2021 (9) TMI 211 - AT - Income Tax

TDS u/s 194I - Non deduction of TDS on lease rent paid to Noida Authoritiy towards the cost of land allotted to the assessee for group housing project - CIT- A held that the assessee is not to be treated as an assessee in default in view of the letter received from Noida Authority, which disabled the assessee from deducting TDS on the payments made to NOIDA - HELD THAT - CIT(A), while following the decision in Rajesh Projects (India) Pvt. Ltd. 2017 (2) TMI 1109 - DELHI HIGH COURT recorded a finding that the assessee is not to be considered as an assessee in default in view of specific requirement of Noida Authority not to deduct TDS on the payments made to them. Hon ble Court directed that wherever amounts have been paid by the petitioners, towards TDS as a result of the coercive process used by the Revenue, the GNOIDA shall make appropriate orders to credit/reimburse such payments; and that in case payments are made through deposit, over and above the rental amounts paid to the GNOIDA without TDS, the income tax authorities shall not pursue any coercive proceedings and the GNOIDA shall duly reimburse the petitioners for such amounts. Above observations made by Hon ble High Court in Rajesh Projects (India) Pvt. Ltd. clearly go to show that the relief granted to the assesses was not only in respect of rents, but to all amounts which are paid over and above the rental amounts to GNOIDA without TDS - since the assessee was directed not to be treated as assessee in default and in view of the directions of the Hon ble High Court in respect of the payments made to GNOIDA over and above the rental amounts, no addition could be made in terms of the orders of the ld. CIT(A) also. We direct the authorities not to add any amount on this score. - Decided in favour of assessee.

Summary

Issues:
Challenge to orders passed by the Commissioner of Income Tax (Appeals) for assessment years 2012-13 and 2014-15 regarding TDS on lease rents paid to Noida Authority.

Analysis:
The Appellate Tribunal ITAT Delhi heard appeals by Logix Infratech (P) Ltd., Logix City Developers (P) Ltd., and Logix Infrastructure (P) Ltd. against orders of the Commissioner of Income Tax (Appeals) for assessment years 2012-13 and 2014-15. The companies paid lease rents to Noida Authority for a group housing project. The Noida Authority informed the assessee that no tax should be deducted on the lease rent payments. However, the Assessing Officer treated the assessee as an assessee in default under section 194-1 of the Income-tax Act for not deducting TDS. The assessee appealed, and the CIT(A) relied on a Delhi High Court decision to hold that the assessee was not in default due to the Noida Authority's instruction but directed the Assessing Officer to recalculate interest under section 201(1A) of the Act. The assessee challenged this decision.

The Tribunal noted that the facts were undisputed, and the CIT(A) correctly followed the Delhi High Court decision regarding TDS deductions. The High Court directed the Noida Authority to comply with the law on TDS deductions and reimburse any coercively collected TDS amounts. The Tribunal concluded that since the assessee was not in default and considering the High Court's directions on payments made to Noida Authority without TDS, no additional amounts should be added as per the CIT(A)'s orders. Therefore, the appeals of the assessees were allowed, and no further additions were to be made.

In conclusion, the Tribunal ruled in favor of the assessees, holding that they were not in default for not deducting TDS on lease rents paid to Noida Authority as per the Authority's instructions and the Delhi High Court's directions. The decision emphasized compliance with TDS provisions and reimbursement of any wrongly collected TDS amounts, ultimately relieving the assessees from additional liabilities in this regard.