2022 (11) TMI 713 - AT - Income Tax

Income from house property - excluding of service tax whereas in Form 26AS it is inclusive of service tax - Difference in regard to the service tax computed by the assessee and shown in Form 26AS by the assessee - HELD THAT - Service tax was included in the income from house property computed by the assessee but the amount mentioned in Form 26AS in inclusive of service tax. This is because the reason that assessee has deducted TDS on rent inclusive of service tax instead of exclusive service tax which has been duly reconciled by the assessee with sufficient evidence adduced before the authorities below as it appears from materials available before us, in our considered opinion, which has not been taken into consideration with its proper perspective. Thus, the addition, is not found to be sustainable. Hence, deleted. Assessee s appeal is allowed.

Summary

Issues involved: Discrepancy in computation of income from house property due to treatment of service tax.

Detailed Analysis:
1. Background: The appeal was filed against an order by the Ld. Commissioner of Income Tax (Appeals) arising from an intimation under Section 143(1) of the Income Tax Act, 1961 for Assessment Year 2017-18. The appellant's return of income declared a total income of Rs.1,71,74,560.

2. Discrepancy in Income Computation: The appellant received notices under Section 143(1)(a) of the Act, leading to a discrepancy in the computation of income from house property. The appellant computed the income excluding service tax, while Form 26AS included service tax. A rectification application was filed, resulting in the income being computed at Rs.37,12,839 instead of Rs.32,86,544 as per the appellant's calculation.

3. Explanation and Dispute: The appellant contested the addition of Rs.4,26,295, providing details of rent received from various parties and the corresponding service tax amounts. However, the Ld. CIT(A) did not accept the explanation, relying on the CPC's order and observations. The appellant's reliance on CBDT Circular No. 1/2014 was considered but not deemed sufficient.

4. Judgment: After hearing both parties and reviewing the evidence, the Tribunal noted the difference in treatment of service tax by the appellant and in Form 26AS. The Tribunal found that the appellant had deducted TDS on rent inclusive of service tax, which was reconciled with evidence. The addition was deemed unsustainable, and thus, it was deleted, allowing the appellant's appeal.

5. Conclusion: The Tribunal's decision, pronounced on 31/10/2022, resolved the issue of discrepancy in income computation from house property in favor of the appellant, emphasizing the importance of proper perspective and evidence in such matters.