Case Law Details
Road Builders (M) SDN BHD Vs DCIT (ITAT Delhi)
The narration of the professional fee bill by the payee is not at all material in rejecting the professional fee bill.
Facts-
The assessee company is incorporated under the laws of Malaysia which is engaged in the business of road construction. However, during the year under assessment, the assessee has not engaged in any project work except the winding up activities of project work. The AO has noted that the assessee company has no business activities and only an income of Rs.1,92,514/- has been shown under the head Other Income comprised of interest on FDR Rs.1,33,963/- and revenue from sale of scrap Rs, 53,451/-. However, as per computation the assessee has further shown an amount of Rs.4,09,707/- as interest on FDR and Rs.1,41,917/- as interest earned on Income Tax Refund, After considering the above receipts, the assessee company has calculated a loss of Rs, 1,01,57,304/-. The AO asked the assessee to file the details of expenses incurred during the year and tax deducted at sources. In reply, the assessee company has admitted that out of expenses under the head hire charges of Rs.2,35,603/-, the tax could not be deducted at source inadvertently on amount of Rs.31,376/-. Hence, the Assessing Officer disallowed the same by invoking the provisions of section 40(a)(ia) of the Act.
Further, the AO noted that the assessee company incurred an amount of Rs.64,12,272/- under the head legal, professional and consultancy. He noted that the assessee has explained that out of above Rs.5,15,000/- were paid to arbitrator as fee and clerical expenses and has explained that the tax is not deducted at source as per the provisions of explanation (a) to section 194J of the Act. Further, the AO noted that in the TDS reconciliation filed, the assessee itself has deducted the tax on part of the arbitrator fee. Hence, the AO noted that the assessee company failed to deduct the TDS of Rs.5,15,000/- and hence he disallowed the same.
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