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Facts
The assessee company's appeal against the CIT(A)'s order for AY 2013-2014 concerned two disallowances: Rs. 15 lakhs for salary paid to directors due to delayed TDS payment, and Rs. 52,000 for house rent where TDS was not deducted.
Held
The Tribunal held that the Rs. 15 lakhs addition was unsustainable in light of the Supreme Court's decision in Hindustan Coca Cola Beverage Pvt. Ltd., as TDS was deducted and paid, and directors had filed their returns. The Rs. 52,000 house rent disallowance was also deleted as it was below the threshold limit for TDS deduction.
Key Issues
Whether disallowance of salary paid to directors due to delayed TDS payment is justified; and whether disallowance of house rent due to non-deduction of TDS below the threshold limit is sustainable.
Sections Cited
Section 201, Section 201(1A), Section 271C
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
(नििाारण वर्ा / Assessment Year : 2013-2014) Motwani Constructions Pvt. Limited Vs DCIT, Circle-1(1), Cuttack At:- Ground Floor, Samabaya Bhawan, Janpath, Khurda 751022 PAN No. : AAGCM 2496 K (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. नििााररती की ओर से /Assessee by : Shri S.K.Sarangi, AR राजस्व की ओर से /Revenue by : Shri Vijay Singh, Sr. DR सुनवाई की तारीख / Date of Hearing : 24/09/2025 घोषणा की तारीख/Date of Pronouncement : 24/09/2025 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the Ld.CIT(A), National Faceless Appeal Centre(NFAC), Delhi order dated 13/08/2025 passed in Appeal No. NFAC/2012-13/10027542 for the assessment year 2013-2014.
It was submitted by the ld. AR that in the course of assessment, the AO had disallowed the salary paid to the director to an extent of Rs.15 lakhs on the ground that there is a delay in deduction of TDs and payment of the same to the credit of the Government. It was the submission that the returns of the directors have also been filed wherein the TDS has been claimed and the credits have been allowed. It was the submission that no disallowance is called for in view of the decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd., reported in [2007] 163 Taxman 355 (SC), wherein the Hon’ble Supreme Court in para 10 has held as follows :- 10. Be that as it may, the circular No. 275/201/95- IT(B) dated 29.1.1997 issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares "no demand visualized under Section 201 (1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under Section 201 (1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under Section 271C of the Income-tax Act."
It was further submitted that the AO has disallowed Rs.52,000/- towards rent as no TDS has been deducted. It was the submission that on house rent of Rs.52,000/-, no TDS is called for, insofar as the threshold limit was Rs.1,80,000/- during the year.
In reply, ld. Sr. DR vehemently supported the order of the ld. AO and ld. CIT(A).
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that TDS has been deducted but there is a delay in payment of the same to the extent of Rs.15 lakhs to the Central Government. Admittedly, the director of the assesee company has also been filed their returns and have claimed the benefit of TDS and the same have also been granted to the directors. Thus, in view of the principle laid down by the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd., referred to supra, the addition as made by the AO and as confirmed by the ld. CIT(A) of Rs.15 lakhs representing remuneration paid to the directors, stands deleted.