The Delhi bench of the Income Tax Appellate Tribunal (ITAT), on Thursday held that tax is required to be deducted from source under section 194I of the Income Tax Act on payment of Annual Maintenance Charges to Yamuna Development Express Authority.
The division bench of the Tribunal was hearing appeals filed by the Revenue against the Jaypee Sports International Ltd and others.
One of the main issue before the division bench was regarding the deduction of tax at source on annual maintenance charges paid by the assessee to Yamuna development express authority limited under section 194I of the income tax act.
Before the Tribunal, the department relied on the Delhi High Court decision in Rajesh Projects (India) (P.) Ltd. v. Commissioner of Income-tax (TDS)-II wherein it has been held that “amounts constituting annual lease rent, expressed in terms of percentage (e.g. 1%) of the total premium for the duration of the lease, are rent, and therefore subject to TDS. Since the petitioners could not make the deductions due to the insistence of GNOIDA, a direction is issued to the said authority (GNOIDA) to comply with the provisions of law and make all payments, which would have been otherwise part of the deductions, for the periods, in question, till end of the date of this judgment.”
In view of the above High Court decision, the bench allowed the departmental appeal and said that if the assessee wishes to take benefit of the proviso to section 201 of the income tax act, then it is for the assessee to furnish necessary detail, so that assessee cannot be treated as assessee in default with respect to the amount of tax deductible.
Before concluding the bench remanded the matter back to the files of the Assessing Officer with a specific direction to the assessee to furnish necessary detail is provided therein and to deposit necessary interest under section 201(1A) of the Act in accordance with the law.
Read the full text of the Order below.
