2014 (8) TMI 790 - AT - Income Tax

Liability to deduct TDS u/s 194C on single payment Held that - Before the CIT(A) the assessee pointed out that the total payments made to X Press Computer Ltd. Mumbai was for an amount of 49, 270/- and the AO has incorrectly included a payment for 8561/- made to M/s Richo India Ltd. - the aggregate payment did not exceed 50, 000/- and the provisions of section 194C were not attracted there was no reason to interfere with the finding of CIT(A) because factual finding regarding aggregate payment being not exceeding 50, 000/- has not been controverted by the department Decided against Revenue. TDS not deducted on payment made for office space - payments made to Kakad Chamber of Commerce Mumbai for maintenance charges Held that - CIT(A) was rightly of the view that M/s Kakad Chamber & Business Premises Co-op Society Ltd. is a registered society under Maharashtra Society Act - There is no taxable income in the hands of the society towards the amount received from its members for these monthly & quarterly charges - There is no practice of deduction of TDS throughout Mumbai for the amounts paid by the member to the society towards the monthly/ quarterly chares in respect of the office premises or even residential premises - there is no contract between the society and the assessee as there is a pure relation of member of the society the assessee was not liable to deduct TDS as per section 194C the society to whom the payment had been made was having no taxable income Decided against Revenue. Expenses on replacement of asset Held that - Assessee has rightly submitted that AO has taken a contradictory stand - On one hand he disallowed the entire expenditure on the ground that no TDS was made u/s 194C and on the other he treated the entire expenditure in the capital field and allowed the depreciation - the finding of CIT(A) regarding TDS made by assessee u/s 194C has not been controverted therefore no disallowance was called for u/s 40(a)(ia) - As far as the claim of expenditure is concerned the main panel was replaced after a gap of 15 years and the entire expenditure was incurred at the business premises which was evident from the copy of I.T. return filed by the assessee Decided against Revenue. Expenses incurred for professional activities - Bill for electrical installation work Held that - The submissions made before CIT(A) have not been controverted by the department and are duly supported by the extract of income-tax returns filed before the department it is evident that Shri V. Shridharan was residing at Mumbai and the properties located at Delhi were primarily used for business purpose only and therefore there was no question of any disallowance on the ground of personal use of the premises - The genuineness of the expenses has not been doubted by the department Decided against Revenue.

Summary

Issues Involved:
1. Disallowance under Section 40(a)(ia) for non-deduction of TDS under Section 194C.
2. Disallowance under Section 40(a)(ia) for non-deduction of TDS on payments made to Kakad Chamber of Commerce.
3. Treatment of expenditure on electrical installation as capital or revenue expenditure.
4. Treatment of certain expenses as personal expenditure.

Detailed Analysis:

1. Disallowance under Section 40(a)(ia) for Non-Deduction of TDS under Section 194C:
The assessing officer disallowed expenses of Rs. 57,831/- for payments made to X Press Computer Ltd., Mumbai, under Section 40(a)(ia) due to non-deduction of TDS under Section 194C. The assessee contended that the total payments made to X Press Computer Ltd. were Rs. 49,270/-, and the assessing officer incorrectly included a payment of Rs. 8,561/- made to M/s Richo India Ltd. The CIT(A) deleted the disallowance, and the Tribunal upheld this decision, noting that the factual finding regarding the aggregate payment not exceeding Rs. 50,000/- was not controverted by the department.

2. Disallowance under Section 40(a)(ia) for Non-Deduction of TDS on Payments Made to Kakad Chamber of Commerce:
The assessing officer disallowed Rs. 1,39,794/- for payments made to Kakad Chamber of Commerce, Mumbai, for maintenance charges, citing non-deduction of TDS under Section 194C. The CIT(A) deleted the disallowance, noting that the payments were reimbursements to a registered society, which had no taxable income, and there was no contract between the society and the appellant. The Tribunal upheld the CIT(A)'s decision, emphasizing the concept of mutuality and the non-taxable nature of the society's income.

3. Treatment of Expenditure on Electrical Installation as Capital or Revenue Expenditure:
The assessing officer disallowed Rs. 6,26,400/- related to electrical installation, treating it as capital expenditure and allowing depreciation. The assessee argued that TDS of Rs. 14,338/- had been deducted under Section 194C and that the expenditure was for replacing an existing main panel due to wear and tear. The CIT(A) allowed the appeal, recognizing the TDS deduction and treating the expenditure as revenue in nature. The Tribunal upheld this decision, noting the factual findings and the contradictory stance of the assessing officer.

4. Treatment of Certain Expenses as Personal Expenditure:
The assessing officer disallowed Rs. 3,04,873/- for various expenses, treating them as personal expenditures related to residential premises. The assessee provided evidence that the properties were used for business purposes, supported by income tax returns and other documents. The CIT(A) deleted the disallowance, and the Tribunal upheld this decision, noting the department did not controvert the evidence provided by the assessee, and the expenses were genuine and related to business use.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The Tribunal found no reason to interfere with the CIT(A)'s findings, which were based on factual evidence and supported by legal precedents. The order was pronounced in open court on 7.8.2014.