2015 (7) TMI 328 - AT - Income Tax

TDS u/s 194I - payment made for use of property of the member of the Joint Venture (JV) - assured return - In the nature of Rent or not - Held that - the said company provided the property for the purpose of joint venture business alongwith assessee, the payment made by the assessee cannot be said to be rent, so as to make the assessee liable for deduction u/s 194I. - Decision in the vase of Commissioner of Income-tax - II Versus Tirupati Organisers (P.) Ltd. 2013 (7) TMI 540 - GUJARAT HIGH COURT followed. TDS u/s 194J - annual maintenance charges - payment for technical services or not - Held that - On going through the facts with regard to services rendered by various concerns, find no point/clue on the basis of which the nature of these services can be characterized as professional of technical in nature. The services rendered are nothing but for maintenance of various types of machines already installed. Only because technical persons are involved in rendering the said services does not mean that services become technical or professional in nature. Hence, the A.O. s action in this regard is not approved. - Decided on favour of assessee. Disallowance of allowing exemption for the office Wear Allowance ( OWA ) under section 10(14) - Held that - In this case, the assessee is unable to satisfy any of the conditions. When there was no dress code and the employees were free to wear any dress, how the wear-allowance can be said to be granted to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office. Moreover, the CIT(A) has recorded the finding that the assessee was unable to establish that the expenditure was actually incurred. In view of above, we do not find any justification to interfere with the order of the CIT(A) in this regard - Decided against assessee.

Summary

Issues involved:
1. Appeal by Revenue against deletion of orders u/s 201A(1) and interest charge u/s 201(1A) for AYs 2007-08 and 2009-10.
2. Appeal by Revenue against deletion of orders u/s 201A(1) and interest charge u/s 201(1A) for AY 2009-10.
3. Assessee's appeal for AYs 2007-08, 2008-09, and 2009-10 regarding exemption for office Wear Allowance under section 10(14) of the Income Tax Act, 1961.

Analysis:
1. For the Revenue's appeal against deletion of orders u/s 201A(1) and interest charge u/s 201(1A) for AYs 2007-08 and 2009-10, the issue revolved around non-deduction of tax on payments made to Tirupati Organizers Pvt Ltd. The Assessing Officer claimed the payments were rent and thus tax should have been deducted u/s 194I. However, the CIT(A) accepted the assessee's argument that it was a joint venture, not rent, based on a High Court decision. The ITAT upheld the CIT(A)'s decision citing the High Court's ruling, stating the payment was not rent but part of a joint venture, hence no tax deduction was required.

2. In the Revenue's appeal for AY 2009-10, another issue was the disagreement on tax deduction under u/s 194C or 194J for payments made by the assessee. The Assessing Officer deemed it professional fees, while the assessee argued it was for services under a contract. The CIT(A) sided with the assessee, stating that the services were for maintenance, not technical or professional, thus tax deduction u/s 194C was correct. The ITAT upheld the CIT(A)'s decision, finding no fault in the assessment.

3. Regarding the assessee's appeal for AYs 2007-08, 2008-09, and 2009-10 concerning exemption for office Wear Allowance under section 10(14), the issue was the inclusion of Wear-Allowance in salary for tax deduction. The Assessing Officer disagreed on the exemption, stating the allowance was not wholly, necessarily, and exclusively incurred for office duties. The CIT(A) upheld this view, as the appellant failed to provide evidence of actual expenses incurred. The ITAT concurred, noting the absence of a dress code and lack of proof of expenses, leading to the rejection of the appeal on this ground.

Overall, the ITAT dismissed all appeals by both the Revenue and the assessee, maintaining the decisions made by the CIT(A) in each case.