RAMANIYAM REAL ESTATES PVT. LTD.,CHENNAI V. ACIT, CIRCLE-I, LTU, CHENNAI

ITA 2439/CHNY/2025

AI Insights

The case involves Ramaniyam Real Estates Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2018-19. The appeal was directed against the disallowance of certain expenditures under Section 40(a)(ia) of the Income Tax Act, 1961, due to alleged non-deduction of TDS. The expenditures in question included rent, professional fees, wages, and AMC charges totaling Rs. 47,87,748. The AO had disallowed 30% of these expenditures, amounting to Rs. 14,36,324, which was sustained by the CIT(A). The Tribunal, after reviewing the party-wise details provided by the assessee, directed the AO to verify the threshold limits for TDS deduction and adjust the disallowances accordingly.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826448 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 02-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTHAMI MANIVASAGAM
• Assessee Lawyers: GIRISH KUMAR
• Keywords: Set aside; Principle of natural justice; TDS; Non-deduction of tax
• Section: 133(6); 40(a)(ia); 194C

Judgement Text

" आयकर अपील य अ धकरण, ‘बी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI \u0015ी मनु क ुमार ग\u0019र, \u000eया\u001aयक सद य एवं \u0015ी एस. आर. रघुनाथा, लेखा सद य क े सम$ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 2439/Chny/2025 \u001aनधा%रण वष% / Assessment Year: 2018-19 Ramaniyam Real Estates Private Limited. 17/35, II Main Road, Besant Nagar, Chennai – 600 020. vs. ACIT, Circle -1, LTU, Chennai. [PAN: AAACR-2276-A] (अपीलाथ'/Appellant) (()यथ'/Respondent) अपीलाथ' क* ओर से/Appellant by : Shri. Girish Kumar, Advocate ()यथ' क* ओर से/Respondent by : Ms. Gauthami Manivasagam, JCIT सुनवाई क* तार ख/Date of Hearing : 03.12.2025 घोषणा क* तार ख/Date of Pronouncement : 07.01.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal filed by the assessee is directed against order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [herein after “ld.CIT(A)] dated 13.08.2025 and pertains to Assessment Year(A.Y.) 2018-19 against the order of the National Faceless Assessment Centre, Delhi, passed u/s.143(3) r.w.s 144B of the Income Tax Act, 1961 (in short ‘the Act’) dated 30.09.2021. Printed from counselvise.com :-2-: ITA. No:2439/Chny/2025 2. The assessee has raised the following grounds of appeal: “1. The order of the NFAC, Delhi dated 13.08.2025 vide Din & order No ITBA/NFAC/S/250/2025-26/1079567836(1) for the abovementioned Assessment Year is contrary to law, fact and in circumstances of the case. 2. The NFAC, Delhi erred in sustaining the disallowances in terms of Section 40(a)(ia) of the Act being the expenditure incurred in the nature of rent for want of TDS in terms of Section 194I of the Act amounting to Rs.19,80,000/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justifications. 3. The NFAC, Delhi erred in sustaining the disallowances in terms of Section 40(a)(ia) of the Act being the expenditure incurred in the nature of professional fees for want of TDS in terms of Section 194J of the Act amounting to Rs.2,40,517/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justifications. 4. The NFAC, Delhi erred in sustaining the disallowances in terms of Section 40(a)(ia) of the Act being the expenditure incurred in the nature of wages for want of TDS in terms of Section 194C of the Act amounting to Rs.24,03,462/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justifications. 5. The NFAC, Delhi erred in sustaining the disallowances in terms of Section 40(a)(ia) of the Act being the expenditure incurred in the nature of AMC charges for want of TDS in terms of Section 194C of the Act amounting to Rs.1,63,769/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justifications. 6. The NFAC, Delhi failed to appreciate that the provisions of Section 40(a)(ia) of the Act had no applications in the present case, thereby vitiating the disputed additions made in terms of Section 40(a)(ia) of the Act in the impugned order. 7. The NFAC, Delhi failed to appreciate that having placed on record the party wise breakup of the details regarding to the non-applicability of the provisions relatable to deductions of taxes at source for he said transactions, the consequential disallowance of the said sum in terms of Section 40(a)(ia) of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 8. The NFAC, Delhi ought to have appreciated that having not exercised the power vested in terms of Section 133(6) of the Act in calling for details regarding the statement of income from the parties to whom the payments were made by the appellant, the consequential disallowance should be reckoned as nullity in law. Printed from counselvise.com :-3-: ITA. No:2439/Chny/2025 9. The NFAC, Delhi failed to appreciate that disputed disallowance made was contrary to the provisions of the Act especially in terms of the second proviso to the Section 40(a)(ia) of the Act and ought to have appreciated that the mechanical disallowance made in this regard should accordingly be reckoned as bad in law. 10. The NFAC, Delhi failed to appreciate that in any event, the TDS provisions had no application to the facts of the present case and hence ought to have appreciated that the disallowance provisions of Section 40(a)(ia) of the Act had no applicability, thereby vitiating the related findings. 11. The NFAC, Delhi failed to appreciate that having not taken into consideration the exceptions carved out in relation thereto including the provisions including the threshold limit prescribed warranting deductions of taxes at source while making the payment, the disputed additions should be reckoned as bad in law. 12. The NFAC, Delhi failed to appreciate that scrutiny assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 13. The NFAC, Delhi failed to appreciate that the entire re- computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 14. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential assessment passed should be reckoned as bad in law. 15. The NFAC, Delhi failed to appreciate that there was no proper/effective opportunity given before passing of the impugned order including arbitrary denial of an opportunity of personal hearing and any order passed in violation of the principles of natural justice would be nullity in law. 16. The appellant craves leave to file additional grounds/arguments at the time of hearing. 3. Brief facts of the case are that the assessee has filed its return of income on 20.09.2018 declaring a total income of Rs.19,97,07,100/-. The case of the assessee was selected for scrutiny through CASS. Subsequently various statutory notices were issued to the assessee to which the assessee responded from time to time. Upon examination of the submissions and the response to the show cause notice, the AO completed the assessment vide order dated 30.09.2021 u/s.143(3) r.w.s 144B of the Act in determining the total income of the assessee at Rs.20,11,43,424/-. In completing the assessment, the AO Printed from counselvise.com :-4-: ITA. No:2439/Chny/2025 disallowed 30% of the total amount of Rs.47,87,748/-, amounting to Rs.14,36,324, u/s. 40(a)(ia) of the Act by holding as under: - “On perusal of the same, it is noticed that the assessee has not submitted any proof/evidence in respect of aforesaid expenses. It is also noticed that the assessee has not submitted any lower deduction certificate or any other documents from which it could be clarified that the TDS is not applicable in respect of rent, professional fees, wages & AMC charges. In the absence of the proper documentary evidences/explanation for non-deduction of TDS” 4. Being aggrieved by the assessment order dated 30.09.2021 passed u/s.143(3) r.w.s 144B of the Act, the assessee carried the matter in appeal before the ld.CIT(A), assailing the disallowance of Rs.14,36,324/- made u/s. 40(a)(ia) of the Act, being 30% of various expenses aggregating to Rs.47,87,748/- incurred towards rent, professional fees, wages and AMC charges on the ground of alleged non-compliance with the provisions relating to deduction of Tax at Source. After considering the submissions and explanations furnished by the assessee, the ld. CIT(A) confirmed the additions made by the AO and dismissed the appeal of the assessee. 5. Aggrieved by the impugned order of the ld.CIT(A), the assessee preferred an appeal before us. 6. Before us, the ld. AR of the assessee assailed the order of the ld.CIT(A) in confirming the disallowance of Rs.14,36,324/- made u/s. 40(a)(ia) of the Act, being 30% of various expenses aggregating to Rs.47,87,748/- incurred towards rent, professional fees, wages and AMC charges on the ground of alleged non-compliance with the provisions relating to deduction of Tax at Source. During the course of hearing, the ld. AR of the assessee filed a paper book pages for the impugned assessment year, placing on record party-wise details of the impugned payments to evidence the fact that that the amounts paid to each party did not exceed the threshold limits as prescribed for deduction of tax at source. Relying on the said documentary evidence, the ld.AR submitted that the provisions of section 40(a)(ia) of the Act were not Printed from counselvise.com :-5-: ITA. No:2439/Chny/2025 attracted and accordingly prayed that the disallowance made by the AO in the impugned year be deleted. 7. Per contra, the ld.DR on the other hand, strongly relied on the impugned order of the ld.CIT(A) and prayed for confirming the disallowance, by dismissing the appeal of the assessee. 8. We have heard the rival contentions, perused material available on record and gone through the orders of lower authorities. The factual matrix relating to the impugned dispute is that the AO disallowed 30% of the following expenditures u/s.40(a)(ia) of the Act, on the ground of alleged non-deduction of tax at source. The expenditure which was debited to the profit and loss account and disallowed by the AO are as follows: 9. Thus, a total disallowance of Rs.14,36,324/- being 30% of Rs.47,87,748/- was disallowed by AO and sustained by ld. CIT(A) for the reason that no concrete evidence was placed on record, giving rise to the present dispute before us. We find from the paper book placed on record by the ld.AR, comprising 191 pages, that the party-wise details furnished therein shows the fact that the payments made to each party were below the threshold limits prescribed for deduction of tax at source as per the provisions of the Act. In view of the foregoing facts and after considering the submissions of the ld.AR as well as the paper book filed during the course of hearing, we are of the considered opinion that and in the interest of justice, the order passed by the ld.CIT(A) deserves to be set aside and the matter restored to the file of the AO for the purpose of verifying whether the payments made to each party were Sl Nature of Expense Amount in Rs. a) Rent 19,80,000/- b) Professional Fees 2,40,517/- c) Wages 24,03,462/- d) AMC Charges 1,63,769/- Total 47,87,748/- Printed from counselvise.com :-6-: ITA. No:2439/Chny/2025 below the threshold limits prescribed under the provisions of the Act for deduction of tax at source. The AO is accordingly directed to allow the said expenditure if upon such verification it is found that the payments made to the respective parties were below the prescribed threshold limits for deduction of tax at source as per the provisions of the Act. We also direct the assessee to appear before the AO and furnish the relevant details as and when called for. Thus, the ground raised by the assessee is allowed for statistical purposes. 10. In the result, the appeal filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 07th January, 2026 at Chennai. Sd/- Sd/- (मनु क ुमार ग\u0019र) (MANU KUMAR GIRI) \u000eया\u001aयक सद य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद य/Accountant Member चे\u000eनई/Chennai, /दनांक/Dated, the 07th January, 2026 SP आदेश क* (\u001aत1ल2प अ3े2षत/Copy to: 1. अपीलाथ'/Appellant 2. ()यथ'/Respondent 3.आयकर आयु4त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 2वभागीय (\u001aत\u001aन ध/DR 5. गाड% फाईल/GF Printed from counselvise.com "