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TMI Blog2013 (8) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... MMRDA during the years under consideration u/s 194-I of the Income Tax Act, 1961 (the Act). 3. The relevant facts of the case giving rise to this appeal are that M/s Satnam Realtors Pvt. Ltd. was allotted a plot of land in Badra-Kurla Complex in the previous year relevant to A.Y. 2005-06 on lease subject to payment of lease premium to MMRDA. The said party was also allotted additional built up area in respect of the said plot of land allotted to it by MMRDA subject to further payment of premium. M/s Satnam Realtors Pvt. Ltd. subsequently merged with the assessee company w.e.f. 1-4-2009 and consequently payment on account of lease premium in respect of plot of land allotted originally to M/s Satnam Realtors Pvt. Ltd. was made by the assessee to MMRDA. According to the A.O., the assessee was required to deduct tax at source from the payment of lease premium made to MMRDA as per the provisions of section 194-I of the Act and since no such tax was deducted by the assessee from the said payments, he issued notice to the assessee requiring it to show cause as to why it should not be treated as the assessee in default for its failure to deduct the tax at source from the payment of leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly where there is ambiguity in law and such rules of interpretation / construction have no place when the law is clear and unambiguous. (iii) MMRDA is neither government nor a corporation incorporated under a Central Act. Accordingly, it does not qualify for exclusion from the TDS of Chapter XVII-B as provided for under section 196 of the Act. (iv) On given facts, it is clear that the assessee was liable to deduct T.D.S. on any payment by whatever name called made by it to MMRDA under the lease for the use of land. Since, it has not been done, the T.D.S. default has occurred. (v) On facts and circumstances it is clear that all payments made by the assessee to the MMRDA are for using the land and rights related to use of land. There is no right to land. This is conclusively proved by restrictive clauses putting encumbrance on the assessee. 5. 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 MMRDA not being in the nature of advance rent within the meaning of section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detail the judgement of HMT Ltd. and held that premium paid for acquiring the leasehold right does not constitute an advance rent. Hon'ble ITAT Mumbai, Special Bench has followed the jurisdictional High Court's view in the case of Khimlin Pipes Ltd. wherein the jurisdictional high court has held that premium paid for acquiring the lease hold right constitutes a capital expenditure and not an advance payment of rent for the lease period. ix) Section 194-I of the I. T. Act clearly provides that payment made by a person should be in the nature of an income by way of rent . This expression expressly requires that the receipt in. the hands of the Lesser/owner must constitute the income by way of rent in the hands of the recipient. x) The definition of rent contained in explanation to section 194-I also clearly provides that the payment made must be for the use of .......... land no where the definition of rent ropes in the consideration paid for acquiring leasehold right. The Appellant (lessee) reiterates its contention that the premium paid for acquiring leasehold right is not an income by way of rent of the recipient for use of land. xi) The various judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at source from the payment of premium made to MMRDA. The demand raised against the assessee by treating it as assessee in default vide an order passed by the A.O. u/s 201(1) 201(1A) of the Act for the year under consideration, therefore, was cancelled by the ld. CIT(A). Aggrieved by the order of the ld. CIT(A), the Revenue has preferred this appeal before the Tribunal. 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 issue involved in the case of Shree Naman Hotels Pvt. Shree Naman Developers Ltd. has been decided by the Tribunal in favour of the assessee vide an order dated 14-08-2013 passed in ITA No. 688 to 691/Mum/2012 by following the decision of the co-ordinate Bench rendered in the case of M/s Wadhwa Associates Realtors Pvt. Ltd. vide order dated 3-7-2013 passed in ITA No. 695/Mum/2012. In the case of M/s Wadhwa Associates Realtors Pvt. Ltd. (supra), a similar issue was decided by the Tribunal in favour of the assessee for the following reasons given in para 9 to 10 of its order dated 3-7-2013 (supra):- 9. We have considered the rival submissions, perused the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court has held that payment for acquiring leasehold land is a capital expenditure. Considering the entire facts in totality in the light of the judicial decisions vis- -vis provisions of Sec. 194-1, definition of rent as provided under the said provision, we do not find any reason to tamper or interfere with the findings of the Ld. CIT(A) which we confirm . 8. As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Wadhwa Associates Realtors Pvt. Ltd. (supra) as well as Shree Naman Hotels Pvt. Ltd. Shree Naman Developers Ltd. (supra) decided by the Tribunal, we respectfully follow the decisions rendered in the 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. 9. In the Cross objection, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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