2019 (12) TMI 903 - AT - Income Tax

Credit of TDS - claim not allowed by the AO on the ground that corresponding amount received from the deductor, M/s Root Corporation Ltd. has been shown by the assessee only as advance rent and not rental income for the year under consideration - Assessee contested that benefit of deduction of the tax has to be allowed to the assessee and the government cannot sit over the money of the taxpayer without any credit - HELD THAT - CIT(A) after considering the position of the law in detail, relying on the decision of the Hon ble Andhra Pradesh High Court in the case of Sri Y Rathiesh Vs. Commissioner of Income Tax 2014 (9) TMI 2 - ANDHRA PRADESH HIGH COURT has upheld the withdrawal of TDS credit by the Assessing Officer. We do not find any error in the order of the learned CIT(A) on the issue in dispute. However, we are of the considered opinion that government cannot sit over amount withheld and credit has to be allowed to the assessee in the year rent in advance is offered by the assessee for income. The grounds of the appeal of the assessee with respect to TDS credit are accordingly partly allowed. Addition of expenses pertaining to the house property, income from which has been offered under the head income from house property - deduction for expenses incurred on said property already stand covered by the 30% deduction under the income from house property - HELD THAT - Assessee failed to substantiate that the expenses in dispute pertains to portion of the property, income from which is not included under the head income from house property . The claim of the assessee cannot be allowed in absence of substantiation with documentary evidences. We do not find any error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the assessee related to disallowance are accordingly dismissed.

Summary

Issues Involved:
1. Disallowance of TDS credit of ?5,85,000.
2. Disallowance of fuel, power, and maintenance expenses of ?5,26,469.

Issue-wise Detailed Analysis:

1. Disallowance of TDS Credit of ?5,85,000:
The primary issue was whether the Assessing Officer (AO) was justified in not allowing the credit for TDS of ?5,85,000 claimed by the assessee. The AO disallowed the TDS credit on the grounds that the corresponding income (advance rent of ?58,50,000) was not offered for taxation in the year under consideration. The assessee argued that TDS credit should be allowed in the year of deduction, irrespective of when the income is declared. The CIT(A) upheld the AO's decision, citing provisions of Section 198 and 199 of the Income Tax Act and Rule 37BA(3)(i), which state that TDS credit can only be given for the assessment year in which the corresponding income is assessable. The CIT(A) also referenced judicial pronouncements, including the case of Sri Y. Rathiesh vs. Commissioner of Income Tax, which supported the view that TDS credit cannot be claimed if the corresponding income is not shown in the returns. The Tribunal agreed with the CIT(A) but noted that the government cannot hold onto the amount withheld indefinitely and that credit should be allowed in the year the advance rent is offered as income. Thus, the grounds of the appeal regarding TDS credit were partly allowed.

2. Disallowance of Fuel, Power, and Maintenance Expenses of ?5,26,469:
The second issue involved the disallowance of fuel, power, and maintenance expenses claimed under 'business expenses' by the assessee. The AO disallowed these expenses, stating they pertained to house property, income from which was assessed under 'income from house property,' and that 30% of the expenses on repair and maintenance were already allowed under Section 24 of the Act. The assessee contended that these expenses related to a portion of the property used for business purposes and not rented out. The CIT(A) upheld the disallowance, noting that the assessee's primary source of income was rental receipts and that there was no evidence of other business activities. The CIT(A) found that the assessee was trying to claim a double benefit by deducting the same expenses under both Section 24 and Section 37(1). The Tribunal agreed with the CIT(A), stating that the assessee failed to substantiate the claim with documentary evidence and upheld the disallowance of ?5,26,469.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the disallowance of TDS credit of ?5,85,000 and the disallowance of fuel, power, and maintenance expenses of ?5,26,469. The order was pronounced in the open court on 10th December 2019.