Rent reimbursement not liable for TDS u/s. 194I

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ITAT DELHI

Assistant Commissioner of Income-tax

v.

Result Services (P.) Ltd.

IT Appeal NO. 2846 (DELHI) OF 2011

[ASSESSMENT YEAR 2008-09]

The assessee is paying rent to the holding company as reimbursement since last many years. This position has been accepted by the department all through and it has been never disputed even when provisions for TDS were on statute since 1994. Section 194-I of the Income-tax Act, 1961 was inserted in Act w.e.f. 01.06.1994. Similarly, this position was also not disputed even after the amendment in section 40(a)(ia) of the Act by the Taxation Law (Amendment) Act, 2006 w.e.f. 1.4.2006. on this issue, there is no material change in the facts and law during the year under consideration. The lease deed provides for use of the premises by the subsidiary companies. The actual payments made by the lessee (holding company) to the lessor and necessary tax was deducted therefrom. The holding company has also not debited the whole of rent to its books of account. It has only debited the rent which pertains to the part of the premises occupied by it. Therefore, in our considered view, there was no lessor and lessee relationship between the holding company and assessee where the provisions of section 194-I are attracted. Keeping these facts in view, we find merits in the order of the CIT (A) in deleting the addition made u/s 40(a)(ia) of the Act.