ACIT (TDS) 1(2), MUMBAI vs. ESSEL INFRA PORJECTS LTD, MUMBAI

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ITA 2386/MUM/2015Status: DisposedITAT Mumbai17 March 2017AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the payment made for acquiring leasehold land and additional built-up area to MMRDA is a capital expenditure and not 'rent' as defined under Section 194-I. Therefore, TDS was not deductible on such payments.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the demand raised by the AO. The AO had held the assessee liable for not deducting TDS on payments made to MMRDA for acquiring land on lease, considering it as rent under Section 194-I.

What were the issues?

Whether the payment made for acquiring leasehold land on lease premium to MMRDA is considered 'rent' for the purpose of TDS under Section 194-I of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 194-I,Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI PAWAN SINGH

For Appellant: DR प्रत्मथी की ओय से/
For Respondent: Shri Aditya R. Ajgaonker
Hearing: 23.02.2017Pronounced: 17.03.2016

सुनवाई की तायीख / Date of Hearing : 23.02.2017 घोषणा की तायीख /Date of Pronouncement : 17.03.2016 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

1.

This appeal filed by the Revenue on 27.4.2015 is against the order of the CIT (A)-59, Mumbai dated 19.2.2015 for the assessment year 2010-2011.

2.

In this appeal, Revenue raised five grounds in toto. The core issue raised in this appeal relates to the applicability of the TDS provisions on the payments made by the assessee to the Mumbai Metropolitan Regional Development Authority (MMRDA) in connection with the acquisition of plot of land on lease. 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of „project consultancy services and development of infrastructure activities‟. It is observed by the AO that the assessee-company had paid lease premium to MMRDA on which TDS has not been deducted. Therefore, AO held that the assessee has committed default within the meaning of section 201(1) of the Act by not deducting tax u/s 194I of the Act on payment and the assessee is liable to pay Rs. 27,58,302/- u/s 201(1) and 201(1A) of the Act. Accordingly, AO passed the order dated 18.1.2012 u/s 201(1)(1A) of the Act. Aggrieved, assessee carried the matter in appeal before the first appellate authority.

4. During the proceedings before the first appellate authority, after considering the submissions of the assessee, CIT (A) deleted the demand raised by the AO. While granting relief, CIT (A) relied on the decision of the Tribunal in the case of M/s. Wadhwa Associates Realtors (P) Ltd [2013] 36 Taxman 526 (Mumbai Tribunal). In para 3.5 of his order, CIT (A) held that the assessee is not liable to deduct the tax u/s 194-I on the amount paid to MMRDA for Development Charges etc. Aggrieved with the said decision of the CIT (A), assessee is in appeal before the Tribunal.

5.

During the proceedings before us, Ld Counsel for the assessee narrated the above facts and filed a copy of the order of the Tribunal in the case of ITO (TDS) vs. M/s. Sonata Realty Pvt Ltd in (AY 2012-13), dated 18.11.2016 and submitted that an identical issue came up for adjudication before the Tribunal and the Tribunal decided the issue in favour of the assessee dismissing the Revenue‟s appeal. In this regard, Ld AR read out the relevant paras from the said Tribunal‟s order (supra), dated 18.11.2016.

6.

On the other hand, Ld DR for the Revenue relied on the order of the AO.

7.

We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited order of the Tribunal, wherein one of us (AM) is a party to the said order and also the relevant material placed before the Tribunal. On perusal of the said Tribunal‟s order dated 18.11.2016, we find, para 4 of the said order is relevant in this regard. Considering the significance and for the sake of completeness of this order, the said para 4 of the Tribunal‟s order (supra) is extracted as under:-

4.

After hearing the Ld DR and on perusal of the orders of the Revenue Authorities as well as the cited decision of the Tribunal (supra), we find, the said order of the Tribunal in the case of ITO vs. M/s. Skyline Construction Co (supra) dated 30.10.2015 is relevant in this regard and for the sake of completeness of this order, relevant paras from the said Tribunal‟s order are extracted as under:- “We have perused the documents on record in the light of the rival submissions and also gone through the above referred orders passed by the ITAT Mumbai Benches. In Wadhwa & Associates Realtors (P) Ltd (supra), this Tribunal has held as under:- “We have carefully perused the lease deed as exhibited from pages 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 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 shows that the payment to MMRDA is also or additional built up area and also for granting free of FSI area, such payment cannot be equated to rent. It is also seen that the MMRDA in exercise of power u/s 43

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