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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SMT. ANNAPURNA GUPTA & SHRI T. R. SENTHIL KUMAR
PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER:
This is an appeal filed by the assessee against the order dated 08.04.2019 passed by the Commissioner of Income Tax (Appeals)-3, Rajkot (in short “CIT(A)”) arising out of the assessment order dated 23.03.2016 passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the A.Y. 2013-14. 2. The brief facts of the case is the assessee is an individual engaged in the trade in business of Wheat, Groundnut, Groundnut Seeds etc. For the A.Y. 2013-14 the assessee filed its return of income on 25.09.2013 declaring total income of Rs. 3,52,860/-. The assessment Asst.Year – 2013-14 under Section 143(3) was completed wherein the AO found rent paid for the Godown which exceeds the limit provided under Section 194-I of the Act, however, no TDS has made by the assessee. Therefore, the entire rent payment of 3,60,000/- disallowed under Section 40(a)(ia) of the Act.
Aggrieved against the same the assessee filed an appeal before the Commissioner of Income Tax, (Appeals)-3. The Ld. CIT(A) also confirmed the order of the AO holding that the assessee has not proved that Section 194 (I) were not applicable to its case and also not deducted TDS. Therefore, the disallowance made by the Ld. AO does not require any interference and thereby dismissed the appeal filed by the assessee.
Aggrieved against the same the assessee is an appeal before us. The assessee raised as many as 10 grounds which are repetition in nature but the solitary issue is disallowance made under Section 40(a)(ia) of the Act.
None appeared on behalf of the assessee and a written submission filed on behalf of the assessee. In the written submission the Godown has been constructed in an agricultural land by three agriculturist brothers thus, the godown belongs to all the three brothers, therefore, the rent of 30,000/- being paid relates to 10,000/- each of them. Thus, the provision of Section 194-I does not apply since the rent paid to each one of the co-owners is 10,000/- per month. The second argument of the assessee is that Coordinate Bench of this Tribunal in assessee’s own case in ITA No. 219/Rjt/2018 for A.Y. 2012-13 vide order dated 08.06.2022 held that the disallowance made at 100% is restricted to 30% Asst.Year – 2013-14 as retrospective and the ratio of the decision will be squarely applicable to the present assessment year also.
Per contra, the Ld. DR appearing for the Revenue supports the order of the lower authorities and requested to confirm the addition.
We have given our thoughtful consideration and perused the materials available on record. As claimed by the assessee that the godown belongs to three co-owners and the rent payable to each co- owner is Rs.10,000/- per month and provision of Section 194-I will not be applicable. In support of this argument no documentary evidence is produced either before the lower authorities or before us. Therefore, this argument of the assessee is devoid of merit and therefore rejected. The second limb of the argument of the assessee that the disallowance should be restricted to the tune of 30% of the rent paid under the provision of Section 40(a)(ia) of the Act pursuant to the amendment brought out by the Finance Act, 2014 w.e.f. 2015 and applicability of Coordinate Bench decision in assessee’s own case cited supra. We have perused the above decision but the Co-ordinate Bench failed to take note of the Hon’ble Supreme Court Judgment in the case of Shree Choudhary Transport Co. vs. ITO reported in (2020) 118 taxmann.com 47 which held as follows:
“20. Before finally answering the root question in the matter as to whether the payments in question have rightly been disallowed from deduction, we may usefully summarize the answers to Question Nos. 1 to 3 that the provisions of section 194C were indeed applicable and the assessee- appellant was under obligation to deduct the tax at source in relation to the payments made by it for hiring the vehicles for the purpose of its business of transportation of goods; that disallowance under section 40(a)(id) of the Act is not Ltd. only to the amount outstanding and this provision equally applies in relation to the expenses that had already been Punambhai Ghughabhai Pardava vs. ITO Asst.Year – 2013-14 incurred and paid by the assessee; that disallowance under section 40(a)(ia) of the Act of 1961 as introduced by the Finance (No.2) Act, 2004 with effect from 1-4-2005 is applicable to the case at hand relating to the assessment year 2005-06; and that the benefit of amendment made in the year 2014 to the provision in question is not available to the appellant in the present case. These answers practically conclude the matter but we have formulated Question No. 4 essentially to deal with the last limb of submissions regarding the prejudice likely to be suffered by the appellant.
The suggestion on behalf of the appellant about likely the prejudice because of disallowance deserves to be rejected for three major reasons. In the first place, it is clear from the provisions dealing with disallowance of deductions in part D of Chapter IV of the Act, particularly those contained in sections 40(a)(ia) and 40A(3) 0f the Act, that the said provisions are intended to enforce due compliance of the requirement of other provisions of the Act and to ensure proper collection of tax as also transparency in dealings of the parties. The necessity of disallowance comes into operation only when default of the nature specified in the provisions takes place. Looking to the object of these provisions, the suggestions about prejudice or hardship carry no meaning at all. Secondly, as noticed, by way of the proviso as originally inserted and its amendments in the years 2008 and 2010, requisite relief to a bona fide tax payer who had collected TDS but could not deposit within time before submission of the return was also provided; and as regards the amendment of 2010, this Court ruled it to be retrospective in operation. The proviso so amended, obviously, safeguarded the interest of a bona fide assessee who had made the deduction as required and had paid the same to the revenue. The appellant having failed to avail the benefit of such relaxation too, cannot now raise a grievance of alleged hardship. Thirdly, as noticed, the appellant had shown total payments in Truck Freight Account at Rs. 1,37,71,206/- and total receipts from the company at Rs. 1,43,90,632/-. What has been disallowed is that amount of Rs. 57,11,625/- on which the appellant failed to deduct the tax at source and not the entire amount received from the company or paid to the truck operators/owners. Viewed from any angle, we do not find any case of prejudice or legal grievance with the appellant.
1 Hence, answer to Question No. 4 is clearly in the affirmative i.e., against the appellant and in favour of the revenue that the payments in question have rightly been disallowed from deduction while computing the total income of the assessee-appellant.” Asst.Year – 2013-14
Respectfully following the above Hon’ble Apex Court judgment, we have no hesitation in rejecting the Grounds raised by the assessee that the insertion of 2nd proviso is not curative in nature and not applicable to the present assessment year 2013-14. 9. In the result, the appeal preferred by the assessee is dismissed.
Order pronounced in the Court on 28.09.2022 at Ahmedabad. (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad, dated 28/09/2022 Tanmay, Sr. PSआदेश की प्रितिलिप अग्रेिषत/Copy of the Order forwarded to : 1.अपीलाथीर् / The Appellant, 2. प्र"यथीर् / The Respondent, 3. संबंिधत आयकर आयुक्त / Concerned CIT, 4. आयकर आयुक्त ( अपील ) / The CIT(A)- , 5.िवभागीय प्रित अिधकरण आयकर अपीलीय राजोकट/DR,ITAT, Rajkot, 6. गाडर् फाईल /Guard file.
आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.