Income Tax Appellate Tribunal - Hyderabad
Jagdish Rai Popat, Hyderabad vs Department Of Income Tax on 10 November, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH ' A ', HYDERABAD
BEFORE SHRI N.R.S. GANSAN, JUDICIAL MEMBER AND
SHRI CHANDRA POOJARI ACCOUNTANT MEMBER
ITA.102/Hyd/2010
Assessment Year 2006-07
ACIT, Circle 4(1), Hyderabad Vs Shri Jagdish Rai Popat,
Hyderabad
(PAN AHOPP 8191 J)
(Appellant) (Respondent)
Appellant by : Shri K.V.N. Charya, DR
Respondent by : None
ORDER
Per Chandra Poojari, Accountant Member:
This appeal preferred by the Revenue is directed against the order passed by the CIT(A) -V, Hyderabad dated 10.11.2009 and pertains to the assessment year 2006-07.
2. The Revenue raised the following grounds:
1. The CIT(A) erred in facts and in law in ignoring the fact that the pre-amended provision u/s 194 1 would cover rent paid for hoardings.
2. The CIT(A) erred in facts and in law in deleting the addition u/s 40(a)(ia) which was clearly applicable in the facts of the assessee's case.
3. None appeared before this Tribunal on behalf of the assessee on the date of hearing and hence we decided to dispose of the case after hearing the learned departmental representative. Accordingly, we heard the learned departmental representative and perused the materials available on record.2 ITA No.102/Hyd/2010
Shri Jagdish Rai Popat, Hyd
4. The assessing officer has made an addition of Rs.22.87 lakhs towards rental charges for hoardings for non deduction of TDS under 194I of the IT Act, by invoking the provisions of Sec.40(a) (ia). In our opinion, the assessee is not liable to deduct TDS in view of the amendment to the Provisions of Section 40(a) (ia) w.e.f. 13.7.2006 and this amendment is applicable for the assessment year 2007-08. More so, on this issue, there was a Circular issued by CBDT i.e., Circular No.1 of 2007, dated 27.4.2007 which reads as follows:
Sub: Taxation Laws (Amendment) Act, 2006 - Explanatory Notes on the amendments:
13. Deduction not to be allowed in the computation of income if tax is not deducted on payments of rent and royalty section 40(a) (ia).
13.1. In accordance with the existing provisions of sub clause (ia) of clause (a) of section 40, failure to deduct tax, as referred to under the provisions of Chapter XVII-B or pay tax after deduction from amounts payable to a resident, as interest, commission or brokerage, fees for professional services or fees for technical services, or amounts payable to a resident contractor or sub contractor, results in disallowance of such payments in the computation of income of the payer.
13.2: The Act has amended the aforesaid sub clause (ia) of clause (a) of section 40 to extend the existing provisions to payments of rent and royalty. Sub clause (ia) so amended also provides for the definitions of the terms rent and royalty.
13.3: Applicability: Assessment year 2007-08 onwards.
6. The assessment year involved before us is 2006-07 and the Amendment is made applicable for the assessment year 2007-08, being so, the assessee is not liable to deduct TDS on rent paid on hoardings u/s 194I. Consequently, the assessee is not attracted by provisions of section 2 3 ITA No.102/Hyd/2010 Shri Jagdish Rai Popat, Hyd 40 (a) (ia) and we find no infirmity in the order of the CIT(A) on this issue and the same is confirmed.
7. In the result, we dismiss the Revenue appeal.
Order pronounced in the open Court 24.9.2010 Sd/- sd/-
N.R.S. GANESAN CHANDRA POOJARI
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated the 24th September, 2010.
Copy forwarded to:
1. Shri Amogh Naik & Co., CAs, 4-8-663/4/A, Opp. Ram Mandir, Gowliguda, Hyderabad-12.
2. The ACIT, Circle 4(1)
3. CIT(A)-V Hyderabad.
4. CIT, Hyderabad
5. The D.R., ITAT, Hyderabad.
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