DADIBA KALI PUNDOLE,MUMBAI vs. ACIT WARD 17(1), MUMBAI

The learned CIT(A) erred in misinterpreting Circular No. 5 dated 30th July 2012.

The learned CIT(A) erred in holding that the accommodation was taken on regular basis.

Both the lower authorities erred in holding that the payment constitutes "rent" within the meaning of section 1941.

Having regard to facts and circumstances of the case, the Appellant submits the above disallowance of Rs. 4,68,543/- be deleted.”

The only effective issue raised by the assessee is against the confirmation of addition of ₹468543/- by CIT(A) as made by the Assessing Officer under section 40(a)(ia) of the Act on account of non- deduction of TDS on rent paid to Royal Yacht Club.

The facts in brief are that the assessee filed its return of income on 30.09.2013 declaring his total income of ₹3,51,35,100/-, which were processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected under scrutiny and statutory notices were issued and served upon assessee. During the course of assessment

We have heard the rival submissions and gone through the facts and circumstances of the case. Undisputedly facts are that the assessee has paid accommodation charges to the above club to the tune of ₹4,68,543/- on which no TDS was deducted and deposited as per the provisions of section 194I of the Act. The AO disallowed and added the same under section 40(a)(ia) of the Act for non deduction of TDS The learned CIT(A) confirmed the addition by holding that the assessee has paid accommodation charges for the hotel accommodation which is on regular basis from the club without deduction of TDS at source by observing and holding as under:-

After taking into account the facts of the case in the light of the circular and the decision as cited above, we note that the accommodation was booked by the assessee in the club not on a regular basis but on casually and occasionally as and when the foreign consultants visits the assessee in connection with assessee’s

During the course of hearing before us, Ld. Counsel of the assessee relied upon the CBDT circular No.5 of 2002 dated 30-07-2002 wherein it was clarified that where earmarked rooms are let out for specified rate and specified period, only then, they will be construed to be accommodation made available on regular basis whereas the facts of the assessee’s case are that there was no prior contract with the hotels. The rooms were hired on as and when available basis, corresponding to the date of shooting. There was no contract for any specific rates or period and thus TDS was not required to be made u/s 194I.

We have gone though the orders passed by the lower authorities and facts brought before us on the basis of bills of hotels and other evidences. It is noted that nothing has been brought before us to show that assessee had entered into any prior contract with the hotels for any specific room or rooms for any specific rates or rooms for any specific period. The rooms were hired on as and when available basis at the regular tariff rates subject to the discounts as agreed at the time of