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TMI Blog2012 (7) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... tax was deducted therefrom. The holding company has also not debited the whole of rent to its books of account. It has only debited the rent which pertains to the part of the premises occupied by it. Therefore, there was no lessor and lessee relationship between the holding company and assessee where the provisions of section 194-I are attracted. Deletion of addition made u/s 40(a)(ia) is sustained - Decided against Revenue - IT Appeal NO. 2846 (DELHI) OF 2011 - - - Dated:- 28-6-2012 - RAJPAL YADAV, B.C. MEENA, JJ. ORDER B.C. Meena, Accountant Member This appeal filed by the revenue emanates from the order of the CIT (Appeals)-XVIII, New Delhi dated 28.02.2011 for the Assessment Year 2008-09. 2. The assessee company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the lease deed does not permit use of the above premises by subsidiary company, whereas actually the said lease deeds do permit the appellant to allow use of the said premises by its subsidiaries and group entities. Copy of the lease deeds are furnished by the ld. AR which had also been furnished before the AO during assessment proceedings. It is argued that in any case TDS on the full amount has been made by the parent company as per law and the reimbursement of a part of it by the appellant company is not separately exigible to TDS in terms of the amended clause (i) of Explanation to section 194-I of the Act. It is further argued that the relation between the holding company and the appellant is not that of a lesser and lessee and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that for the purpose of section 194-I in Explanation (i) of that section, the rent has been defined as 'rent' means any payment whatever name called under any lease, sub lease, tenancy or any agreement or arrangement for the sue of (either separately or together) any (a) land or (b) building or (c) land appurtenant to building (including factory building) etc. whether or not any or all of the land or building are owned by the payee. He pleaded that during the year, the company has debited the amount of Rs. 64,86,806/- as expenditure on account of rent. Out of this, an amount of Rs. 56,23,456/- was paid to the holding company, M/s. McCann Erickson India Pvt. Ltd. No TDS was deducted on this amount. The payment has been made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p entities and associates. Assessee had paid the amount as reimbursement for the use of premises as per agreement. Therefore, this amount was reimbursement to the holding company. Ld. AR further pleaded that holding company has debited in the books of account rent only related to the portion occupied by it only. Mccann Erickson India Pvt. Ltd. was not deriving any rental income and it has not declared any rental income under the head 'Income from house property'. It is also submitted that this position continued for several years, even when the provisions of section 40a(ia) were not in existences. The provisions of section 194-I were inserted in statute by Finance Act, 1994, w.e.f. 1.6.1994, The amendment in section 40 (a) w.e.f. 01.04.2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount to holding company without deducting TDS. The rent for the whole premises was paid directly by the holding company to the Lessors and the tax was deducted as per provisions of section 194-I of the Income-tax Act, 1961. The clause 5 of the lease deed for Delhi premises dated 22.10.2007 between CEPCO Industries Pvt. Ltd. and Mccann Erickson India Pvt. Ltd. read as following : "5. The LESSEE may use the Demised Premises or parts thereof for their commercial use as well as for the offices of its subsidiaries and associates and allied companies and for the purposes of companies / firms and business in which the Directors of the LESSEE are interested or concerned, however, any such companies / subsidiaries shall not acquire any interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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