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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri J.Sudhakar Reddy & Shri, S.S. Godara
आदेश /O R D E R PER S.S.Godara, Judicial Member:-
This Revenue’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax (Appeals)-12, Kolkata’s order dated 31.08.2016 passed in case No.123/CIT(A)-12/Kol/Circle-40/2015-16, upholding Assessing Officer’s action disallowing / adding assessee’s payments of repair, maintenance and other expenditure for non-deduction of TDS thereby involving section 40(a)(ia) as well as restricting balance payable security deposit addition amount of ₹9,00,000/- to ₹3,42,400/- (granting relief of ₹5,97,600/-), respectively, in assessment order dated 30.11.2015 involving proceedings under section 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.
Shri Rajpal Singh Vs. ACIT Cir-40, Kol. Page 2 2. We come to the former issue of section 40(a)(ia) disallowance of ₹81,42,493/- as made by the Assessing Officer during the course of assessment and deleted to the extent of ₹77,98,676/- in lower appellate proceedings. This assessee runs a proprietary concern dealing in transportation, body building, repairing of heavy vehicles / trucks, lease of land and a hotel as well. It claimed four heads of expenses of drainage, sewering & dismantling charges, building repairs, asset maintenance and land development charges involving corresponding sums of ₹10,53,000/-, ₹2037,993/-, ₹10,20,700/-, 40,30,800/-, respectively totaling to ₹81,42,493/-. The Assessing Officer inter alia observed in his assessment order that the assessee had placed on record only its self attested payment vouchers without supportive evidence, the corresponding ledgers indicated the relevant payees to have been working regularly on contract basis, he drew support from assessee’s explanation itself to form an opinion that all the above payments had seen made to the concerned payees working as daily wagers and building material suppliers. The Assessing Officer then took note of the fact that the assessee had not deducted TDS thereupon in either of the above stated four heads of expenditure. All this made him to invoke section 40(a)(ia) of the Act for disallowing whole of this claim in entirety amounting to ₹81,42,493/-.
The assessee preferred the appeal. He inter alia pleaded in the course of lower appellate proceedings that there existed no contractual relationship with most of the concerned parties. Nor the said payments exceeded threshold limit of ₹20,000/- in a single instance on a given day or that of gross figure of ₹75,000/- in the relevant financial year as per section 194C(5) Proviso in the Act. He filed payee-wise detailed break-up of the relevant material purchased as well as services availed, pertaining to all four heads of expenditure. The assessee’s case therefore was that no TDS was required to be deducted on outright material purchases.
Shri Rajpal Singh Vs. ACIT Cir-40, Kol. Page 3 4. Case file suggests that the assessee produced payee-wise details as well forming part of records before the Assessing Officer indicating the relevant services payments to be well below the above stated twin threshold conditions. He sufficiently proved that only three instances of land development charges amounting to ₹1,22,640/-, ₹1,17,177/- & ₹1,04,000/-, totaling to ₹3,43,817/- attracted section 194C of the Act. The assessee also explained that there existed no written or oral agreement with the concerned payees so as to bring into play section 194C of the Act in all other payees cases. The CIT(A) has granted part relief to the assessee in this backdrop of facts as follows: “8.3. I have considered the facts of the case and the submissions of the appellant. The AO disallowed the following expenses claimed as per provision of section 40a(ia) of the Act: Drainage, Swearing & Dismantling Charges Rs. 10,53,000.00 Repairing to Building Rs. 20,37,993.00 Asset Maintenance Charges Rs. 10,20,700.00 Land Development Charges Rs. 40,30,800.00 Rs.81,42,493.00 The appellant has submitted a detailed list of all payments made. It is seen that the assessee made payments on various dates and the payments included payment for material and services. The service amounts were also paid over various dates and on no single date the service charges exceeded the sum of Rs.20,000 or aggregate amount of Rs.75,000 except in few cases). It is submitted that all the payments were made to various persons in individual capacities having no contractual agreements. Further payments were made for material as well as for associated job charges. Accordingly no TDS was deducted while incurring the aforesaid expenditures. It is clearly seen that in 3 incidents in case of payment made under the head "Land development charges", namely Rs.1,22,640/-, Rs. 11,17,177/- & Rs.1,04,000/-, totalling Rs.3,43,817/- were over the annual threshold limit for TDS . The appellant has also accepted that fact and hence these amounts are confirmed. The balance amounts disallowed by the AO are not covered u/s 40(a)(ia) of the Act as clearly submitted by the appellant. The case laws cited by the appellant have been perused and I find force in the contention of the appellant that these judgements are similar and applicable to their present case . The AO may verify whether the recipients have included the income in their respective returns and also paid taxes on the same. The appellant gets a relief of Rs . 77,98,676/- .”
Shri Rajpal Singh Vs. ACIT Cir-40, Kol. Page 4 5. We have given our thoughtful consideration to rival contentions. Learned Departmental Representative vehemently contends during the course of hearing that the CIT(A) has erred in law as well as on facts in partly deleting the impugned disallowance of ₹81,42,493/- to the extent of ₹77,98,676/-. We find no merit Revenue’s instant plea. It has come on record as per assessee’s details filed before the lower authorities that payments instances totaling to ₹3,43,817/- (supra) attract the relevant twin conditions of payments exceeding ₹20,000/- in a single instance or ₹75,000/- in the relevant financial year. This clinching finding has gone unrebutted during the course of hearing before us. The Revenue has pleaded its third substantive ground indicating admission of additional evidence in violation of Rule 46A of the Income Tax Rules. There is no material before us suggesting such an admission of additional evidence before the CIT(A). The assessee has filed a detailed paper book on record indicating the payees concerned to have issued separate bills for material purchases and services, headwise for all four items of expenditure. We therefore find no reason to interfere with the CIT(A)’s action reversing Assessing Officer’s to the extent of the impugned disallowance representing figure in question of ₹77,98,676/-. The Revenue fails in its instant former substantive ground.
Coming to the Revenue latter’s substantive ground seeking to revive Assessing Officer’s action adding security deposit payable amount of ₹9,00,000/- as deleted to the extent of ₹5,97,600/-, we find that the CIT(A) has partly accepted assessee’s contention as follows: “9.3. I have considered the facts of the case and the submissions of the appellant. The AO in his assessment order has stated that “As per the copy of the Lease agreement entered between the Assessee and M/s. Gemini Tie Up Pvt. Ltd. dated 21.07.2011, which was filed by the assessee during the assessment proceedings, M/s. Gemini Tie Up Pvt. Ltd. had paid interest free deposit of Rs. 9, 00,000/- which was refundable at the time of termination of the said agreement. The assessee in his balance sheet as at 31.03.2013 had not shown any amount as payable to this party. The assessee was requested to explain the matter. The assessee vide his written submission dated 03.09.2015 stated, "Deposit of Rs. 9 lacs deposit against rent by M/s. Gemini Tie Up Pvt. Ltd. was adjustable on Shri Rajpal Singh Vs. ACIT Cir-40, Kol. Page 5 completion of rental period, has been adjusted as rent income during the year as the party become defaulter for paying rent during the year. As per 26AS details, M/s. Gemini Tie Up Pvt. Ltd. had paid a total sum of Rs.15,12,000/- against rent on which TDS were made and the assessee had shown total receipt of Rent of Rs.18,14,400/- from M/s. Gemini Tie Up Pvt. Ltd. Therefore, the assessee had adjusted a sum of Rs.3,02,400/- (Rs.18,14,400 - Rs.15,12,000) out of the deposit of Rs.9,00,000/- and thus, the assessee had failed to show his liability of Rs.5,97,600/- which is added back to the total income of the assessee. " The appellant has clarified that " The assessee had given its property on rent from 01/03/2010, situated at Uluberia to M/s Gemini Tie up Private Limited for a monthly rent of Rs.1,51,200 p.m. along with a refundable security deposit of Rs.9, 00, 000. The assessee obtained the amount for security deposit of Rs. 9,00,000 in two tranches :7 chequess @ Rs.1,00,000 in different dates of March 2010 totalling Rs. 7,00,000 and another cheque of Rs. 2,00,000 in 03/04/2010. However, instead of keeping the same in the "Security Deposit Payable A/c ", the assessee wrongly credited in "Rent A/c" - Rs. 7,00,000 in FY 2009-10 & Rs.2,00, 000 in FY 2010- 11. Accordingly the assessee offered Rs.7,00,000 as income in AY 2010-11 instead of one month's rent of Rs.1,51,200 (rented from 01/03/2010). Similarly in the AY 2011-12, instead of showing the rental income of Rs. (151200x12) = Rs.18, 14, 000, the assessee considered a sum of Rs.(1814000+200000) = Rs.20,14,000. Therefore it can be seen that the assessee wrongly accounted for the 'security deposit' amount of Rs. 9,00,000 as rental income' in the preceding years and accordingly not carried forward the. same as liability . On the other hand, for the AY 2013-14, the assessee considered the rental income as Rs,(151200x12) =Rs.18, 14, 000. From the table above, it can be seen that though the assessee received rent only for 10 months, he considered the income for the whole year. However, the AO presumed that out of Rs. 9,00,000/-, after making adjustment for outstanding rent for 2 months (151200X2) = Rs. 3,02,400/- there should be a balance left in the a/c of ‘Security Deposit Payable” for (900000-302400) = Rs. 5,97,600/- and since there was no such balance, the AO added the amount. I fine force in the contentions of the appellant. It can be seen that the same amount has been taxed twice as per details submitted by the appellant. No tax can be imposed twice on the same income. It is also legally settled that no tax can be levied merely for an accounting error. The assessee made an accounting error with the receipt of deposit money of Rs. 9,00,000/- under “Security Deposit Payable A/c” and owing to this it had offered the same to tax much earlier i.e. Rs. 7,00,000/- in A.Y. 2010-11 & Rs. 2,00,000/- in AY 2011-12. But the same cannot put an obligation on the part of the assessee to offer this again to tax as merely due to accounting error, a liability cannot turn to be an income nor it is permitted to levy double taxation on same income. Thus the addition made by the AO under this head is deleted.”
Shri Rajpal Singh Vs. ACIT Cir-40, Kol. Page 6 7. Heard both sides. Learned Departmental Representative’s case is that the Assessing Officer had rightly made the impugned addition of entire sum of ₹9,00,000/- as per the relevant evidence available on record. We find no force in Revenue’s instant latter argument as well. It fails to dispute the CIT(A) crucial finding proving the impugned sum of ₹5,97,600/- to be a case of double addition of the very income as the assessee has filed all of its details of having been assessed in preceding assessment years. We thus decline Revenue’s instant latter substantive ground as well.
This Revenue’s appeal is dismissed.
Order pronounced in the open court 18/07/2018