IT (TDS) 3(3), MUMBAI vs. SONATA REALTY P.LTD, MUMBAI

सुनवाई की तायीख / Date of Hearing : 03.11.2016 घोषणा की तायीख /Date of Pronouncement : 18.11.2016 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

“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 r.w.s 37(1) of the Maharashtra Town Planning Act 1966, MRTP Act and other powers enabling the same have approved the proposal to modify regulation 4A(ii) and thereby increased the FSI of the entire „G‟ Block of BKC. The Development Control Regulations or BKC specify the permissible FSI. Pursuant to such provisions, the assessee became entitled for additional FSI and has further acquired / purchased the additional built up area for construction of additional FSI and has further acquired / purchased the additional built up are for construction of additional area on the aforesaid plot. Thus, the assessee has made payment to MMRDA under Development Control for acquiring leasehold land and additional built up area. The decision of the Tribunal in the case of National Stock Exchange (supra) and Mukund Ltd (supra) have been well discussed by the Ld CIT (A) in his order. The decision of the Hon‟ble jurisdictional High Court in the case of Khimline Pumps Ltd 258 ITR 459 (Bom) squarely and directly apply on the facts of the case wherein the Hon‟ble jurisdictional High Court has held that payment for acquiring leasehold land is a capital expenditure. Considering the entire facts in totality in the light of the judicial decisions vis-a-vis provisions of section 194-I, definition of rent as provided under the said provision, we do not find any reason to temper or interfere with the finding of the CIT (A) which we confirm. Similarly, in ITO (TDS) (OSD), Range 2 vs. Navi Mumbai SEZ (P) Ltd (2014) 147 ITD 261 (Mum), this Tribunal has held that lease premium paid by assessee to CIDCO for acquiring leasehold land for a period of 60 years in order to develop a Special Economic Zone (SEZ) does not fall within the meaning of „rent‟ under section 194-I and therefore, assessee is not liable to deduct tax at source while making said payment.

In our view, the facts of the present case are identical to the facts of the cases referred by the Ld Counsel for the assessee. The order dated 29.5.2013 passed by the Ld CIT (A) is in accordance with the orders passed by the Tribunal in above referred cases. Following the findings of this Tribunal on the identical issue, we dismiss the appeal of the Revenue.”

by the Revenue.

6. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 18th November, 2016.