2018 (3) TMI 1407 - AT - Income Tax

TDS u/s 194I - payment of the impugned amount by way of Lease Premium to MMRDA - assessee in default - Held that - As decided in assessee s own case 2018 (3) TMI 1338 - ITAT KOLKATA we are not in agreement with the findings of the Assessing Officer and we decline to hold that the Commissioner of Income Tax(A) has erred in not treating the assessee as assessee in default within the meaning of section 201(1)of the Income Tax Act for non-deduction of TDS on payment of lease premium to MMRDA. For invoking the provisions of section 201(1)this is a precondition that the person should be required to deduct any sum in accordance with the provisions of this Act and he does not deduct, or does not pay or after deduction fails to pay the whole or in part of the tax as required under the provisions of the Act, then only such person shall be deemed to be an assessee in default in respect of payment of such tax. In the case in hand, the assessee was not liable to deduct any tax on payment of lease premium to MMRDA because it was capital expenditure to acquire land on lease with substantial right to construct a commercial building complex - Decided in favour of assessee.

Summary

Issues Involved:
Whether lease premium falls within the purview of sub-clause (i) of explanation to Sec. 194I of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1:
The appeal filed by the revenue challenges the order of Ld. CIT(A)-24 for AY 2012-13, focusing on whether the lease premium falls under Sec. 194I of the Income-tax Act, 1961. The grounds of appeal raised by the revenue question the nature of the payment, the distinction between capital and revenue expenditure, and the applicability of judicial pronouncements.

Issue 2:
The facts reveal that the assessee paid a lease premium to MMRDA without deducting TDS under Sec. 194I of the Act. The AO considered the premium as rent, requiring TDS deduction. However, the Ld. CIT(A) ruled in favor of the assessee, citing precedents and the capital nature of the expenditure. The revenue, dissatisfied, approached the ITAT Kolkata.

Issue 3:
During the ITAT hearing, the Ld. DR argued that the premium constituted advance rent, urging the bench to uphold the AO's decision. However, the ITAT referred to previous rulings in the assessee's favor, emphasizing that the lease premium was capital in nature, not rent. The ITAT highlighted the distinction between rent and capital expenditure, relying on the judgment of the jurisdictional High Court.

Conclusion:
The ITAT dismissed the revenue's appeal, upholding the Ld. CIT(A)'s order in favor of the assessee. The decision was based on the capital nature of the lease premium, following precedents and legal interpretations. The ITAT's ruling reinforced the distinction between rent and capital expenditure, aligning with the assessee's position. The judgment emphasized the importance of understanding the nature of payments and their tax implications under relevant provisions of the Income-tax Act, 1961.