ITAT deletes TDS demand against Resident Transporter of goods as Payment was less than Threshold Limit [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the Tax Deducted at Source (TDS) demand against resident transporter of goods as payment was less than the threshold limit.

The assessee, Air Transport Corporation (Assam) Pvt.Ltd being resident corporate assessee was stated to be engaged in transport of goods. An assessment was made under Section 143(3) of the Income Tax Act for this year wherein it transpired that the assessee paid godown rent to various parties. The assessee paid rent of Rs.42.36 Lacs and deducted Tax at source under Section 194I.

However, no tax was deducted on rental payment of Rs.112.92 Lacs on the ground that the payment to each of the parties was below the threshold limit of Rs.1.80 Lacs. Since the assessee could not furnish the supporting documents, AO made applicable disallowance of 30% under Section 40(a)(ia) of the Income Tax Act.

As a consequence of above assessment, AO passed another order under Section 201(1) / 201(IA) of the Income Tax Act and held that the assessee did not deduct tax at source on aggregate payment of Rs.155.29 Lacs and accordingly, raised demand of Rs.30.43 Lacs which included interest of Rs.14.90 Lacs. Upon further appeal, CIT(A) directed AO to revise the demand to the extent of default i.e., Rs.112.92 Lacs.

Sunil Sharma, appearing on behalf of the assessee submitted that the rental payment, in each of the cases, did not exceed the threshold limit of Rs.1.80 Lacs and therefore, the assessee was not obligated to deduct tax at source (TDS) against these payments. He also averred that merely because the assessee has accepted disallowance made under Section 40(a)(ia),of the Income Tax Act the same could not necessarily make assessee as assessee-in-default under Section 201(1) of the Income Tax Act.

P. Sajit Kumar, submitted that the demand had been raised for want of adequate details and lack of supporting documents. He also submitted that disallowance under Section 40(a)(ia) and proceedings under Section 201(1) of the Income Tax Act were different proceedings

The two-member Bench of V. Durga Rao, (Judicial Member) and Manoj Kumar Aggarwal, (Accountant Member) observed that the assessee had furnished the complete details of rental payment i.e., Godown Location, address of the Godown, name & PAN of landlord and payment made to each of them. And the payment to each of these parties was less than the threshold limit of Rs.1.80 Lacs and therefore, the assessee was not liable for TDS on these payments considering the provisions of Section 194I of the Income Tax Act.

The Bench allowed the appeal filed by the assessee noting that, “The assessee may be temporarily hiring the godown and may not be successful in furnishing adequate documentary evidence to the satisfaction of lower authorities. For that lapse, the assessee had already suffered disallowance under Section 40(a)(ia) of the Income Tax Act. But, nevertheless, the details as furnished before lower authorities were sufficient to make a reasonable conclusion that the assessee was not liable for TDS on these payments.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates