ITAT: Wrong Entry U/S 194J Instead 194I By Tenant, Owners Not Liable for TDS Deduction

The Income Tax Appellate Tribunal (ITAT) Delhi bench recently ruled that due to a tenant’s incorrect provision, the landlord was not responsible for TDS (tax deducted at source).

Rajesh Kumar Gupta, the assessee, receives rent from V.M. Rubber Industries, his tenant. According to the copy of the computation of income, the assessee included a deduction under Section 24 of the Income Tax Act of 1961 for rental income of Rs. 3,15,000/-.

The faulty deduction of TDS and the deduction of TDS made under the inaccurate provisions by the tenant were among the major claims made by the authorities. Because of this, the deduction was not allowed by the assessing officer, and an addition of Rupees 3,15,000/- was also made, and the distressed assessee appealed before the ITAT.

Advocate Gurjeet Singh submitted that the assessee’s filing required confirmation or certification from tenant V.M. Rubber Industries Pvt. Ltd. In this file, he explains the deduction of TDS on rent for the financial year 2013–14. However, the TDS return was submitted wrongly by the accountant under Section 194J of the Income Tax Act 1961 instead of Section 194I of the Income Tax Act 1961. It happened unintentionally because of a clerical mistake, and they are the renter of the assessee.

As a result, the tenant’s failure to deduct TDS by the correct provision restricted the addition from being made in the recipient’s hands.

Om Prakash, the advocate for the revenue, respected the decision of the lower authorities and supported their arguments.

A single bench of judicial members, C.M. Garg, observed that the disapproval given by the assessing officer was not valid. The landowner, who showed the income generated through the rent in his income returns, could not be charged for the TDS deduction under the wrong provisions by paying an incorrect return of TDS by the tenant, ruled C.M. Garg.