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TMI Blog2014 (7) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... to MMRD is also for additional built up are and also for granting free of FSI area, such payment cannot be equated to rent. The assessee has made payment to MMRD under Development Control for acquiring leasehold land and additional built up area - payment for acquiring leasehold land is a capital expenditure - definition of rent as provided under the provision, there is no reason to tamper or interfere with the findings of the CIT(A) - the payment on account of premium represents transfer price of the land on lease hold basis and no part thereof qualifies to fall within the meaning of “rent” as contemplated in section 194-I - no deduction of tax at source is required – thus, the payment made by the assessee to the CIDCO represent transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies represents transfer price of the land on lease hold basis and no part thereof falls within the meaning of rent as contemplated under section 194-I and, therefore, no TDS is required to be deducted. 4. The learned Departmental Representative, on the other hand, agreed that this issue has come up for consideration before the Tribunal in various cases and the same has been decided in favour of the assessee. However, on merits, he strongly relied upon the reasoning give in the order of the Assessing Officer. 5. After carefully considering the relevant findings of the Assessing Officer and the learned Commissioner (Appeals) as well as various decisions relied upon by the assessee in ITO (TDS) v/s Wadhwa Associates Realtors Pvt. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has taken a consistent view that such a payment of lease premium do not fall within the realm of rent as contemplated in section 194-I. Therefore, the assessee is not liable for deducting the TDS on such a payment. The main reason is that the lease premium is capital expenditure to acquire land with substantial right to construct and cover the building complex. For the sake of ready reference, we are quoting the relevant observations and findings of the Tribunal in ITO v/s Trent Ltd., ITA no.4629/Mum./2012, order dated 21st August 2013, wherein the Tribunal observed and held as under:- 7. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that a similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 MMRDA 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. 8. Thus, in view of the catena of decision, we hold that the impugned payment on account of premium represents transfer price of the land on lease hold basis and no part thereof qualifies to fall within the meaning of rent as contemplated in section 194-I and, therefore, no dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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