OKHLA INDUSTRIAL AREA CETP SOCIETY REGD.,DELHI vs. ITO WARD EXEMPTION 2(4), DELHI

PER VIKAS AWASTHY, JUDICIAL MEMBER: This appeal is filed by the Assessee against the order of CIT(A)/NFAC, Delhi dated 13.02.2026, for Assessment Year 2020-21.

2.1 In respect of disallowance u/s 40(a)(ia) of the Act, the ld. counsel submits that the AO has made disallowance under aforesaid section in respect of payments made towards security charges, legal & professional charges and printing & stationery. The ld. counsel pointed that in so far as the security charges is concerned, the assessee has deducted tax at source u/s 194C of the Act @ 1%. To support his argument, the ld. counsel referred to ledger account at page 46 of the paper book and Form 16A indicating TDS on payment of security charges at pages 47 to 58 of the paper book. With regard to payment of legal & professional charges, the ld. counsel stated that there was no liability to deduct TDS on legal & professional charges as the amount paid was below Rs.30,000/- to each professional. For non-deduction of TDS on advertisement expenses, the ld. counsel stated that the payment was made towards purchase of calendars, hence, no TDS was required to be deducted for the purchase of calendars.

i) Disallowance of depreciation: The contentions of the assessee is that although in Income and Expenditure account, the assessee has reflected depreciation as expenditure, however, while filing return of income, no expenditure has been claimed and the entire income has been accumulated. To substantiate, the assessee has drawn attention of the bench towards the Income Tax Return at page 29 & 30 of the paper book and statement furnished by the assessee u/s 11(2) of the Act in Form 10 at page 37 of the paper book. A perusal of documents placed on record clearly reflect that no depreciation was claimed by the assessee. Once, there is no claim of depreciation, the question of its disallowance does not arise. The assessee succeeds on ground nos. 1 & 2 of appeal.

ii. Disallowance u/s 40(a)(ia): The AO has made disallowance u/s 40(a)(ia) for non-compliance of TDS provision on the payments made towards security charges, legal & professional charges and advertisement expenses. The ld. counsel for the assessee has drawn attention of the bench towards ledger account indicating payments made towards security and TDS at pages 44 to 46 of the paper book. The assessee has also furnished corresponding Form 16A at pages 47 to 58 of the paper book. A perusal of the said documents clearly show that the assessee has complied with TDS provisions and has deducted withholding tax @ 1% u/s 194C of the Act on payments towards security charges. Hence, no disallowance in respect of security charges is warranted.

In so far as TDS on professional charges is concerned, the ld. counsel has contended that the payments made to each professional is less than Rs.30,000/-. The total payment towards legal & professional charges is Rs.57,050/-. Since, the payments towards professional charges is less than the threshold limit for deducting tax at source, the assessee had no liability for deducting tax at source on such payments.

The AO has further made disallowance u/s 40(a)(ia) of the Act in respect of advertisement expenses. The ld. counsel has pointed that the payment was towards purchase of calendars. No TDS liability arises for making purchases of calendar. Accordingly, disallowance made u/s 40(a)(ia) of the Act is directed to be deleted. The assessee succeeds on ground no. 3 of appeal as well .

Sd/- VIKAS AWASTHY JUDICIAL MEMBER Delhi Dated: 18.09.2026