VALLURUPALLI PRABHU KISHORE,VISAKHAPATNAM vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3(1), VISAKHAPATNAM

ITA 366/VIZ/2024Status: DisposedITAT Visakhapatnam20 February 2025AY 2018-1912 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

On Issue 1 (Assessee's appeal), the Tribunal noted the assessee's plea that expenditures were below TDS thresholds and that bills were available. The Tribunal found merit in remitting the issue back to the AO. The assessee was directed to submit invoices to the AO, who was instructed to examine them and the applicability of TDS provisions before deciding on merits. This ground was allowed for statistical purposes. On Issue 2 (Assessee's appeal), the Tribunal referred to Section 23(1)(c) of the Act, which allows for vacancy allowance when a property is vacant for part of the year, resulting in actual rent received being less than the reasonably expected rent. The Tribunal held that the assessee was entitled to claim vacancy allowance and directed the AO to delete the addition of Rs. 8,21,741/-. This ground was allowed. On the Revenue's appeal (Issue 1 from assessee's perspective), the Tribunal observed that the issue of disallowance for non-compliance with TDS provisions was identical to the one adjudicated in the assessee's appeal. Therefore, the decision to remit the issue back to the AO for verification and decision in accordance with law was applied. This ground was allowed for statistical purposes.

What were the facts?

The assessee, Vallurupalli Prabhu Kishore, filed an appeal for Assessment Year 2018-19 against an order by the Commissioner of Income Tax (Appeals) [CIT(A)]. The Assessing Officer (AO) had made additions totaling Rs. 6,51,00,000/- on account of interest expenses, Rs. 5,00,00,000/- for non-deduction of TDS on various expenditures, and Rs. 29,28,802/- for income from house property. The CIT(A) deleted the addition of Rs. 6,51,00,000/-, confirmed an addition of Rs. 1,71,00,000/- out of the Rs. 5,00,00,000/- for non-deduction of TDS, and partly allowed the addition on rental income by confirming Rs. 8,21,741/-. The revenue filed a cross-appeal challenging the deletion of Rs. 3.29 crores from the disallowance of miscellaneous expenditure.

What were the issues?

1. Whether the CIT(A) was justified in sustaining Rs. 1,71,00,000/- out of the Rs. 5,00,00,000/- addition made by the AO for ad-hoc disallowance of expenditure due to non-deduction of TDS. 2. Whether the CIT(A) was justified in sustaining Rs. 8,21,741/- out of the Rs. 8,22,538/- addition made by the AO for shortfall in rent concerning a property. Assessee's contentions: Issue 1: The assessee argued that TDS was not deducted because the expenditures were below the prescribed threshold. Copies of bills were provided to the AO. The AO made an ad-hoc disallowance without basis. The issue should be remitted to the AO for verification of TDS deductibility. Issue 2: The assessee claimed rental income was offered for three months, and the property was vacant for the remaining nine months, entitling it to vacancy allowance. The revenue authorities did not consider the vacancy. Revenue's contentions: Issue 1 (as per cross-appeal): The revenue argued that the CIT(A) erred in deleting Rs. 3.29 crores out of the Rs. 5,00,00,000/- disallowance. The AO's order indicated that expenditures totaling Rs. 40.92 crores did not suffer TDS, necessitating an enhanced disallowance similar to 'Travelling & Conveyance'. The revenue relied on the AO's order.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 142(1),Section 23(1)(c)

AI-generated summary — verify with the full judgment below

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IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM

(HYBRID HEARING)

M Sarre at, ante Paes Ue Mt Va aap Or, Cal Aad & TAat BEFORE SHRI K. NARASIMHA CHARY, HON’BLE JUDICIAL MEMBER

&

SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER

SHAGL HUTS /L.T.A.No.366/VIZ/2024 GI uu aY/ Assessment Year: 2018-19)

Vallurupalli Prabhu Kishore v. | ACIT - Circle - 3(1) D.No. 10-50-22/1 Infinity Tower Siripuram Junction Shankarmatham Road Visakhapatnam — 530003 Santhipuram Visakhapatnam — 530016 [PAN: AARPV7235M] Andhra Pradesh (arent Appellant) wet ai Respondent)

HAST HUTS /L.T.A.No.419/VIZ/2024 GI uu aY/ Assessment Year: 2018-19)

DCIT - Circle — 3(1) v. | Vallurupalli Prabhu Kishore 35, 50-92-35 D.No. 10-50-22/1 Shankarmatham Road Siripuram Junction

Opposite Reliance Fresh Visakhapatnam — 530003 Beside Reliance Fresh

Nearby Main Road Madhuranagar, Dwarakanagar Visakhapatnam — 530016

[PAN: AARPV7235M]

( / Appellant) wet ai Respondent) PIA HI UicialIea/ Assessee Represented by : | Shri GVN Hari, AR RoR HT UictAed/ Department Represented by : | Shri D. Hema Bhupal, Sr. AR Baars Barca SA wt ff8/ Date of Conclusion of

The order continues below.

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