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of <h1>Tribunal Overturns Rs. 15,98,400 Addition, Finds No Lessor-Lessee Link; Rent Reimbursement Accepted as Consistent.</h1> <h3>Mcnally Bharat Infrastructure Limited Versus DCIT, Circle-4 (1), Kolkata</h3> Mcnally Bharat Infrastructure Limited Versus DCIT, Circle-4 (1), Kolkata - TMI Issues involved:- Disallowance of rent expensesDisallowance of rent expenses:The appeal was against the sustaining of the addition of Rs. 15,98,400/- made under section 40(a)(ia) of the Income-tax Act, 1961. The assessee had claimed expenses on rent without deducting TDS as required under the Act. The AO disallowed the expenses on the grounds of non-compliance with TDS provisions. The assessee contended that the rent paid to its holding company was reimbursement for premises taken on rent by the holding company, a position accepted by the department in previous years. The lease deed between the subsidiary and holding company provided for the use of premises by the subsidiary, with actual payments made by the holding company after deducting necessary tax. The holding company did not debit the entire rent to its books, only debiting the portion relating to the premises occupied by the assessee. The Tribunal found no lessor and lessee relationship between the holding company and the assessee, therefore ruling that the provisions of section 194-I were not applicable. Citing a similar precedent, the Tribunal directed the AO to delete the addition under section 40(a)(ia) and allowed the appeal of the assessee.*Decision:* The Tribunal allowed the appeal, directing the deletion of the addition made under section 40(a)(ia) of the Act.
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