Case Law Details
Brief of the Case
ITAT Delhi held In the case of Luxmi Rice Mills vs. ITO that there is no TDS liability on the assessee on account of reimbursement of expenses. In the present case, the assessee reimbursed the expenses to the bank and the bank ought to have deducted the TDS when there was a contract in between the bank and the NBHC, but there was no contract between the assessee and NBHC. Therefore, provisions of section 40a (ia) were not applicable as the assessee was not required to deduct TDS u/s 194C on the reimbursement of the expenses.
Facts of the Case
The assessee was engaged in the manufacturing of rice and its bye-products and filed the return of income, declaring an income of Rs. 1,04,790/-, which was processed u/s 143(1). Later on, the case was selected for scrutiny. During the course of assessment proceedings the AO noticed that the assessee had debited warehouse paddy rent to the tune of Rs. 5,76,808/-, which comprised of Rs. 60,000/- paid to M/s Hanuman Rice Mills on 28-11-2009 and Rs. 5,16,808/- paid to Haryana Warehousing Corporation and Central Warehousing Corporation. The AO was of the view that the assessee was under obligation to deduct the tax on the rent payment of Rs. 5,16,808/- u/s 194-I of the Act, which had not been done by the assessee. He asked the assessee to explain as to why the TDS on rent payment had not been deducted. The assessee submitted that since the rent had been paid to the State Government and Central Government, no TDS was deductible. The assessee also furnished the copy of Circular no. 699 dated 30-1-1995 issued by the CBDT. The AO did not find merit in the submissions of the assessee and made the addition of Rs. 5,16,808/-.
The AO also noticed that the assessee had claimed NBHC bank guard pay to the tune of Rs. 2,37,757/- and no TDS was deducted as per the provisions of section 194C of the Act. The said amount was also disallowed u/s 40a (ia) and added to the income of the assessee.
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