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Judgment
PER MANISH AGARWAL, AM :
The present appeal is filed by assessee against the order dated 26.03.2025 passed by the Ld. Commissioner of Income Tax (Appeals) /ADDL/JCIT(A)-1, Mumbai [“Ld. CIT(A)”] in Appeal No. ADDL/JCIT(A)-1 Mumbai/10004/2015-16 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 31.03.2023 passed u/s 201(1)/201(1A) of the Act pertaining to Assessment Year 2016-17.
Brief facts of the case are that the assessee is running a club at Sector-5, IMT Manesar, Gurugram wherein the assessee has got sub-lease of the said property from Manesar Club and Manesar Golf Club for an initial period of 10 years and further extendable for 05 years on annual payment of INR 52.52 Lakhs with 8% annual increase and further paid INR 13.13 Lakhs as security deposit. The said premises was owned by Haryana State Industrial and Infrastructure Development Corporation [“HSIIDC”] who had leased the said property to Manesar Club and Manesar Gold Club Societies for 30 years since 2004 at an annual payment of INR 11 lakhs. The assessee got a sub-lease in FY 2013-14 at INR 52.52 Lakhs after approval from HSDIDC. During the year under appeal, assessee had paid lease charge of INR 46.49 Lakhs to Manesar Club & Manesar Golf Club and as per IND-AS-116, INR 76.06 Lakhs were recorded in the books of accounts. The assessee has not deducted any TDS on the amount of INR 29.56 Lakhs however, has deducted TDS on INR 46.49 Lakhs i.e. actual sub-lease payable but due to certain disputes, the same was not deposited. A survey action was carried out on 27.01.2016 at the business premises of the assessee and thereafter the AO passed the order u/s 201(1)/201(1a) of the Act dated 31.03.2023 wherein AO has created the demand of INR 17.06 Lakhs for non-deduction of TDS on lease rent and on service tax paid on repair and maintenance and interest thereon.
Against the said order, the assessee preferred an appeal before Ld. CIT(A) who vide impugned order dated 26.03.2025, dismissed the appeal of the assessee.
Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.
Heard the contentions of both the parties at length and perused the material on record. It is observed that admittedly assessee has deducted the tax at source on the lease rent payable of INR 46.49 Lakhs however, the same was not deposited due to some disputes between the parties. It was further claimed that the lease rent of INR 29.56 Lakhs [difference between INR 76.06 Lakhs- INR 46.49 Lakhs] was due to the entries made as per IND-AS-116 adjustments, therefore, it is a notional entry and no TDS was required to be made. It was further claimed that a sum of INR 9,823/- was paid as service tax on Repair and Maintenance for which in terms of Circular No.1/2014 dated 13.01.2014, no TDS was deducted on the amount of service tax though the TDS on the expenses paid was already made. Alternatively, the assessee claimed that since the recipients have paid the taxes therefore, in terms of order of Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt. Ltd. vs CIT reported in (2007) 8 SCC 463 (SC), the assessee should not be liable for the TDS.
On careful consideration of the facts, it is observed that the assessee though had deducted TDS on the lease rent however, has failed to deposit the same without any plausible explanation. Further the remaining amount of lease rent of INR 29.56 Lakhs was stated to have been debited as per Ind AS however, once the expenses is claimed, TDS is required to be made which has not been done. Further, TDS on repair and maintenance was deducted @ 1 % as against the prescribed rate of 2% and therefore, considering the entirety of the facts, we find no error in the order of Ld.CIT(A) in holding the assessee as assessee in default for not making TDS. Regarding the assessee’s contention that the recipient had paid the taxes therefore, the exemption should be allowed. In this regard, assessee has not filed any certificate as prescribed for making such claim therefore, this claim cannot be admitted.
In the result, the appeal of the assessee is dismissed.