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2013 (9) TMI 158 - AT - Income TaxBar of limitation - order passed u/s 201(1) / 201(1A) - Order passed to give effect to the order of High Court Mumbai - Held that - High Court of Mumbai quashed the order of TDS Officer, Mumbai leaving the issue open for appropriate competent authority to initiate TDS proceedings. Revenue has not disputed the point that High Court of Mumbai left the issue open for the appropriate competent authority to initiate TDS proceedings, keeping in view the law of limitation, meaning thereby that the High Court of Mumbai simply quashed the order of TDS officer, Mumbai perhaps on the ground of jurisdiction and the issue was left to be decided by the competent authority but the period of limitation has to be taken from the relevant provisions of the Act which cannot be extended by judicial pronouncements - Decided against Revenue. Payment made to MMRDA - Held that - payment of lease premium was not to be made on periodical basis but it was one time payment to acquire the land with right to construct a commercial complex thereon and the lease premium was paid to MMRDA in four installments - it is a lease premium for acquiring land with right to construct a commercial building although with certain restrictions, but it is a capital expenditure not falling within the ambit of section 194-I of the Act - Decided against Revenue. Payment made to MMRDA - Held that - When the payment made to MMDC is capital in nature then there is no question of applying S.194(1) to it. Hence assessee is not liable to deduct TDS - Decided against Revenue.
Issues Involved:
1. Whether the order passed under Section 201(1)/201(1A) of the Income Tax Act is barred by limitation. 2. Whether the payment made by the assessee to MMRDA is covered under the definition of "Rent" as per Section 194-I of the Income Tax Act. 3. Whether the assessee is in default within the meaning of Section 201(1) of the Income Tax Act for non-deduction of TDS on the payment made to MMRDA. Issue-wise Detailed Analysis: 1. Limitation of the Order Passed Under Section 201(1)/201(1A): The revenue contended that the Commissioner of Income Tax(A) erred in treating the order passed by the Assessing Officer/TDS Officer as barred by limitation, arguing that the order was passed to give effect to the order of the Hon'ble High Court of Bombay. The assessee's counsel argued that the case falls within the ambit of Section 201(3)(i) of the Act, which prescribes a deadline of two years from the end of the financial year in which the tax at source return was furnished. The return for the last quarter ended on 31.03.2008 and was filed on 13.06.2008, implying the financial year 2008-09. Therefore, the period of limitation ended on 31.03.2011, but the impugned order was passed on 29.03.2012, hence barred by limitation. The Commissioner of Income Tax(A) agreed with this view, holding that the order was passed beyond the prescribed period of limitation. The Tribunal upheld this decision, noting that the High Court of Mumbai quashed the order of the TDS Officer, Mumbai, and left the issue open for the appropriate competent authority to initiate TDS proceedings, keeping in view the law of limitation. 2. Definition of "Rent" Under Section 194-I: The revenue argued that the payment made by the assessee to MMRDA was covered under the definition of "Rent" as per Section 194-I of the Act. The assessee contended that the lease premium paid to MMRDA was not subject to tax deduction at source under Section 194-I. The Commissioner of Income Tax(A) observed that the premium and rent have distinct and separate connotations in law. The premium is a one-time non-recurring payment made before the commencement of the tenancy relationship and constitutes the very superstructure of the existence of that relationship. The payment of Rs. 88,52,75,000 was made in two installments before the initiation of the tenancy relationship and was not subject to adjustment against the annual rent. The Tribunal upheld the Commissioner of Income Tax(A)'s decision, noting that the lease premium was a capital expenditure for acquiring land with the right to construct a commercial building and did not fall within the ambit of Section 194-I. 3. Assessee in Default Under Section 201(1): The revenue contended that the Commissioner of Income Tax(A) erred in not treating the assessee as an assessee in default within the meaning of Section 201(1) for non-payment of TDS on the payment made to MMRDA. The assessee argued that the lease premium was a capital expenditure and not liable for tax deduction at source. The Tribunal observed that since the lease premium was capital in nature and not rent, the assessee was not liable to deduct TDS on the payment made to MMRDA. The Tribunal placed reliance on the judgment of the Hon'ble jurisdictional High Court of Delhi in the case of Krishak Bharati Cooperative Ltd. vs DCIT, which held that lease premium constituted capital expenditure. Therefore, the Tribunal agreed with the Commissioner of Income Tax(A) that the assessee was not liable to deduct tax at source from the payment made to MMRDA as lease premium and was not an assessee in default within the meaning of Section 201(1). Conclusion: The Tribunal dismissed both appeals of the revenue, upholding the Commissioner of Income Tax(A)'s decisions that the order passed by the Assessing Officer/TDS Officer was barred by limitation, the lease premium paid to MMRDA was not covered under the definition of "Rent" as per Section 194-I, and the assessee was not in default within the meaning of Section 201(1) for non-deduction of TDS on the payment made to MMRDA.
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