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TMI Blog2016 (6) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri Hitendra Ninave ORDER Per R. K. Panda, AM This appeal filed by the Revenue is directed against the order dated 26-09-2014 of the CIT(A)-V, Pune relating to Assessment Year 2011-12. 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of Promoters and Developers of properties. During the course of TDS verification in the case of Pimpri Chinchwad New Town Development Authority (in short PCNTDA ) on 07-08-2012 it was noticed that the assessee had entered into lease agreement for 99 years with PCNTDA on the terms and conditions laid down by the lessor in the lease deed dated 03-11-2010 for Plot No.46(c) in sector No.10 of the Pimpri Chinchwad New Town Development Authority, as per the terms of lease deed. After going through the various clauses of the lease deed, the AO came to the conclusion that provisions of section 194I of the I.T. Act are applicable in respect of payment for acquisition of leasehold right for 99 years as the same was nothing but rent. He accordingly confronted the assessee. The assessee in his reply submitted that as per the lease agreement with PCNTDA the lease is for perpetuity and is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue has been dismissed. Therefore, this being a covered matter the grounds raised by the Revenue should be dismissed. He also relied on the following decisions : 1. ITAO Vs. Shree Naman Developers Ltd. and vice versa ITA No.686 687/Mum/2012 order dated 14-08-2013. 2. ITO Vs. M/s. Wadhwa Associates Realtors Pvt. Ltd. and Vice versa ITA No.695/Mum/2012 order dated 03-07-2013. 3. ITO Vs. M/s. Navi Mumbai SEZ Pvt. Ltd. ITA Nos.738 to 741/Mum/2012 order dated 16-08-2013. 7. The Ld. Departmental Representative on the other hand fairly conceded that the issue has been decided in favour of the Assessee and against the Revenue by the order of the Tribunal. 8. We have considered the rival arguments made by both the sides, perused the order of the AO and the CIT(A) and the various decisions relied on by the Ld. Counsel for the assessee. We find the AO in the instant case has treated the assessee as an assessee in default for non deduction of tax at source from the lease premium paid to PCNTDA amounting to ₹ 2,54,67,840/- for acquisition of leasehold right for 99 years. We find in appeal the Ld.CIT(A) following various decisions of the Mumbai Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Lessor. However, the Assessing Officer referred to the various restrictions on the Lessee / assessee put up by the Lessor and it was observed by the Assessing Officer that this was not a case of freehold transfer or sale and the assessee was not the absolute owner of the property. The Assessing Officer thus, concluded that the assessee was liable to deduct tax at source under section 194 I of the Act on the lease premium paid to PCNTDA. The assessee having failed to deduct tax at source, was held to be in default under section 201(1) of the Act at ₹ 13,73,696/- and further interest under section 201(1A) of the Act was charged at ₹ 82,416/-. Reliance was placed on the ratio laid down by Chennai Bench of the Tribunal in Foxconn India Developer (P) Ltd. Vs. ITO (TDS) (supra). 6. The CIT(A) after considering the facts and reply filed by the assessee, observed that no doubt, after 99 years of lease, the lease hold right expired and the Lessor was vested with the full rights on the said plot 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 reflect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 premium was to be paid to PCNTDA and lease agreement would be entered with the party. The assessee entered into a lease agreement with PCNTDA for 99 years and the lease rent was ₹ 100/- per annum for the period of 99 years. The assessee accordingly, deposited the premium amount of ₹ 2,20,24,860/-. After receiving the premium amount, the licenser i.e. PCNTDA agreed to execute Lease Deed to convey / transfer / assign the leasehold rights. The Lease Deed authorizes the assessee to build / construct any building on the said plot of land. The case of the assessee was that the payment of premium was a pre-condition for obtaining the lease rights and it was only after payment of the lease premium, the lease agreement was entered into and bundle of rights were obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013, held that TDS was not required to be deducted under section 194I of the Act in respect of payment of lease premium to M/s. MMRD Ltd. 10. In view of above said facts and circumstances, wherein the lease premium was paid to PCNTDA by the assessee as a pre-condition for entering into a lease agreement, the same cannot be said to have been paid consequent to the lease agreement executed between the parties. Further, the CIT(A) has given a finding that stamp duty had been paid on the market value of the plot represented by the lease premium, which has not been controverted by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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