RAMANIYAM REAL ESTATES PVT. LTD.,CHENNAI vs. ACIT, CIRCLE-I, LTU,, CHENNAI

The NFAC, Delhi erred in sustaining the disallowances in terms of Section 40(a)(ia) of the Act being the expenditure incurred in the nature of wages for want of TDS in terms of Section 194C of the Act amounting to Rs.24,03,462/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justifications.

The NFAC, Delhi erred in sustaining the disallowances in terms of Section 40(a)(ia) of the Act being the expenditure incurred in the nature of AMC charges for want of TDS in terms of Section 194C of the Act amounting to Rs.1,63,769/- and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justifications.

The NFAC, Delhi failed to appreciate that the provisions of Section 40(a)(ia) of the Act had no applications in the present case, thereby vitiating the disputed additions made in terms of Section 40(a)(ia) of the Act in the impugned order.

The NFAC, Delhi failed to appreciate that having placed on record the party wise breakup of the details regarding to the non-applicability of the provisions relatable to deductions of taxes at source for he said transactions, the consequential disallowance of the said sum in terms of Section 40(a)(ia) of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that disputed disallowance made was contrary to the provisions of the Act especially in terms of the second proviso to the Section 40(a)(ia) of the Act and ought to have appreciated that the mechanical disallowance made in this regard should accordingly be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that in any event, the TDS provisions had no application to the facts of the present case and hence ought to have appreciated that the disallowance provisions of Section 40(a)(ia) of the Act had no applicability, thereby vitiating the related findings.

The NFAC, Delhi failed to appreciate that having not taken into consideration the exceptions carved out in relation thereto including the provisions including the threshold limit prescribed warranting deductions of taxes at source while making the payment, the disputed additions should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that scrutiny assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 13. The NFAC, Delhi failed to appreciate that the entire re- computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 14. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential assessment passed should be reckoned as bad in law. 15. The NFAC, Delhi failed to appreciate that there was no proper/effective opportunity given before passing of the impugned order including arbitrary denial of an opportunity of personal hearing and any order passed in violation of the principles of natural justice would be nullity in law. 16. The appellant craves leave to file additional grounds/arguments at the time of hearing.

Brief facts of the case are that the assessee has filed its return of income on 20.09.2018 declaring a total income of Rs.19,97,07,100/-. The case of the assessee was selected for scrutiny through CASS. Subsequently various statutory notices were issued to the assessee to which the assessee responded from time to time. Upon examination of the submissions and the response to the show cause notice, the AO completed the assessment vide order dated 30.09.2021 u/s.143(3) r.w.s 144B of the Act in determining the total income of the assessee at Rs.20,11,43,424/-. In completing the assessment, the AO

Being aggrieved by the assessment order dated 30.09.2021 passed u/s.143(3) r.w.s 144B of the Act, the assessee carried the matter in appeal before the ld.CIT(A), assailing the disallowance of Rs.14,36,324/- made u/s. 40(a)(ia) of the Act, being 30% of various expenses aggregating to Rs.47,87,748/- incurred towards rent, professional fees, wages and AMC charges on the ground of alleged non-compliance with the provisions relating to deduction of Tax at Source. After considering the submissions and explanations furnished by the assessee, the ld. CIT(A) confirmed the additions made by the AO and dismissed the appeal of the assessee.

Aggrieved by the impugned order of the ld.CIT(A), the assessee preferred an appeal before us.

Before us, the ld. AR of the assessee assailed the order of the ld.CIT(A) in confirming the disallowance of Rs.14,36,324/- made u/s. 40(a)(ia) of the Act, being 30% of various expenses aggregating to Rs.47,87,748/- incurred towards rent, professional fees, wages and AMC charges on the ground of alleged non-compliance with the provisions relating to deduction of Tax at Source. During the course of hearing, the ld. AR of the assessee filed a paper book pages for the impugned assessment year, placing on record party-wise details of the impugned payments to evidence the fact that that the amounts paid to each party did not exceed the threshold limits as prescribed for deduction of tax at source. Relying on the said documentary evidence, the ld.AR submitted that the provisions of section 40(a)(ia) of the Act were not :-5-: ITA. No:2439/Chny/2025 attracted and accordingly prayed that the disallowance made by the AO in the impugned year be deleted.

Per contra, the ld.DR on the other hand, strongly relied on the impugned order of the ld.CIT(A) and prayed for confirming the disallowance, by dismissing the appeal of the assessee.

We have heard the rival contentions, perused material available on record and gone through the orders of lower authorities. The factual matrix relating to the impugned dispute is that the AO disallowed 30% of the following expenditures u/s.40(a)(ia) of the Act, on the ground of alleged non-deduction of tax at source. The expenditure which was debited to the profit and loss account and disallowed by the AO are as follows:

Thus, a total disallowance of Rs.14,36,324/- being 30% of Rs.47,87,748/- was disallowed by AO and sustained by ld. CIT(A) for the reason that no concrete evidence was placed on record, giving rise to the present dispute before us. We find from the paper book placed on record by the ld.AR, comprising 191 pages, that the party-wise details furnished therein shows the fact that the payments made to each party were below the threshold limits prescribed for deduction of tax at source as per the provisions of the Act. In view of the foregoing facts and after considering the submissions of the ld.AR as well as the paper book filed during the course of hearing, we are of the considered opinion that and in the interest of justice, the order passed by the ld.CIT(A) deserves to be set aside and the matter restored to the file of the AO for the purpose of verifying whether the payments made to each party were :-6-: ITA. No:2439/Chny/2025 below the threshold limits prescribed under the provisions of the Act for deduction of tax at source. The AO is accordingly directed to allow the said expenditure if upon such verification it is found that the payments made to the respective parties were below the prescribed threshold limits for deduction of tax at source as per the provisions of the Act. We also direct the assessee to appear before the AO and furnish the relevant details as and when called for. Thus, the ground raised by the assessee is allowed for statistical purposes.

In the result, the appeal filed by the assessee are allowed for statistical purposes.