The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that the landlord was not liable for deduction of Tax Deduction at Source (TDS) under wrong provision by the tenant.
Assesee Rajesh Kumar Gupta is a recipient of rent from his tenant V.M. Rubber Industries. From the copy ofcomputation of income, assessee has shown rental income of Rs.3,15,000/- in thecomputation of income and has also claimed deduction under section 24 of the Income Tax Act 1961 thereon.
The main allegation of the authorities below is that the deduction of TDS is defective and deduction of TDS was under the wrong provisions by the tenant. Due to this the assessing officer did not allow deduction and made addition of Rupees 3, 15,000/-.Aggrived assesee filed appeal before the ITAT.
Gurjeet Singh counsel for the assessee submitted that assessee filed confirmation-cum-certificate from tenant V.M. Rubber Industries Pvt. Ltd. wherein it was categorically explained that they had deducted TDS on rent for the period falling in financial year 2013-14, but, their accountant wrongly submitted TDS return under section 194J Income Tax Act 1961 instead of section 194I Income Tax Act 1961 due to a clerical mistake and they are tenants of the assessee.
Therefore, the addition in the hands of the recipient could not be made on account of default by the tenant in deducting TDS under the wrong provision.
Om Prakash counsel for the revenue relied upon the decision of the lower authorities, supporting their contentions.
The single bench of the tribunal of C.M. Garg, (Judicial Member) found that the disallowance made by the assessing officer was invalid and held that the landlord, who is declaring rental income in his return of income, could not be blamed for deduction of TDS under wrong provision by the submission of incorrect return of TDS by the tenant.
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