TDS Deduction u/s 194 J of Income Tax Act if Payment of Professional Services does not Exceed ₹30,000 for Relevant FY: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), held that deduction of tax at source has to be made by the assessee for the payment of professional services for payment exceeding Rs.30,000/- for relevant Financial Year.

The assessee company Eximius Management Pvt. Ltd is engaged in the business of providing facility management, security services and other related services to its clients and had filed its return of income declaring total income of Rs. 2,11,56,360/-.

The Assessing Officer (AO) under Section 143(1)(a) of the Income Tax Act made the adjustments towards delayed payment of Employees Contribution to PF and under Section 36(1)(va) of the Income Tax Act and under Section 40(a)(ia) of the Income Tax Act towards the non deduction TDS (Tax deducted at source) on audit fees.

The assessee had then filed an application for rectification under Section 154 of the Income Tax Act which was disposed off by the AO upholding the disallowance made under Section 36(1)(va) and 40(a)(ia) of the Income Tax Act. Aggrived by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] which confirmed the addition relying on the provision of  Section 194J of the Income Tax Act for non deduction of TDS for payment of professional fees.

 Further aggrieved, the assessee filed an appeal before the Tribunal.

The Two Member Bench comprising of Om Prakash Kant, Accountant Member and Kavitha Rajagopal, Judicial Member observed that The AO under Section 143(1) (a) of the Income Tax Act has disallowed the impugned amount of Rs. 37,500/- for the reason that the assessee has failed to deduct TDS for the payment for professional services rendered for the purpose of the assessee company.

It was observed that the CIT(A) confirmed the addition on the ground that Section 194J of the Income Tax Act provides that deduction of tax at source has to be made by the assessee for the payment of professional services for payment exceeding ₹30,000/- .

The Tribunal further stated that the this ground of appeal requires factual verification whether the assessee was in obligation to deduct such TDS or as to whether the payee has paid tax on such income has to be verified for this purpose.

Hence, the Bench remanded the case to AO for verifying the factual aspects of this ground and allowed the ground of appeal for statistical purpose.

To Read the full text of the Order CLICK HERE

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