2015 (6) TMI 209 - AT - Income Tax

Liability to TDS u/s 194I- payment made by the assessee being lease premium - CIT(A)deleted the addition - Held that - As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Wadhwa & Associates Realtors Pvt. Ltd. (2013 (9) TMI 261 - ITAT MUMBAI) as well as Shree Naman Hotels Pvt. Ltd. (2013 (9) TMI 309 - ITAT MUMBAI) decided by the Tribunal, we respectfully follow the decisions rendered in the said cases by the co-ordinate Bench of this Tribunal and uphold the impugned order of the ld. CIT(A) holding that the lease premium paid by the assessee to CIDCO not being in the nature of rent as contemplated in section 194-I of the Act, the assessee was not liable to deduct tax at source from the said payment and hence could not be treated as the assessee in default u/s 201(1) & 201(1A) of the Act. The appeal filed by the Revenue is accordingly dismissed. - Decided in favour of assesse.

Summary

Issues Involved:
1. Different footing of proceedings for assessment of income of the payee and the deductor.
2. Applicability of TDS provisions in Chapter XVIIB to acquisition of capital assets.
3. Interpretation of Chapter XVIIB as a self-contained code for TDS purposes.
4. Nature of the amount paid as lease premium and additional FSI-whether it qualifies as rent under section 194I.
5. Requirement of tax deduction under section 194I for lease premium payments.
6. Comprehensive nature of the definition of "Rent" in section 194I.
7. Classification of lease premium as capital receipt and its implications on TDS.

Detailed Analysis:

1. Different footing of proceedings for assessment of income of the payee and the deductor:
The Revenue argued that the proceedings for assessing the income of the payee are distinct from those for determining the liability of the deductor under section 201. The Tribunal noted that the liability to deduct TDS is governed by specific provisions such as section 194I of the Income Tax Act.

2. Applicability of TDS provisions in Chapter XVIIB to acquisition of capital assets:
The Revenue contended that TDS provisions under Chapter XVIIB apply even to the acquisition of capital assets, citing section 194LA. The Tribunal, however, focused on the specific nature of the lease premium payments and their classification under the Act.

3. Interpretation of Chapter XVIIB as a self-contained code for TDS purposes:
The Revenue asserted that Chapter XVIIB, including section 194I, is a self-contained code for TDS, unaffected by other sections involving interpretative issues such as revenue or capital classification. The Tribunal examined the comprehensive nature of the definition of "Rent" in section 194I and its application to the case at hand.

4. Nature of the amount paid as lease premium and additional FSI-whether it qualifies as rent under section 194I:
The Tribunal considered whether the amount paid by the assessee to CIDCO as lease premium and for additional FSI qualifies as rent under section 194I. It was concluded that such payments do not fall within the ambit of "rent" as defined under section 194I, following consistent views in previous ITAT decisions.

5. Requirement of tax deduction under section 194I for lease premium payments:
The Tribunal reviewed the requirement of tax deduction for lease premium payments under section 194I. It was held that the assessee was not liable to deduct tax at source from the lease premium paid to CIDCO, as these payments were not considered rent.

6. Comprehensive nature of the definition of "Rent" in section 194I:
The Revenue argued that the amended definition of "Rent" in section 194I is comprehensive and includes any payments under any lease or similar arrangements. The Tribunal, however, found that the lease premium paid did not meet the criteria of rent as per the statutory definition.

7. Classification of lease premium as capital receipt and its implications on TDS:
The Tribunal upheld the view that the lease premium is a capital receipt and not rent, thus not attracting TDS under section 194I. This conclusion was supported by previous judicial precedents and the nature of the payments made by the assessee.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision that the lease premium paid by the assessee to CIDCO is not in the nature of rent under section 194I and thus does not require tax deduction at source. The Tribunal's decision was consistent with previous ITAT rulings on similar issues, emphasizing the nature of the payments and the statutory definitions involved.