Payment made by the assessee to the society as society maintenance expenses are not covered under section 194C

Mitsutor Shipping Agency Pvt Ltd Vs DCIT (ITAT Mumbai)- The assessee was owner of the premises in which it was carrying on business. The assessee paid maintenance charges to the society of Apartment Owners. According to the AO the assessee ought to have deducted tax at source on the payment of maintenance charges to the society as the payment by the assessee to the society was in the nature of contract and, therefore, the provisions of section 194C was applicable.

Under section 40(a)(ia) of the Act where assessee has an obligation to deduct tax at source before making payment and where such tax is not deducted by an assessee the payment made without deduction of tax at source which is claimed as expenditure while computing total income is liable to be disallowed. According to the AO the payment of maintenance charges to the society by the assessee was in the nature of payment to contractor for carrying out any work attracting the provisions of section 194C of the Act. Since tax was not deducted at source while making payment, the AO invoked the provisions section 40(a)(ia) of the Act and added a sum of Rs. 1,72,455/- to the total income of the assessee.