Non-Speaking Disallowance of Written off TDS on Unrealized Rental Income: ITAT directs Re-adjudication [Read Order]

Non-speaking Disallowance - Written off TDS - Unrealized Rental Income - ITAT - Re-adjudication - Taxscan

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) directs the Commissioner of Income Tax (Appeals) [CIT(A)] to re-adjudicate and also orders to record the reasons for the disallowance of written off Tax Deduction Source (TDS) on unrealised rental income of the assessee.

The assessee, Idea Estate Private Ltd., engaged in the business of Real Estate Developer & Promoters, Trading, construction and letting out various properties on lease/rental basis,  filed an appeal before the ITAT against the order of the CIT(A).

The assessee filed its return declaring an income of Rs.1,01,11,179 comprising income from business and profession and income from house property. The return was processed and the case was picked up for scrutiny under Computer Aided Scrutiny Selection (CASS) and notice under section 143(2) of the Income Tax Act, 1961 was served upon the appellant along with a questionnaire.

The assessment was completed on disallowing the business loss of Rs. 1,12,49,102 against the rental income on the ground that there was no business receipts/business activity during the period under assessment.

Aggrieved by the order of the Deputy Commissioner of Income Tax, filed an appeal before the CIT(A) who disallowed the TDS written off on rent which was earlier allowed by assessing officer and interest and penalty on late deposit of service tax. Thus, the order was appealed before the ITAT.

It was noted by the bench that the while hearing, the assessee or his representative was not present. However, the bench heard the contentions of the respondent side.

The bench observed that the Tax Authorities below have disallowed written off TDS on rental income it was earlier allowed in the assessment order under section 143(3) of the income Tax Act on the basis that since the expenses pertain to the income from house property and does not pertain to income under the head business and profession therefore, same is not allowable under the section 37 of the Act nor 36(1)(vii) of the Income Tax Act.

Further it was observed that the assessee had raised the plea that The TDS deducted but not paid by the tenant should be treated as unrealised rent in terms of section 24(1)(x) of the Income Tax Act and as deduction from the “Income from house property” in the subsequent years.

The tribunal highlighted the case of Ashok Kumar, HUF v. Assistant Commissioner of Income Tax, ITAT.

It was further noted by the bench that the CIT(A) has not recorded for finding that this amount is not allowable expenses under section 24(1)(x) of the Income Tax Act as specifically claimed.

Accordingly the bench of Anil Chaturvedi (Accountant Member) and Anubhav Sharma (Judicial Member) decided in favour of the assessee for statistical purposes. The ld CIT(A) is directed to give a reasoned finding on the  plea and law relied by the assessee.

Subscribe Taxscan Premium to view the Judgment

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