ACIT CIRCLE-3 (1)(2), MUMBAI vs. M/S HEMLATHA INVESTMENT PVT LTD., MUMBAI

The present appeal has been preferred by the Revenue against the order dated 25.07.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2013-14.

At the time of hearing when the case was called up for hearing neither assessee nor his authorized representative appeared before the Bench nor any application for adjournment was received. Therefore, we are disposing of this appeal after hearing the Ld. D.R. and after considering the merits of the case.

The only issue raised by the Revenue is against the order of Ld. CIT(A) directing the AO to allow the credit of taxes deducted

The facts in brief are that the assessee had given its premises on rent to Pratibha Shipping Ltd. from whom the assessee received a sum of Rs.32,79,600/- as rent and offered the same under the head “House property” after claiming the deductions under section 24 of the Act. The said payer of rent deducted tax at source of Rs.3,27,960/- from the rent and paid the net amount of rent to the assessee. However, the said tax deducted at source was not deposited in the government treasury and consequently not reflected in form No.26AS. The assessee received the intimation under section 143(1) of the Act dated 29.09.2014 processing the income tax return filed by the assessee on 27.09.2013 whereby a demand of Rs.4,12,700/- comprising tax of Rs.3,27,960/- and interest under section 234B of Rs.68,262/- and interest under section 234C Rs.16,481/- was raised.

The aggrieved assessee filed an appeal before Ld. CIT(A) which was allowed by Ld. CIT(A) by observing and holding as under: “4.2.1 The information provided by the appellant regarding the payment of rent by M/s Pratibha Shipping Limited after deduction of taxes has been verified. It is a fact that the TDS was deducted by the party while making the rental payments to the appellant. Now, the issue to be decided is whether the ant is to be held responsible for payment of that tax which was e;d by the party who was supposed to deposit the same. The section Act very clearly states that the assessee shall not be called upon1 to pay the tax to the extent the tax has been deducted from the income. The Central Board of Board of Direct Taxes vide it's office memorandum dated 11.03.2016 having F.No. 275/29/2014-IT(b] has also specifically directed the field officers to not to call upon the deductee assesses to pay taxes which were already deducted by the deductors. Thus, in this case also the appellant should not 3 M/s. Hemlatha Investment Pvt. Ltd. be asked to pay the taxes which were already deducted by the deductee party, i.e. M/s Pratibha Shipping Limited. 4.2.2 In view of the above discussion and as prescribed by the provision of section 205 of the Act, the AO is directed to allow credit of tax deducted at source by M/s. Pratibha Shipping Limited and charge correct interest u/s 234A & 234C of the Act while giving effect to this appellate order.”

After hearing the Ld. D.R. and perusing the material on record including the impugned order, we observe that the Ld. CIT(A) has correctly directed the AO to allow the credit of tax deducted at source from the rent by M/s. Pratibha Shipping Ltd. of Rs.3,27,960/- in consonance with the provisions of section 205 of the Act which provides that once the tax is deducted at source, the assessee can not be called upon to pay the tax himself to the extent to which the tax has been deducted at source from the income. We, therefore, do not find any infirmity in the order of Ld. CIT(A) and accordingly are inclined to uphold the same.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 08.07.2021.