Case Law Details
Ravi Lochan Singh Vs ITO (ITAT Patna)
Introduction: In the case of Ravi Lochan Singh Vs ITO, the Income Tax Appellate Tribunal (ITAT), Patna, underscored a significant aspect of deductions under Section 40(a)(ia) of the Income Tax Act. The Tribunal clarified that deductions under this section should not be disallowed on the grounds of non-deduction of TDS if the recipient has included the income from the receipts of the assessee in their income tax return.
Analysis: The case revolved around multiple disallowances made by the Assessing Officer based on the grounds that the assessee did not deduct TDS under section 194H while making certain payments. These payments included consultancy fees, rent, and commissions to various entities. The assessee argued that these payments were made to entities that had included these receipts in their income tax returns, therefore no TDS should have been deducted. Citing the Hon’ble Supreme Court’s judgment in the case of Hindustan Cocacola vs. CIT, the assessee stated that if the recipient has included the receipts in their income, then the payer should not have the deduction disallowed under Section 40(a)(ia) due to the non-deduction of TDS. The ITAT upheld this argument, deleting the disallowances and ruling in favor of the assessee.
The ruling by the ITAT, Patna, in this case provides significant clarification regarding deductions under Section 40(a)(ia) of the Income Tax Act. It suggests that the non-deduction of TDS should not automatically lead to disallowance of deductions if the recipient has accounted for the income in their tax returns.
FULL TEXT OF THE ORDER OF ITAT PATNA
The present two appeals are directed at the instance of assessee against the separate orders of ld. Commissioner of Income Tax (Appeals), Patna-2 dated 26.02.2020 passed for Assessment Years 2012-13 and 20 13-14.
2. Since the issues are common, therefore, we heard both the appeals together and deem it necessary to dispose of them by this common order.
3. Registry has pointed out that the appeals are time-barred, but we find that the period mentioned by the Registry is a COVID period because impugned orders of the ld. CIT(Appeals) are dated 26.02.2020, by the time the limitation for filing of appeal expires COVID pandemic struck off in the country and thereafter the assessee has filed the appeals in 2021. Hence, the period is already covered by the decision of the Hon’ble Supreme Court and both the appeals are not to be treated as time-barred.
4. In assessment year 20 12-13-
(a) the assessee is impugning disallowance of 3,38,970/-, which was paid as consultancy fees.
(b) Disallowance of Rs.2,40,000/-, which was paid to Ravi Lochan Singh HUF.
(c) The next amount, which has been disallowed by the ld. Assessing Officer, is of Rs.7,31,140/-. This amount has been disallowed to the assessee on the ground that while making commission payment to Monisha Rao Saraswati, Ankita Saikia and Surya Narayan Mishra, the assessee did not deduct the TDS. The assessee has filed copies of their income tax return and submitted that the recipients have shown these receipts into their income.
All these expenses have been disallowed to the assessee on the ground that he failed to deduct TDS under section 194H of the Income Tax Act. The assessee has submitted that as far as payment of Rs.3,38,970/- is concerned, this payment was made to Dr. Sitasaran Singh, who has already filed his return of income-tax and paid the taxes on the receipts from the assessee. The assessee has annexed copy of the letter and other details.
5. The next payment is of Rs.2,40,000/-, which has been paid to M/s. Ravi Lochan Singh HUF as rent and M/s. Ravi Lochan Singh HUF has also filed its return of This rent received from the assessee has been shown as an income.
6. In A.Y. 2013-14, the assessee is impugning disallowance of Rs.6,07,335/- paid to nine agents and disallowance of Rs .4,11,726/-.
7. In assessment year 2013-14, the first payment is of Rs.6,07,335/-. It was paid to nine concerns and claimed under the head “commission”. This payment has been disallowed to the assessee on the ground that the assessee failed to deduct the TDS under section 194H. Similarly the assessee had incurred advertisement expenses of Rs.4,11,726/-. It was disallowed to the assesese on the ground that it failed to deduct the TDS. These findings of the ld. Assessing Officer for all these five issues have been upheld by the ld. CIT(Appeals).
8. Before us, ld. Counsel for the assessee relied upon the judgment of the Hon’ble Supreme Court in the case of Hindustan Cocacola –vs.- CIT reported in 293 ITR 226, wherein it has been propounded that in case a recipient has included the receipts from an assessee in its income, then in the hands of the payer, the deduction would not be disallowed under section 40(a)(ia) on the ground that TDS was not deducted. The assessee has filed evidence, copy of the return of Dr. Sitasaran Singh for A.Y. 20 12- 13 with regard to payment of Rs.3,38,970/-. In A.Y. 2012-13, similarly copy of the return of Ravi Lochan Singh HUF for showing that rental income received from the assessee has been duly recognized in its accounts.
9. Circumstance in the next year is also similar. The recipients have shown these receipts as their income. The ld. Assessing Officer not disputed about the nature of expenses and their incurrence for the purpose of their business, his only grievance was that the assessee has not deducted the TDS while making the payments. All these payments are covered by the decision of the Hon’ble Supreme Court in the case of Hindustan Cocacola, therefore, we allow the appeals of the assessee in both the years and delete the disallowances.
10. In the result, both the appeals of the assessee are allowed.
Order pronounced in the open Court on 17.05.2023.
