Case Number: ITA 1602/DEL/2019
Appellant: Suncity Cinemas Pvt. Ltd., Hisar
Respondent: ITO (TDS), Hisar
Assessment Year: 2017-18
Case Filed on: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2023-07-31
Pronounced on: 2023-07-31
In this case, Suncity Cinemas Pvt. Ltd., based in Hisar, contested an order passed by the Income Tax Officer (TDS) regarding the deduction of TDS on payments categorized as rent. The case revolves around the assessment year 2017-18, where the appellant argued against the liabilities imposed for TDS on certain payments.
During the assessment year 2017-18, Suncity Cinemas Pvt. Ltd. made several payments, including Rs. 41,28,454/- on account of rent and Rs. 11,00,000/- to the Haldwani Branch. These payments were part of the company’s joint venture with M/s Sharda Facility Management Pvt. Ltd. However, the Assessing Officer (AO) found that no TDS had been deducted on these payments, leading to the issuance of the impugned order.
The appellant raised the following grounds of appeal:
During the assessment proceedings, the AO observed that the appellant had continuously claimed these expenses under the head ‘Rent’ in their returns for the relevant assessment year. The AO was not satisfied with the explanations provided by the appellant and treated the company as an assessee in default, imposing a TDS amount of Rs. 5,28,345/- and interest of Rs. 63,401/- under sections 201(1) and 201(1A) respectively.
The appellant approached the CIT(A) with their grievances. However, the CIT(A) upheld the AO’s decision, stating that the appellant did not produce any joint venture agreement during the assessment or appellate proceedings to substantiate their claim that the payments were revenue shares rather than rent.
The case was then brought before the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘G’. The hearing was held on 31st July 2023, with Shri Shamim Yahya, Accountant Member, and Shri Yogesh Kumar US, Judicial Member, presiding over the matter.
During the proceedings, the Revenue argued that the payments claimed as rent in the returns were indeed rent and subject to TDS. The appellant, on the other hand, maintained that these payments were part of a joint venture agreement and thus not subject to TDS under the rent category.
The Tribunal observed that the appellant had not produced the joint venture agreement during the assessment and appellate proceedings. It was unclear whether the document was requested by the Revenue authorities or not. The Tribunal noted that the appellant deserved an opportunity to present the joint venture agreement to substantiate their claim.
In the interest of justice, the Tribunal remitted the issue back to the AO for reconsideration. The AO was directed to provide the appellant an opportunity to produce the evidence of the joint venture agreement. The AO was also instructed to grant a fair hearing to the appellant before making a final decision. The Tribunal’s order stated:
“We remit this issue to the file of AO. AO shall grant the assessee an opportunity to produce the evidence to substantiate the claim. Needless to say, the assessee should be provided an opportunity of being heard.”
The appeal was thus allowed for statistical purposes, and the final judgment was pronounced on 31st July 2023.
This case highlights the importance of maintaining proper documentation and evidence to support claims made in tax filings. It also emphasizes the Tribunal’s role in ensuring that taxpayers receive a fair opportunity to present their case. The outcome of this case will provide guidance for similar disputes in the future, particularly concerning the categorization of payments and the applicability of TDS.
In conclusion, the Tribunal’s decision to remit the case back to the AO for further consideration underscores the necessity of thorough examination and fair treatment in tax assessment proceedings. The appellant now has the opportunity to present the necessary documentation to substantiate their claim, which could potentially lead to a different outcome in the reassessment.
Suncity Cinemas Pvt. Ltd. vs. ITO (TDS): Case Filed for TDS Deduction Issue
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