SULEMAN HUSAIN KALU,DAHISAR, MUMBAI vs. CIRCLE 42(1)(1), MUMBAI, BKC, BANDRA EAST, MUMBAI

Briefly stated the facts of the case are that while scrutinizing the return of income the AO notice that the assessee paid rent of Rs.3,60,000/- for Gala No. 1 was paid to two persons, Rs.1,80,000/- each and Rs.2,88,000/- as rent for Gala 2 also paid to two persons, Rs.1,80,000/- and Rs.1,08,000/- respectively. It was strongly contended that the provisions relating to TDS did not apply on the impugned payments. The contention of the assessee was dismissed by the AO who 2 was of the firm belief that the assessee has bifurcated the payment of rent to avoid liability for deduction of tax at source. The AO disallowed the entire rent of Rs.6,48,000/- u/s 40(a)(ia) of the Act. Proceeding further, the AO noticed that the assessee has paid interest to Magma Fincorp Ltd. at Rs.1,53,336/- and to Religare Finvest Ltd. at Rs.2,03,268/-. Since no tax was deducted at source, the AO made addition of Rs.3,56,604/-.

The assessee carried the matter before the ld. CIT(A) but without any success.

Before us, the ld. Counsel for the assessee reiterated that rent has been paid to four persons and payment to each party was below the limit, attracting the provisions of TDS. Insofar as, interest payment is concerned, the ld. Counsel stated that the recipient has shown the income in their computation of income, therefore, the liability to deduct tax at source cannot be put on the assessee. Per contra, the ld. D/R strongly supported the findings of the AO.