• Deduction of TDS & Its deposition with the IT Department.

1.My demised father rented out a house on rent to a Partnership(at will)firm on a rent of 30000 per month.Of the 30000,my father was supposed to receive Rs 15000 a month & rest 15000,was supposed to be deposited by the partnership firm with the person who lended out money for house construction.
2.The partnership firm was supposed to deduct Rs 5000 a year for house maintenance.The rest was supposed to be handed over to my father.
3.There are 3 legal heirs of my father-my mother,myself & my sister.
4.The partnership firm doesnt have a TAN number.
5.I enquired with the IT department,whether it had received the TDS that was supposed to be deducted from the house rent & deposited with the IT dept.
6.The concerned tenant has not been paying us house rent for over a year now(Rs 15000 a month),but he claims that he was paying house rent to my father who's no more since a year.
7.After enquiry,the IT department has said that the CONCERNED INDIVIDUAL owning the partnership firm has replied that "The accounts of the Firm is not audited"(The firm runs a business of fire & safety training school) & that "the provisions of TDS are not applicable in the case of an individual while paying rent".
This has been mentioned,by the concerned individual,when he has signed the tenancy agreement as the "Managing Advisor" of the partnership firm.
8.Then the IT Dept has cited section 1941 of the IT act 1961 & sec 44AB,clause (a),(b) & cited-"as per the above provisions an individual is to deduct tax at source from payment of rent as per provisions of section 1941 of the act,if his accounts have been audited during the financial yr immediately preceeding the financial year in which such income by way of rent is credited or paid."

That much information is given to me.

9.The tenancy agreement has been entered into by my father & Concerned person (his name qualified with "advisor" to the certain partnership firm he owns).And the agreement also contains the statement the the partnership firm is represented by the Concerned person.Thus in my view its a contract between my demised father & the partnership firm.

I wish to know-

1.Should this partnership firm have its account books audited or not.
2.Should it file its TDS
3.Should it deposit the money deducted as TDS from the house rent my father was supposed to receive with the IT dept & under what head in its returns?
4.I ve come to know from confidential sources that my father has never shown any house rent in his returns because he never received them & he has not claimed any benefit of TDS.
5.What legal steps can be taken against the Concerned individual(who has probably hoodwinked the IT department by posing as individual while signing as a partner for a partnership firm in the tenancy agreement) & what steps/response should I take/give to the IT department.Kindly advise.
Asked 7 years ago in Taxation

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2 Answers

it is mandatory for every partnership firm to file the return of income irrespective of amount of income or loss.

2) firms that have a turnover of under Rs 1 crore can pay tax without maintaining books and getting them audited.

3) under section 44AD of the Income Tax, proprietary businesses, partnership firms and Hindu Undivided Family are eligible to claim benefit of presumptive tax scheme

4) Partnership firms and Companies and persons other than individuals and HUF, will deduct tax at source on all specified payments.

5) Payment of Rent (excluding service tax) paid to a resident under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of land appurtenant to building including factory building or machinery or plant or equipment or furniture or fittings whether separately or together, when such payment made or credited during a financial year exceeds Rs.180000/=.then TDS has to be deducted

6) it should deposit money deducted as TDS in income tax returns . it would fall under head income from other sources

7) since firm has not been paying you rentals issue legal notice to firm to vacate the premises

8) if they fail to do so file eviction suit

Ajay Sethi
Advocate, Mumbai
95205 Answers
7607 Consultations

5.0 on 5.0

Whether the company/firm have its account audited or not, it is its duty to deposit the TDS with the government and provide the details to the person from whose funds this TDS was effected.

The legal heirs of your deceased father should cancel the rental agreement, if any, entered between your father and the firm and demand the arrears of rent so far after his death failing which an eviction notice is to be served.

Subsequently an eviction sit may also be initiated for default in rental payment.

T Kalaiselvan
Advocate, Vellore
85404 Answers
2236 Consultations

5.0 on 5.0

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