Assessee Not Liable for TDS on Rentals Below Rs. 1,80,000; Tribunal Deletes Demand and Interest Imposition.

The Tribunal allowed the appeal, concluding that the assessee was not liable for TDS on rental payments below the threshold of Rs. 1,80,000 as per Section 194-I. The Tribunal found that the rental payments did not exceed the threshold limit, and therefore, the assessee was not obligated to deduct TDS. Consequently, the demand for TDS and the imposition of interest under Section 201(1A) were deleted. The appeal was heard by Hon'ble Shri Manoj Kumar Aggarwal, AM, who pronounced the deletion of the demand and allowed the appeal.

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Issues Involved:
The issues involved in the judgment are:
1. Whether the assessee was liable for deduction of TDS u/s. 194-I on rental payments below Rs. 1,80,000 to various parties.
2. Whether the imposition of interest u/s. 201(1A) on the amount of TDS not deducted was justified.

Issue 1:
The appeal by the assessee for Assessment Year 2016-17 arose from an order of the Commissioner of Income Tax (Appeals) regarding the demand raised against the assessee for want of TDS on rental payments below Rs. 1,80,000. The assessee contended that the AO erred in treating the sum paid as liable for TDS u/s. 194-I and in imposing TDS u/s. 201. The AR argued that the rental payments did not exceed the threshold limit, and accepting disallowance u/s 40(a)(ia) did not make the assessee liable for TDS u/s 201(1). The Tribunal found that the details of rental payments were below the threshold limit, and the assessee was not obligated to deduct TDS. Therefore, the demand was deleted, and the appeal was allowed.

Issue 2:
The AO passed an order u/s 201(1) / 201(IA) holding that the assessee did not deduct TDS on aggregate payment and raised a demand including interest. The CIT(A) directed a revision of the demand to the extent of default. The Tribunal observed that the assessee had paid rent to various parties, and while tax was deducted on some payments, it was not deducted on others below the threshold limit. The Tribunal found that the assessee was not liable for TDS on these payments as they were below the prescribed limit. Despite the disallowance u/s 40(a)(ia), the details provided were deemed sufficient to conclude that the assessee was not in default. Therefore, the demand was deleted, and the appeal was allowed.

Separate Judgment:
The appeal was heard by Hon'ble Shri Manoj Kumar Aggarwal, AM, who delivered the order pronouncing the deletion of the impugned demand and allowing the appeal of the assessee.

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