2024 (10) TMI 587 - AT - Income Tax

Delay Excused: ITAT Rules on Non-Taxable Salary, Overturns Rs. 1,44,000 Disallowance Due to Notification Mix-Up.

Anil Kumar M/s Raj Trading Company Versus National Faceless Assessment Centre NFAC, Delhi

The ITAT condoned a 46-day delay in filing an appeal, accepting the assessee's unfamiliarity with email notifications. The Tribunal ruled in favor of the ... Disallowance u/s 40(a)(ia) - non-deduction of tax at source u/s 194J on the accountancy charges debited in the profit and loss account - AR submitted that the assessee has paid monthly salary to his accountant at the rate of 12,000/- per month and the same is not liable for deduction of tax at source - HELD THAT:- We observe that the assessee has paid salary to his accountant at the rate of 12,000/- per month. We failed to find any merit in the action of ld. AO who has treated the salary as professional and technical fee. As the assessee had paid a salary to its accountant and the total sum paid as a salary is below the taxable limit, there was no liability to deduct the tax at source u/s 192 of the Act. Therefore, since the alleged sum of ₹ 1,44,000/- is a salary expenditure and not a payment towards Professional or Technical Services, no disallowance was called for u/s 40(a)(ia) for non-deduction of tax at source u/s 194J of the Act. We therefore, set aside the finding of CIT (A) and delete the impugned disallowance and allow, the effective ground of appeal raised by the assessee is allowed. Issues:1. Condonation of delay in filing appeal.2. Disallowance u/s 40(a)(ia) of the Income-tax Act, 1961.Condonation of Delay:The appeal was filed by the assessee against the order of the National Faceless Appeal Centre, Delhi, which was time-barred by 46 days. The assessee sought condonation of delay, stating that they were not aware of the order due to lack of familiarity with technology advancements regarding notice delivery through emails. The Tribunal accepted the reason provided by the assessee and decided to condone the delay, emphasizing that the delay did not benefit the assessee in any way. The appeal was admitted for adjudication in the interest of justice.Disallowance u/s 40(a)(ia):The main grievance of the assessee was against the disallowance of Rs. 1,44,000 under section 40(a)(ia) of the Act for alleged non-deduction of tax at source under section 194J on accountancy charges debited in the profit and loss account. The assessee contended that the amount paid as a monthly salary to the accountant was not subject to tax deduction at source. The Tribunal noted that the salary paid to the accountant was below the taxable limit and was not for professional or technical services, thus no tax deduction was required under section 194J. Consequently, the disallowance of Rs. 1,44,000 was set aside, and the appeal of the assessee was allowed.In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of the assessee on the issue of disallowance under section 40(a)(ia) of the Income-tax Act, 1961. The judgment was pronounced in Kolkata on 3rd October 2024.