9911796707
TMI Blog2025 (2) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... Pande, Sr.DR ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeals have been filed by the Revenue challenging the common impugned order dated 25.09.2024 passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)-48, Mumbai ["learned CIT(A)"], for the Assessment Years 2018-19 and 2019-20. 2. Since both the appeals involve similar issue arising out of a similar factual matrix, therefore, as a matter of convenience both appeals were heard together and are being decided by way of this consolidated order. Since in both appeals, the Revenue has raised similar grounds, the grounds raised by the Revenue in A.Y. 2018-19 are reproduced as follows for ready reference: - "1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) is justified in holding that the payments made by the assessee company of Rs. 2,28,88,500/- as compensation paid towards alternative accommodation not being in the nature of rent as defined in section 194I of the Income Tax Act, 1961, there was no requirement of deduction of tax under the said provision, rent towards compensation for alternate accommodation cannot be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. In response, the assessee submitted that it has not deducted TDS on rent paid to the tenant. Accordingly, notice under section 201(1)/201(1A) of the Act was issued to the assessee requesting it to furnish the details of payment made along with rental agreements, TDS return filed and challan etc. In response, the assessee submitted that the persons to whom compensation have been paid are from the low-income class who do not have any source of income and have very limited sources to generate income which is not liable to tax under the Act and as per practice, no one deducts TDS on such payments. The assessee further submitted that it is in the redevelopment business and accordingly, it enters into a redevelopment agreement wherein rent is given to the occupant, during the construction period, to compensate for the hardship caused by displacement from the accommodation. 5. The AO (TDS) vide order dated 25.03.2021 passed under section 201(1)/201(1A) of the Act disagreed with the submission of the assessee and held that by virtue of the development agreement entered into by the assessee with the occupants of the building under redevelopment, the assessee is liable to provide each o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent per month to the tenants/occupants/owners/members of the aforesaid society as monthly compensation in lieu of temporary alternate accommodation for acquiring development rights from the tenants/occupants/owners/members for vacating and handing over the existing premises to the assessee. We find that it was further agreed under the agreement that such payment shall not be made to the tenants/occupants/owners/members if they shift to their own premises elsewhere. Thus, from the perusal of the record, it is evident that the compensation was paid for the alternative accommodation due to the disposition of the occupants from the property under development. As per Revenue, the compensation which is in the nature of hardship compensation was paid by the assessee without deducting TDS under section 194-IC of the Act and thus the assessee is assessee in default within the meaning of section 201(1)/201(1A) of the Act. 10. We find that a similar issue came up for consideration before the Coordinate Bench of Tribunal in Nathani Parekh Construction Pvt. Ltd. (supra), wherein while deciding the issue in favour of the taxpayer the Co-ordinate Bench of the Tribunal vide order dated 11.07.2024 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason that the existing property is to be demolished for re-development. From the terms of the said agreement it is clear that the impugned payment made is in the nature of compensation towards hardship the tenants would have to undergo in order to handover the vacant possession of the property for demolition and towards the alternate accommodation charges which the tenant has to bear during the time of re-development. From the observations of the CIT(A) as extracted in the earlier part of this order, the contention of the revenue is that as per section 194IC any sum paid by any person under the specified agreement referred to in section 45(5A) shall be subjected to TDS at the rate of 10% and that since the compensation towards hardship is paid as per specified agreement the TDS provisions under section 194IC is applicable in assessee's case. Therefore before proceeding further we will first look at the relevant provisions of Section 45(5A) and Section 194IC. "45(5A) Notwithstanding anything contained in sub-section (1), where the capital gain arises to an assessee, being an individual or a Hindu undivided family, from the transfer of a capital asset, being land or buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum as income-tax thereon. 10. Accordingly the provisions section 194IC of the Act would get attracted at the time of credit / payment of any sum by way of consideration under the specified agreement as defined under section 45(SA). Therefore the question here is whether the alternate accommodation/hardship allowance paid by the assessee is a sum by way of consideration under the specified agreement as claimed by the revenue. The term "consideration" is not specifically defined for the purpose of section 194IC, and its meaning has to be inferred from the definition of the term "specified agreement" as extracted above. As per the definition, it is the agreement entered into between the owner and the developer allowing the developer to develop the real estate project in consideration of share in the land or building or both in such project, with or without payment of part of the consideration in cash. Therefore in our considered view any sum paid under the specified agreement, to be treated as a "consideration" should have been paid as part of a share in the land or building or both including cash payments. In the given case, the payment towards altern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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