Addition of rental income as undisclosed income merely because of wrong deduction of TDS unjustified

Rajesh Kumar Gupta Vs ITO (ITAT Delhi)

ITAT Delhi held that addition of rental income as undisclosed merely because tenant as wrongly deducted TDS u/s. 194J is unsustainable as landlord cannot be blamed for wrong deduction of TDS.

Facts- Assessee contested addition of Rs. 3,15,000/- treating rent received from M/s VM Rubber Industries as undisclosed income as TDS was deducted u/s 194J instead of 194I of the Income Tax Act.

Notably, assessee has shown rental income of Rs. 3,15,000/- in his return of income and had claimed deduction u/s. 24 of the Income Tax Act @ 30% as per the provisions of Income Tax.

Conclusion- Held that the main allegation of the authorities below is that the deduction of TDS is defective and deduction of TDS was under the wrong provisions by the tenant. In such a situation, the landlord, who is declaring rental income in his return of income, cannot be blamed for deduction of TDS under wrong provision by the submission of incorrect return of TDS by the tenant. Therefore, the disallowance made by the AO and sustained by the ld.CIT(A) is held as invalid, baseless and thus, unsustainable.

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