M/S. JACK N JILL,DIMAPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-DIMAPUR, DIMAPUR

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ITA 477/GTY/2019Status: DisposedITAT Guwahati26 February 2020AY 2016-173 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that payments made to exempt assessees under Section 10(26) do not attract disallowance under Section 40(a)(ia). Therefore, the disallowance of rent payment was deleted.

What were the facts?

The assessee disallowed a rent payment of Rs. 11,46,312/- for non-deduction of TDS. The payment was made to three parties who enjoyed Section 10(26) exemption as they belonged to recognized Scheduled Tribes.

What were the issues?

Whether rent payments made to assessees exempt under Section 10(26) are disallowable under Section 40(a)(ia) for failure to deduct TDS.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 10(26)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘E-COURT’ GAUHATI

Before: SHRI P.M. JAGTAP, V.P & SHRI S.S. GODARA, AM

For Appellant: Shri Sanjay Mody, CA
Hearing: 14/02/2020Pronounced: 28/02/2020

O R D E R Per Shri S.S. Godara: This assessee’s stay application S.A No.01/Gau/20 seeks to restrain the department from effecting outstanding demand of Rs.3,74,133/- out of the total sum of Rs.467379/- arising from both the learned lower authorities’ action disallowing/adding rent payment of Rs.11,46,312/- for non-deduction of TDS during the course of assessment framed on 26.11.2018 as affirmed in the lower appellate order under challenge.

2 S. A. No.01/Gau/2020 & M/s Jack N Jill, Dimapur

1.

Heard both the parties. Case file perused. With both the parties’ consent, we proceed to decide the assessee’s main appeal ITA No.477/Gau/2019.

3 Coming to merits of the sole issue of correctness of section 40(a)(ia) disallowance of rent payment involving sum of Rs.11,46,312/-, we notice that this assessee-firm has made the impugned payment to three parties Sharaf Zaselatuo Solo, Smt. Linda Solo and Shri T.K. Angami. All of them enjoy section 10(26) exemption since belonging to the recognised Scheduled Tribes under the Constitution (Schedule Tribes) Order, 1950 and Constitution (Nagaland) Schedule Tribes Order, 1970 under Article 366 Clause 25 of the Constitution of India. That being the case, this tribunal’s coordinate bench in M/s Shillong Lajong vs. ACIT decided on 25.09.2019 holds that such payments made to exempt assessees under the Act do not invite the impugned disallowance in view of yet another decision reported as [2015] 156 ITD 276(Gau-Trib) Tamchikusuk vs. ACIT. We thus delete the impugned section 40(a)(ia) rent payment disallowance itself by adopting this precise reason alone. The assessee’s main appeal ITA No.477/Gau/2019 is accepted.

4.

The assessee main appeal is allowed and its SA No.01/Gau/20 stands rendered infructuous.

Order Pronounced in the Open Court on 28/02/2020. Sd/- Sd/- (P. M. JAGTAP) (S. S. GODARA) VICE-PRESIDENT JUDICIAL MEMBER Dated: 28/02/2020 RS

3 S. A. No.01/Gau/2020 & M/s Jack N Jill, Dimapur

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