2021 (3) TMI 67 - AT - Income Tax

Rectification u/s 154 - rental payment was wrongly typed as ₹ 1,88,49,478/- thereby quantum addition of ₹ 1,49,33,115/- was made, after verification of the records, the Assessing Officer rectified the mistake apparent from record - assessee has not deducted TDS on the rent paid - HELD THAT - We find that as per section 154 of the Act, the Assessing Officer is fully empowered to rectify the mistake apparent from records either of his own motion or rectification application filed by the assessee. Thus, since the Assessing Officer has rightly exercised his jurisdiction in rectifying the mistake apparent from the records, the ground raised by the assessee stands dismissed. Disallowance made u/s 40(a)(ia) - We find force in the arguments of the ld. Counsel that since the assessee has not directly paid the rent to the land lord and therefore, the question of deducting TDS would not arise. In view of the above, we remit the matter back to the file of the Assessing Officer to verify as to whether M/s. RMKV Silks Private Limited paid the entire rent to the land lord after deducting TDS and the assessee has only reimbursed the rent to M/s. RMKV Silks Pvt. Ltd. and decide the issue in accordance with law after allowing an opportunity of being heard to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Challenge to order under section 154 of the Income Tax Act, 1961
2. Disallowance made under section 40(a)(ia) of the Act

Analysis:

Issue 1: Challenge to order under section 154 of the Income Tax Act, 1961
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2012-13. The Assessing Officer rectified a mistake regarding rental payment not subjected to TDS, which was initially overlooked during assessment under section 143(3) of the Act. The Assessing Officer observed the non-deduction of TDS on rent paid to a company. The appellant challenged the jurisdiction of the Assessing Officer for disallowance under section 40(a)(ia) of the Act. The Tribunal upheld the Assessing Officer's power to rectify mistakes under section 154 of the Act, dismissing the appellant's challenge.

Issue 2: Disallowance made under section 40(a)(ia) of the Act
Regarding the disallowance of a specific amount under section 40(a)(ia) of the Act, the appellant argued that they did not directly pay rent to the landlord but reimbursed a company that made the payment. The Tribunal found merit in this argument and directed the matter back to the Assessing Officer for verification. The Assessing Officer was instructed to confirm if the company making the payment deducted TDS before the appellant reimbursed them. The Tribunal allowed the appellant's ground for statistical purposes, indicating a partial allowance of the appeal.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, remitting the matter back to the Assessing Officer for further verification and decision in accordance with the law.