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TMI Blog2015 (11) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. - Decided in favour of assessee - ITA No.190/PN/2014 - - - Dated:- 16-1-2015 - Ms. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER Appellant by : Shri B.D. Singh Respondent by : Shri Abhay Avchat ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the Revenue is against the order of CIT(A)-V, Pune dated 30.10.2013 relating to assessment year 2013-14 against order passed under section 201(1) / 201(1A) of the Income-tax Act. 2. The Revenue has raised the following grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals) erred in deleting the demand raised of ₹ 14,56,112/- u/s 201(1)/201(1A) of the Income Tax Act,1961 in respect of lease premium payment paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Township Development Authority (PCNTDA). In the facts of the case before us, the assessee had entered into 99 years lease agreement through its Chairman with PCNTDA for using 3261 sq. mtrs. of land located on Plot No.1, in Sector 13, Chikhali, Taluka Haveli, Pune. The said land was to be used for education purposes as per clause (N) of the lease deed. The assessee paid lease premium of ₹ 1,37,36,963/- for the said plot and further agreed to pay sum of ₹ 100/- per annum for the entire period of lease. The Assessing Officer (TDS) was of the view that the assessee was required to deduct tax at source under section 194 I of the Act at the time of payment of lease premium to PCNTDA. The Assessing Officer issued a show cause notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land, with the option either to renew the lease for further period and take back the possession of the land. However, the preliminary clause of the lease agreement reflects that the payment of lease premium was a pre-condition for entering into lease agreement. The CIT(A) has reproduced the preliminary clause of the lease agreement at page 7 of the appellate order, which are not being reproduced for the sake of brevity. The CIT(A) thus, held that the payment of lease premium of ₹ 1,37,36,963/- was a pre-condition for entering into the lease agreement and the same was not under the lease deed, therefore, the payment of lease premium fell outside the purview of definition of rent as provided under section 194 I of the Act. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The assessee was running various schools and colleges in the city of Pune. During the year under consideration, in order to establish another school in Pimpri Chinchwad area, the assessee in reply to an advertisement by PCNTDA, applied for a plot on leasehold basis. As per the Bid document, where the Bid quoted by a party accepted, the said party was required to pay the quoted amount i.e. the premium within 3 months of the letter of allotment. In case such premium was not paid within period of 3 months, 25% of the Tender deposit was to be fortified and balance amount was to be refunded without any interest. The Tender document stated that the Tender was for the purpose of sale of reserved plots and as per the document full premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium finds mention in the Lease Deed but the said payment of lease premium was a pre-condition for entering into lease agreement. The CIT(A) thus, held that same was not under the lease deed and the payment of lease premium falls outside the purview of definition of rent as specified in section 194I of the Act. The CIT(A) further observed from the ratio laid down in the case of Fox Conn India Developer (P) Ltd. (supra) was distinguishable on the facts as in that case issue in question was upfront payment and not lease premium. Further, upfront payment was part of consideration for acquiring leasehold rights unlike the present case where payment of lease premium was pre-condition for entering into lease agreement and therefore the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Departmental Representative for the Revenue. Relying upon the ratio laid down by the Mumbai Bench of the Tribunal in three different cases, we uphold the order of CIT(A) in holding that the lease premium paid by the assessee is outside the purview of section 194I of the Act and the Assessing Officer was not justified in raising the demand under section 201(1) and 201(1A) of the Act. The grounds of appeal raised by the Revenue are thus, dismissed. 8. Following the same parity of reasoning, we hold that where the lease premium paid to PCNTDA was a pre-condition for entering into the lease agreement, the same not being paid consequent to the execution of the lease agreement, cannot be said to be payment in lieu of rent as envi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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