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TMI Blog2015 (6) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Rs. 1,62,532/- in assessment year 2011-12 under section 201(1A) of the Act. It is the case of the Revenue that tax was deductible under section 194-I on the lease premium paid by the assessee in respect of plot of land namely Plot No.14, Sector-15, Khargar, Navi Mumbai allotted to assessee by way of tender passed by CIDCO and, therefore, aforementioned demand has been raised. 3.1 Revenue has raised as many as 12 grounds to contest deletion made by Ld. CIT(A) who has deleted this demand following the judicial precedences mentioned in the impugned order passed by Ld. CIT(A). 4. 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, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tset, it needs to be mentioned that the Assessee's representative has vehemently claimed that the payment referred in show cause does not bear the character of Rent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct tax u/s. 1941 and pay it to the Govt. Treasury within the stipulated time as required by provisions of chapter XVI1 B of the income Tax Act. Admittedly assessee has not complied with the provisions of section 1941 and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the lease deed dt. 22nd November, 2004. It is the say of the Revenue that this lease premium was liable for deduction of tax at source failing which the assessee is to be treated as assessee in default. It is the say of the assessee that such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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