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Income Tax Appellate Tribunal, DELHI BENCH: F , NEW DELHI
Before: SH. BHAVNESH SAINI & SH. O.P. KANT
ORDER PER O.P. KANT, A.M.: These three appeals are directed against common order dated 31.03.2015 passed by CIT(A)-I, Noida [in short ‘the CIT(A)] for assessment years 2011-12, 2012-13 & 2013-14 respectively in relation to tax liability under Section 201(1)/201(1A) of the Income-tax Act, 1961 (in short ‘the Act’) for non-deduction of tax at source.
As common issues are involved in all the three appeals, the same were heard together and disposed of by way of consolidated order for the sake of convenience. The grounds of appeal
raised in for assessment year 2011-12 are reproduced as under:
1. That the learned CIT (A) has erred on facts and in law in upholding action of the assessing officer holding the appellant as assessee-in-default under s. 201 of the Act for non deduction of tax at source (in the sum of Rs 2,30,59,862/-) from lease rent payments to the Yamuna Expressway Industrial Development Authority ("YEIDA") in respect of the 90-year leases of land, ignoring that – 1) The 90-year leases of land involve substantial lease premium or price that is paid upfront. They transfer substantially all the risks and rewards incidental to ownership to the lessee who virtually becomes the owner of the lands on leasehold basis. 2) The recurring annual lease rent is small compared to the lease premium. It is only to maintain the nominal title of the lessor. It does not reflect the real value of the rights transferred under such lease. Lease rent in such leases can not be termed as rent for "the use of land" within the meaning and scope of s. 1941 of the Act. 3) Section 1941 should be construed to only apply to operating leases wherein the lessor retains the substantial ownership and gives the land for use against rent. It cannot apply to a capital lease wherein the lessee becomes the virtual owner and the recurring lease rent is not for the use of land. 4) Ownership of land on lease-hold basis has been recognized by the Hon'ble Supreme Court in Sri Shanti Sharma & Others v. Smt. Ved Prabha & Others (1987) 4 SCC 193 and 1987 AIR 2028. It has also been approved by the Hon'ble Delhi High Court in Krishak Bharati Cooperative Ltd v. ACIT (2012) wherein it held that the 90 year tenure of lease was quite substantial and virtually created ownership rights in favour of the lessee.
2. That without prejudice to the above, the learned CIT (A) has erred in law in not holding, in terms of the rule laid down by the jurisdictional high court in Jagran Prakashan Ltd v. DCIT (TDS) [2012] 345 ITR 288, that even if tax (in respect of lease rent) was deductible but was not deducted, the appellant- assessee still cannot be required to pay the tax not so deducted, because the liability to pay the tax remains that of the payee of income direct. The assessee is liable only to pay the interest under s. 201(1 A) on tax which remains unpaid by the payee. The appellant craves leave to add, amend, modify and/ or forgo any of the grounds of appeal.
3. Briefly stated facts of the case are that the assessee company was engaged in the business of developing, operating and maintaining infrastructure facility. In the case of the assessee, a survey under Section 133A of the Income-tax Act, 1961 (for short ‘the Act’) was conducted on 24.02.2014 for verification of TDS compliance. In view of the finding of the survey, a show cause notice was issued to the assessee company, requiring to furnish the details of information related to payments of lease rent, interest and others made during the three assessment years involved in the present appeals. After considering the submission of the assessee, the Assessing Officer held the assessee company as assessee in default under Section 201(1)/201(1A) read with section 194(I), 194(A) and 194(H) of the Act and computed the tax liability in a composite order passed on 25.03.2014, as under: F.Y. A.Y. Short charge Interest u/s Total tax u/s 201(1) 201(1A) liability 2010-11 2011-12 7,55,18,885 2,92,57,156 10,47,76,041/- 2011-12 2012-13 3,54,79,898 89,36,240 4,44,16,138/- 2012-13 2013-14 6,64,75,004 89,65,115 7,54,40,119/- Total 17,74,73,787 4,71,58,511 22,46,32,298 3.1 The learned CIT(A) partly allowed the appeal of the assessee. Aggrieved, the assessee was in appeal raising the above grounds.
4. Before us, at the outset, the assessee submitted that in the same assessment year, the appeals filed by the Revenue in 4280 & 4281/Del/ 2015, the Tribunal vide order dated 31.08.2017 has confirmed the order of the learned CIT(A), however, directed the Assessing Officer to give assessee an opportunity in terms of proviso to section 201(1) to show, whether the recipient of the income had filed their returns disclosing the lease rent and paid the tax payable by them. He submitted that since the issues in dispute have already been decided, the present appeals may also be disposed of accordingly.
On the other hand, Ld. DR could not controvert this fact.
We have heard the rival submissions and perused the relevant material on record. The Tribunal decided the appeals of the Revenue in 4280 & 4281/Del/ 2015, dated 31.08.2017, against the same impugned order in para 17, which reads as under: “17. On the issue of deduction of tax at source of annual lease rent paid by the assessee to Yamuna Development Express Authority Limited under Section 194I of the Income Tax Act is now squarely covered in favour of the revenue by the decision of the Hon’ble Delhi High Court [2017] 78 taxmann.com 263 (Delhi), Rajesh Projects (India) (P) Ltd. Vs. Commissioner of Income-tax (TDS)-II where in it has been held that: “amounts constituting annual lease rent, expressed in terms of percentage (e.g. 1%) of the total premium for the duration of the lease, are rent, and therefore subject to TDS. Since the petitioners could not make the deductions due to the insistence of GNOIDA, a direction is issued to the said authority (GNOIDA) to comply with the provisions of law and make all payments, which would have been otherwise part of the deductions, for the periods, in question, till end of the date of this judgment.” In view of this ground No. 1 of the appeal of the revenue is allowed. Now if the assessee wishes to take benefit of the proviso to section 201 of the income tax act, then it is for the assessee to furnish necessary detail, so that assessee cannot be treated as assessee in default with respect to the amount of tax deductible. As then proviso added to section 201 is for mitigating any hardship therefore we set aside the issue to the file of the assessing officer with a direction to the assessee to furnish necessary detail is provided therein and to deposit necessary interest under section- 201(1 A) of the act in accordance with the law.”
Since the issue in dispute of deducting tax at source on lease rent and consequent tax liability under Section 201(1) & 201(IA) involved in the present appeals of the assessee has already been decided by the Tribunal (supra) and the Assessing Officer has been directed to carry out the verification as mentioned in para 17 of the order of the Tribunal, these appeals stand disposed of accordingly.
In the result, all the appeals are disposed of in the terms as indicated above. Decision is pronounced in the open court on 29th June, 2018.