Ramaniyam Real Estates Private Limited Vs ACIT (ITAT Chennai)
Section 40(a)(ia) Disallowance Not Automatic: ITAT Remands Issue Where Payments May Be Below TDS Threshold
The Chennai Bench of the ITAT, in Ramaniyam Real Estates Pvt. Ltd. v. ACIT (AY 2018-19), dealt with disallowance of expenses under section 40(a)(ia) for alleged non-deduction of TDS on payments towards rent, professional fees, wages and AMC charges aggregating to ₹47.88 lakh. The AO had mechanically disallowed 30% of the expenditure (₹14.36 lakh) on the ground that the assessee failed to produce evidence justifying non-deduction of tax at source, and the NFAC confirmed the disallowance.
Before the Tribunal, the assessee produced party-wise details demonstrating that payments to individual payees were below the statutory threshold limits prescribed under sections 194I, 194J and 194C, and therefore, TDS provisions themselves were not attracted. The Tribunal noted that if payments are below threshold limits, section 40(a)(ia) cannot be invoked at all.
In the interest of justice, the ITAT set aside the order of the CIT(A) and restored the matter to the AO with a direction to verify whether the payments to each party were indeed below the prescribed TDS limits. The AO was directed to allow the expenditure in full if such verification confirms non-applicability of TDS provisions. Accordingly, the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
