Once TDS deducted u/s 194J and income declared u/s 44AD by the matriculation passed assessee, no addition permitted u/s 44ADA

Finding that the case was filed and adjudicated under the wrong Section, The Bench of Mumbai Income Tax Appellate Tribunal held that a matriculation passed taxpayer who had deducted TDS u/s 194J on consultancy payments and declared income u/s 44AD, should not be fastened u/s 44ADA.

A Division Judge Bench of Justice Narender Kumar Choudhry and Accountant Member B.R. Baskaran observed that “both the authorities below applied the provisions of section 44ADA of the Act, which in fact deals with persons carrying on legal, medical, engineering or architectural profession or profession of accountancy, technical consultancy or interior decoration or any other profession as is notified by the Board in the official gazette”.

“Admittedly the Assessee is just a 10th/matriculation passed and do not have any qualification to act as a legal, medical, engineering or architectural professional or professional accountancy or technical consultancy of interior decoration or any other profession as is notified by the Board in the official gazette, as prescribed under section 44AA of the Act. As the Assessee’s case does not fall under the provisions of section 44ADA of the Act”, added the Bench. 

Advocate Jitendra Singh appeared for the Petitioner whereas Advocate Naganath B. Pasale appeared for the Respondent. 

The brief facts of the case were that the Assessee is engaged in a business of consultancy qua stamp duty and registration. The amount of Rs.4,81,280/- on which TDS was deducted under section 194J of the Act, in fact, is part of the total receipt of Rs.8,30,800/- on which the Assessee has declared income @8% under section 44AD. The Assessing Officer/Central Processing Centre added the income @50% under section 44 ADA of the Act, which resulted into making the addition of Rs. 2,40,640/-. The assessee challenged the same before the Commissioner, who sustained the previous order and extended it for Rs.2,40,640/-. Hence, the Assessee approached the Bench for relief. 

After considering the submission, the Bench noted that there is a wrong interpretation of Section 44ADA has been done by the parties. 

The Bench clarified the provision of Section 44ADA by stating that this section specifically deals with persons carrying profession as is notified by the Board in the official gazette. 

The Bench also stated that the Assessee is just a 10th/matriculation passed and does not belong to any profession listed under the provisions of Section 44ADA. 

Therefore, the Bench deleted the addition sustained by the Commissioner and allowed the Assesse’s appeal.

Cause Title: Vishnu Dattatraya Ponkshe Vs. Central Processing Centre Bengaluru [ITA No. 1570/Mum/2023 / 2023-Enterslice-41-ITAT-Mum]

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