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TMI Blog2016 (1) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts of defaults u/s 201(1) and 201(1A) of the Act. - Decided in favour of assessee. - ITA Nos.2930/Mum/2014 - - - Dated:- 23-10-2015 - Shri Shailendra Kumar Yadav, Judicial Member, and Shri Ramit Kochar, Accountant Member For The Revenue : Shri C.W.Angolkar For The Appellant : Sh. Rajeev Waglay ORDER Per Ramit Kochar, Accountant Member This appeal has been filed by the Revenue against the order dated 7th February 2014 passed by the Commissioner of Income Tax(Appeals)-14, Mumbai,(Hereinafter called the CIT(A) ) for the assessment year 2010-11. 2. The effective grounds of appeal raised in this appeal by the Revenue in memo of appeal filed are with respect to non-deduction of TDS u/s 194I of Income Tax Act,1961 (Hereinafter called the Act ) by the assessee company on the amount paid to the lessor M/s City Industrial Development Corporation (Hereinafter called the CIDCO ) as held by the assessing officer and the holding by CIT(A) that the said amount paid was not in nature of rent covered u/s 194I of the Act and not confirming the assessee company as an assessee in default u/s 201(1) of the Act for failure to deduct and pay TDS and for levying inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xes on the amounts received by CIDCO from the assessee company and no prejudice has been caused to Revenue, such fact can be verified by Revenue from CIDCO and hence the assessee company cannot be declared as assessee in default vide CBDT Circular No. 275/201/95-IT(B) dated 29.1.2015 and also by said proposition accepted by Hon ble Apex Court in Hindustan Coca-Cola v. CIT 293 ITR 226 (SC). 6. The AO rejected the contentions of the assessee company by relying on Section 194I of the Act and held that the said section 194I of the Act is of widest amplitude and shall cover rent and lease in relation to any kind of property transactions be it lease, sub-lease, tenancy or any other agreement or arrangement for use of land, building, land appurtenant to a building ,machinery, plant, equipment , furniture , fittings whether or not any or all of these are owned by the payee . The AO held that in the instant case , the CIDCO has given plot of land on lease basis for a period of 60 years to the assessee company and the assessee company has paid lease premium as per agreement with CIDCO. Thus, AO held that it is not the case that the assessee company has acquired the land or acquired the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to CIDCO for granting allotment of plot. The amount paid is as per rates prevalent as per stamp duty ready reckoner and payment for acquisition of land rights and not merely a payment of rent for use of land. The CIT(A) held that the Mumbai Tribunal in Shah Group Builders Limited in ITA No. 4523/Mum/2012 dated 14.08.2013 for assessment year 2008-09 has held that lease premium paid to CIDCO not being in the nature of rent as contemplated u/s 194I of the Act , the assessee is not liable to deduct TDS from said payments and hence the assessee could not be treated as assessee in default. Taking similar view as taken by Mumbai Tribunal in above case and the facts of the case, the CIT(A) allowed the appeal of the assessee and deleted the additions of ₹ 35,85,083/- made by the AO on accounts of defaults u/s 201(1) and 201(1A) of the Act. 9. Aggrieved by the orders of CIT(A), the Revenue is in appeal before us. 10. The Ld. DR relied upon the orders of the AO and contended that the payment of ₹ 1,38,12,158/- has been made by the assessee company to CIDCO towards lease premium for lease of plot for 60 years entered into by the assessee company with CIDCO and no TDS is ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greed 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., [2004] 146 ITR 694, and TRO v/s Shelton Infrastructures Pvt. Ltd., ITA no.5678/Mum./2012, order dated 19th May 2014, we find that the issue involved herein before us is squarely covered by the decisions of the Tribunal. In this case, the assessee has made payment amounting to ₹ 6,60,71,665, in the financial year 2007 08 towards lease premium in respect of the plot of land at New Panvel, Navi Mumbai, to CIDCO. Since the assessee had not deducted tax at source on the amount of payment paid to the CIDCO, the Assessing Officer held that the assessee is at default under section 201(1) and is also liable to pay interest under section 201(1A). The Assessing Officer held that the payment made towards lease p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce revolves around the premium paid by the assessee to M/s. MMRDA Ltd. for the leasehold rights acquired by the assessee through 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-I 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof qualifies to fall within the meaning of rent as contemplated in section 194 I and, therefore, no deduction of tax at source is required. We, accordingly, confirm the findings and conclusion of the learned Commissioner (Appeals) and dismiss the grounds raised by the Revenue. 7. Thus, consistent with the view taken by the Tribunal, we also hold that the payment made by the assessee to the CIDCO represent transfer price of the land on lease hold basis and it cannot be contemplated as rent within the meaning of section 194 I. Accordingly, the order of the learned Commissioner (Appeals) is affirmed on this score. Thus, the ground raised by the Revenue stands dismissed. 8. In the result, Revenue s appeal is dismissed. 12. We have considered the rival contentions , perused the material on records and the case law relied upon by the rival parties .We have observed that the assessee company has made payment of ₹ 1,38,12,158/- to CIDCO towards lease premium for plot no 166 in Sector 27 of Belapuron on 5.5.2009 which is leased to the assessee company by CIDCO for 60 years , which in our considered opinion is for acquisition of capital asset being long term ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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