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2021 (4) TMI 438 - AT - Income TaxTDS u/s 194C - Addition u/s 40(a)(ia) - Payment on account of freight expense - assessee has claimed that the PAN details were furnished by the transporters at the time of payment of freights - HELD THAT - Similar identical issue has also been decided by the Coordinate Bench of this Tribunal in the case of ACIT Vs M/s Arihant Trading Co. 2019 (3) TMI 1251 - ITAT JAIPUR in favour of the assessee and against the Revenue by observing that non-deduction of TDS on payment to the transporter is that the latter furnishes his PAN number to the person responsible for paying or crediting the amount to him. The primary onus is thus on the recipient to furnish his PAN to the payer and the payer, on receipt of such PAN number, is under statutory obligation not to deduct TDS on such payments. The payer is also under a statutory obligation to furnish the said information in prescribed forms to the Income tax authority. To our mind, the statutory obligation to furnish the information regarding receipt of PAN and non-deduction of TDS is a fall out of and consequent of the first statutory obligation to not deduct TDS on receipt of PAN - merely because there is non-compliance on part of the assessee to furnish the prescribed information to the Revenue authorities, the same cannot lead to a conclusion that the assessee has not complied with the first statutory obligation. There are separate penal provisions for non-compliance thereof and the AO has in fact invoked those penal provisions whereby show-cause has been issued to the assessee. We observe that the case laws relied on by the ld DR are not applicable in the facts of the present case. The ld. CIT(A) has passed a speaking and reasoned order discussing all the facts and circumstances as well as legal propositions of law therefore, considering the totality of facts and circumstances and case laws exactly similar to the facts and circumstances of the present case, we find no reason to interfere in the order of the ld. CIT(A) qua this issue, hence, we uphold the same. Correct head of income - rental income received from M/s L T Ltd .- income from house property as against of income from business or profession taxed by the A.O. - HELD THAT - We observe that the ld. CIT(A) has given relief to the assessee by holding that the annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head Income from house property In this case the assessee had got lease right from the Rajasthan govt. on the land for a period of 20 years and therefore covered by the provision of section 27(iiib) and section 269UA(f) of the Act. Therefore, for the purpose of section 22 of the Act, the assessee is the deemed owner of the land and the assessee 's contention that sub-letting this land to L T is to be considered as 'income from house property'. The ld. CIT(A) has further held that preceding year case i.e A.Y. 2014-15 was also assessed u/s 143(3) of the Act where the rent income received from the same tenant has been accepted by the department. CIT(A) has passed a speaking and reasoned order discussing all the facts and circumstances as well as legal propositions of law therefore, considering the totality of facts and circumstances and case laws, we find no reason to interfere in the order of the ld. CIT(A) qua this issue, hence, we uphold the same. Addition of printing and stationary expenses and workmen and staff welfare expenses - HELD THAT - From perusal of the impugned order, we observe that any expenditure is allowed under section 37(1) of the Act only if such expenditures are incurred or expended wholly and exclusively for business purposes. Telephone and travelling expenses come under the purview of personal expenses but being a firm office expenses and expenditure related to printing and stationary, staff welfare etc is a reasonable business expenses. Therefore, considering the totality of facts and circumstances of the case, we find no reason to interfere in the order of the ld. CIT(A) qua this issue, hence, we uphold the same. Appeal of the Revenue is dismissed.
Issues Involved:
1. Deletion of additions under Section 40(a)(ia) read with Section 194C of the IT Act on account of freight expenses. 2. Compliance with provisions of Section 194C(6) and Section 194C(7) of the IT Act. 3. Classification of rental income as 'Income from house property' versus 'Income from business or profession.' 4. Deletion of additions related to printing and stationary expenses and workmen and staff welfare expenses. Issue-wise Detailed Analysis: 1. Deletion of Additions under Section 40(a)(ia) read with Section 194C on Account of Freight Expenses: The Revenue challenged the deletion of additions amounting to ?1,44,13,853/- on account of freight expenses. The Assessing Officer (AO) had disallowed these expenses by invoking Section 40(a)(ia) due to non-compliance with TDS provisions under Section 194C. The CIT(A) deleted the addition, stating that the assessee had furnished PAN details of the transporters, satisfying the conditions under Section 194C(6). The Tribunal upheld the CIT(A)'s decision, noting that once the transporters provide PAN details, no TDS is required under Section 194C(6). The Tribunal also emphasized that Section 194C(6) and Section 194C(7) are independent provisions, and non-compliance with Section 194C(7) does not attract disallowance under Section 40(a)(ia). 2. Compliance with Provisions of Section 194C(6) and Section 194C(7): The Tribunal examined whether the assessee had complied with the provisions of Section 194C(6) and Section 194C(7). It concluded that the assessee had obtained PAN details from the transporters at the time of payment, satisfying Section 194C(6). The Tribunal reiterated that Section 194C(6) and Section 194C(7) are independent, and non-compliance with Section 194C(7) (filing TDS returns) does not lead to disallowance under Section 40(a)(ia) if Section 194C(6) is complied with. This view was supported by various judicial precedents, including decisions from the ITAT Kolkata and Gujarat High Court. 3. Classification of Rental Income: The Revenue contested the CIT(A)'s decision to treat rental income from M/s L&T Ltd. as 'Income from house property' instead of 'Income from business or profession.' The Tribunal upheld the CIT(A)'s decision, noting that the assessee had taken land on a long-term lease and sublet it, making the assessee a deemed owner under Section 27(iiib) and Section 269UA(f). The Tribunal cited judicial precedents, including the Supreme Court's decision in Poddar Cement Pvt. Ltd., to support the classification as 'Income from house property.' Additionally, it was noted that the same treatment was accepted by the department in the previous assessment year. 4. Deletion of Additions Related to Printing and Stationary Expenses and Workmen and Staff Welfare Expenses: The AO had disallowed 10% of these expenses due to lack of third-party vouchers. The CIT(A) deleted the disallowance, reasoning that such expenses are reasonable business expenditures under Section 37(1) of the Act. The Tribunal agreed with the CIT(A), noting that while telephone and traveling expenses might have personal elements, printing, stationary, and staff welfare expenses are legitimate business expenses. Therefore, the Tribunal upheld the deletion of these additions. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The Tribunal confirmed that the assessee had complied with the necessary provisions for TDS under Section 194C(6), correctly classified rental income as 'Income from house property,' and reasonably claimed business expenses for printing, stationary, and staff welfare.
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