2023 (3) TMI 1310 - AT - Income Tax

TDS u/s 194I - Addition u/s 40(a)(ia) - Non deduction of TDS - HELD THAT - Assessee was liable to deduct tax at source. The assessee failed to deduct the tax at source. Hence as per section 40(a)(ia) the amount needs to be disallowed. AR submitted that the actual amount was paid by the purchaser directly to the warehouses. However, this does not change the character of the Rent. It was the liability of the assessee. The assessee has admittedly debited the said amounts in its books. It is also a fact that assessee could not file any confirmations from the warehouses that they have shown the amounts as Income and paid taxes. Disallowance made by the AO u/s 40(a)(ia) was right. Accordingly the disallowance is upheld. Therefore, the ground numbers 1 and 3 of the assessee are dismissed.

Summary

Issues:
The judgment involves the confirmation of disallowance of storage charges reimbursed by the appellant, applicability of tax deduction at source provisions, and levying of interest under sections 234A, 234B, and 234C.

Disallowance of Storage Charges:
The Assessee contested the disallowance of an amount under section 40(a)(ia) for not deducting TDS on storage charges reimbursed to customers. The Assessee argued that TDS provisions do not apply to payments made to a corporation established under an Act of parliament and that the event of payment of expenses was not in their control. However, the ITAT rejected the plea, stating that there was no evidence of reimbursement and directed the Assessee to provide proof that the warehouses declared the amount for taxation. As the Assessee failed to deduct TDS on rent payments to warehouses, the disallowance under section 40(a)(ia) was upheld.

Interest under Sections 234A, 234B, and 234C:
The Assessee challenged the levy of interest under sections 234A, 234B, and 234C. The ITAT found no defect in the interest calculation and upheld the AO's decision. As the Assessee could not explain any errors in the interest calculation, the levy of interest was deemed appropriate.

Conclusion:
The ITAT upheld the disallowance of storage charges and the levy of interest under sections 234A, 234B, and 234C. The appeal of the Assessee was dismissed, and the order was pronounced on 17th March 2023.