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TMI Blog2022 (3) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... es having the same status against the lease of land taken by the appellant from those authorities. The A.O. has held that the lease rent paid by the appellant to the authorities is covered under the provisions of section 1941 of I.T. Act, 1961 and the appellant not having deducted the tax thereon to the credit of Central Government is liable to be proceeded against. 4. The Ld. Counsel raised the spirited defense the sum and substance of which was that the lease rent paid was not the revenue payment but was capital in nature. Placing reliance on certain authorities the Ld. counsel claimed that the payment to the Noida Authority etc. was not covered by the liabilities u/s. 194I and the impugned order was incorrect in law. 5. The Ld. Counsel placed reliance on the order dated 04.12.2006 of Hon'ble Supreme Court in the case of Enterprising Enterprises Vs. DCIT where the Hon'ble Court directed that there was no need to deduct tax on payment of lease rent. With due respect to the said orders of Hon'ble Supreme Court it is to be noted that being an order the same cannot be a precedence. This order accordingly, is of no help to the appellant. 6. The Ld. Counsel o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and issues in all the appeals being common, it shall be sufficient to refer the facts and pleadings in Civil Appeal No. 15130 of 2017 Commissioner of Income Tax (TDS) II Ors. Vs. Rajesh Projects (India) Pvt. Ltd. Anr. for deciding this batch of appeals. 3. The respondent Rajesh Projects (India) is a private limited company engaged in the business of real estate activities of constructing, selling residential units etc. On 03.11.2010, the respondent company entered into a long term lease for 90 years with the Greater Noida Industrial Development Authority for Plot No. GH07A for development and marketing of Group Flats. As per terms of the lease deed, the company partially paid the consideration amount for the acquisition of the plot to Greater Noida at the time of execution of the lease deed and is also paying the balance lease premium annually as per the terms and conditions of the lease deed. Notice under Section 201/201(A) of the Income Tax Act, 1961 was issued by the Income Tax department inquiring regarding non-deduction of tax at source under Section 194I of the Income Tax Act from the annual lease rent paid to Greater Noida. The respondent company replied the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax was deducted by the respondent company while paying rent to Noida and Greater Noida, hence they are assessee in default . The revenue also relied on Division Bench judgment of Allahabad High Court in Writ Petition Tax No. 1338 of 2005 decided on 28.02.2011 where the Allahabad High Court has held that Noida is not a local authority within the meaning of Section 10(20) as amended by Finance Act, 2002. The Delhi High Court after hearing all the parties allowed the writ petitions. The Delhi High Court held that Noida and Greater Noida are not local authorities within the meaning of Section 10(20) as amended w.e.f. 01.04.2003. Delhi High Court further held that interest income of the Noida and Greater Noida is exempted under the notification dated 22.10.1970 issued under Section 194A(3)(iii)(f) of the Income Tax Act. The High Court further held that as far as payment of rent to the Noida and Greater Noida, the respondent company was liable to deduct income tax at source. The High Court recorded its conclusions in Para 20 of the judgment, which is to the following effect: 20. In view of the above analysis, the court hereby concludes as follows: (1) Amounts paid as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id for acquisition of long term lands is not applicable. 7. It is further submitted that the question as to whether Noida/Greater Noida is local authority is engaging attention of this Court in Civil Appeal No. 792-793 of 2014, in which judgment has already been reserved. On tax deduction at source, it is further submitted that the said issue is also pending consideration of this Court in Special Leave Petition (Civil) No. 33260 of 2016, in which judgment has also been reserved. With regard to tax deduction at source on the payment of lease rent, reliance has been placed on Circular dated 30.01.1995. 8. Learned counsel for the revenue in support of its appeal submits that Noida and Greater Noida are not covered by the definition of local authority as contained under Section 10(20) and their income is not exempted under Section 10(20). Judgment of Allahabad High Court dated 28.02.2011 in Writ Petition Tax No. 1338 of 2005 was also relied by the revenue against which appeal has already been filed by Noida and has been heard. With regard to income tax deduction at source under Section 194A, the revenue has referred to its appeal in Special Leave Petition (C) No. 34530 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income tax thereon at the rate of 4[(a) two per cent for the use of any machinery or plant or equipment; and (b) ten per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings:] Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed 5[one hundred eighty thousand rupees] : 6[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income tax under this section.] 1[Provided also that no deduction shall be made under this section where the income by way of rent is credited or paid to a busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, is exempt from income tax under Section 10(20A). In view of the aforesaid, in Paragraph 4 of the circular, following was stated: In view of the aforesaid, there is no requirement to deduct income tax at source on income by way of 'rent' if the payee is the Government. In the case of the local authorities and the statutory authorities referred to in para 3 of this circular, there will be no requirement to deduct income tax at source from income by way of rent if the person responsible for paying it is satisfied about their tax-exempt status under clause (20) or (20A) of Section 10 on the basis of a certificate to this effect given by the said authorities. 16. A perusal of the above circular indicate that circular was issued on the strength of Section 10(20A) and Section 10(20) as it existed at the relevant time. Section 10(20) has been amended by Finance Act, 2002 by adding an explanation and further Section 10(20A) has been omitted w.e.f. 01.04.2003. The very basis of the circular has been knocked out by the amendments made by Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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