9911796707
TMI Blog2014 (7) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-12 respectively. 4. It is the case of the Revenue that tax was deductible under section 194-I on lease premium paid by the assessee in respect of plot of a land obtained by the assessee from CIDCO i.e. Plot No.20A, Block-B, situated at No.2, Dronagiri, Navi Mumbai. The Revenue has raised as many as 14 grounds to contest deletion made by Ld. CIT(A), who has deleted this demand following judicial precedences mentioned in the impugned order passed by Ld. CIT(A). 5. During the course of hearing it was submitted by Ld. AR that this issue is covered in favour of the assessee by the decision of Mumbai ITAT passed in several cases. It was submitted that identical grounds were raised by the Revenue against similar deletion in the case of ITO vs. Shah Group Builders Ltd. which is decided by ITAT vide its order dated 14/8/2013 in ITA No.4523/Mum/2012. He has placed copy on our record and copy was also given to Ld. DR. He submitted that similar view has been taken in the case of ITO vs. Dhirendra Ramji Vora vide order dated 9/4/2014 in ITA No.3179/Mum/2012, copy of this order is also placed on our record and given to Ld. DR. Thus, it was pleaded by Ld. AR that the issue raised by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt mentioned in Sect. 1941 and therefore there is no requirement of deduction of tax from such payment made to CIDCO. The land under question has been given by the Lessor to the assessee on Lease and for which it has paid the premium of Rs. 70,85,01,870/-. This lump-sum payment made by the Leasee i.e. M/s. Shah Group Builders Ltd. (assessee) has been made to avoid recurring payment by instalments by the them to the Lessor. The payment so made by the assessee is a Rent for enjoyment and occupancy of the impugned land. The one time payment does not change the character of this payment and therefore it squarely falls within the parameter of section 1941. This inference also gathers support from the judicial pronouncements of Hon'ble Karnataka High Court in the case of CIT v/s HMT Limited - 203 ITR 820 and that of Hon'ble Calcutta High Court in the ease of Braithwaite & Co. (1) Ltd. v/s CIT - 111 ITR 542. Both the High Courts in these cases have ruled that lease premium paid in lump sum is nothing but the rent paid in advance to obviate periodical payments. Going by the verdict of these Hon'ble High Courts, the rulings are squarely applicable to the facts of the instant case. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby chapter XVII B of the income Tax Act by deducting the TDS from the Lease Rent paid to the C1DCO and not paid it to the Government Treasury. As a result Assessee has committed default within the meaning of section 20 1(1) and thereby it is an 'assessee in default'. Accordingly, assessee is treated as assessee in default and directed to make payment of interest u/s. 201(1A)." 4. Against the order passed by the A.O. u/s 201(1)/201(1A) of the Act, the assessee filed its appeal before the ld. CIT(A) and elaborate submissions were made on its behalf before the ld. CIT(A) in support of the stand that the lease premium paid to CIDCO not being in the nature of advance rent within the meaning of section 194-1 of the Act, the assessee was not liable to deduct tax at source and therefore it could not be treated as assessee in default u/s 201(1) & 201(1A) of the Act. The said submissions made on behalf of the assessee before him were forwarded by the ld. CIT(A) to the A.O. for his comments. In the remand report submitted to the ld. CIT(A), the A.O. offered his comments on the submissions made on behalf of the assessee. After considering the submissions made on behalf of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch lease premium is in the nature of capital expenditure and therefore there is no question of deduction of tax at source. Further, the said lease premium does not come within the purview of the definition of rent as provided u/s. 194-1 of the Act. 10. We have carefully perused the lease deed as exhibited from page-1 to 42 of the Paper Book. A careful reading of the said lease deed transpires that the premium is not paid under a lease but is paid as a price for obtaining the lease, hence it precedes the grant of lease. Therefore, by any stretch of imagination, it cannot be equated with the rent which is paid periodically. A perusal of the records further show that the payment to MMRD is also for additional built up are and also for granting free of FSI area, such payment cannot be equated to rent. It is also seen that the MMRD in exercise of power u/s. 43 r.w. Sec. 37(1) of the Maharashtra Town Planning Act 1966, MRTP Act and other powers enabling the same has approved the proposal to modify regulation 4A(ii) and thereby increased the FSI of the entire 'G' Block of BKC. The Development Control Regulations for BKC specify the permissible FSI. Pursuant to such provisions, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
