Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: SHRI B.R.BASKARAN (AM) & SHRI RAM LAL NEGI (JM)
The present appeal and Cross Objection have been preferred by the Revenue and the assessee respectively against order dated 14/03/2014 passed CO No. 116/MUM/2015 Assessment Year: 2010-11 by the Ld. CIT(A)-37, Mumbai for the Asst. year 2010-11. Since the appeal and cross objection pertain to the same assessee for the same assessment year, both were clubbed and heard together and are being disposed of by this common order for the sake of convenience.
Brief facts of the case are that the assessee engaged in the business of real estate and constructions, filed its return of income for the relevant assessment year declaring the total income of Rs. 1,20,62,49,330/-. The return was processed and the AO passed assessment order u/s 143(3) of the Income Tax Act, 1961 (in short ‘The Act’) determining the total income of Rs. 1,77,04,05,282/- after inter alia making disallowance of Rs. 51,32,63,248/- towards lease rent payment made to MMRDA. The assessee challenged the assessment order before the CIT(A). The Ld. CIT(A) allowed this ground of appeal of the assessee and deleted the disallowance made u/s 40(a)(ia) of the Act. Against the said order the revenue is in appeal before the Tribunal.
2. The revenue has challenged the impugned order dated 14/03/2014 passed by the Ld. CIT(A) on the following effective grounds:-
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the sum of Rs. 51,32,63,248/- paid by the assessee to MMRDA for acquiring lease hold rights and additional FSI for the leased plot was not in the nature of rent as defined in Section 194I of the IT Act, and is not liable for TDS.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that, the amended definition of “rent”
CO No. 116/MUM/2015 Assessment Year: 2010-11 in Explanation to section 1941 w.e.f. 13/07/2006 is comprehensive and includes any payment by whatever name called under any lease, sub- lease, tenancy or any other arrangement.”
At the outset, the Ld. Counsel for the assessee submitted that the issues involved in the present appeal have been decided in favour of the assessee and against the revenue by the ITAT Mumbai in assessee’s own cases for the A.Y. 2008-09 and ITA No 4457/Mum/2012 for the A.Y. 2010-11 and C.O. No 42/Mum/2012 and CO No 167/Mum/2012 respectively, arising out of the said appeals. Since, the identical issues have been decided in favour of the assessee, the present appeal is squarely covered by the decision of the ITAT Mumbai.
On the other hand the Ld. Departmental Representative did not dispute that the facts and circumstances of the present case is similar to the facts of the cases referred, however, relying upon the findings of the AO submitted that since each and every case is required to be decided on its own merit, the AO has rightly made the disallowance in question and the Ld. CIT has wrongly allowed the appeal of the assessee.
We have heard the rival submissions and perused the documents carefully in the light of the respective contentions of the parties. We have noticed that the coordinate Bench of the Tribunal has decided the identical issues in favour of the assessee in assessee’s own cases referred above, by following the decision dated 3.6.2013 rendered by the Mumbai Tribunal in and CO No 6/Mum/2013 in the case of Wadhawa & Associates Retailors Pvt. Ltd.. The relevant portion of the order reads as under:- “ 3. To understand the issue reference can be made to the facts relating to assessment year 2008-09 and the facts for A.Y 2010-11 CO No. 116/MUM/2015 Assessment Year: 2010-11
are also the same except difference in figures. The assessee made a payment of Rs. 260,19,80,000/- to Mumbai Metropolitan Regional Development Authority (MMRDA) for additional built up area. According to AO such payment made by the assessee is in the nature of rent for the use of land, therefore, the assessee was required to tax under section 194I of the Act. Accordingly, vide order dated 29/3/2011 passed under section 201(1) and 201(1A) the assessee has been fastened with the tax liability as under: Tax under section 201 - Rs.58,95,94,618/- Interest U/s. 201(1A) - Rs. 23,58,37,848/-
Ld. CIT(A) has deleted such addition made by the AO. The department is aggrieved and hence has filed aforementioned appeal. 3.1 Figures for assessment year 2010-11 are as under:
Payment made for additional built up area To MMRDA - Rs.39,18,30,000 2. Tax u/s. 201(1) - Rs. 4,03,58,490 3. Interest under section 201(IA) - Rs. 1,04,,93,207 4. Total tax liability - Rs. 5,08,51,697
4. After hearing both parties we found that the issue is covered by the aforementioned decision of ITAT. For the sake of completeness the relevant portion of order passed in the case of ITO vs. M/s.Wadhawa & Associates Realtors Pvt. Ltd.(supra) is as under:
“9. We have considered the rival submissions, perused the order of the lower authorities and the material evidence brought on record in the form of paper Book and the judicial decisions relied upon by the rival parties. The entire grievance revolves around the premium paid CO No. 116/MUM/2015 Assessment Year: 2010-11 by the assessee to M/s. MMRDA Ltd. for the leasehold rights acquired by the assessee through the lease deed dt. November, 2004. It is the say of the Revenue that this lease premium was liable for deduction of tax at source failing which the assessee is to be treated as assessee in default. It is the say of the assessee that such lease premium is in the nature of capital expenditure and therefore there is no question of deduction of tax at source. Further, the said lease premium does not come within the purview of the definition of rent as provided u/s. 194-1 of the Act.
We have carefully perused the lease deed as exhibited from page-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 a 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 show that the payment to MMRD is also for additional built up are and also for granting free of FSI area, such payment cannot be equated to rent. It is also seen that the MMRD in exercise of power u/s. 43 r.w. Sec. 37(1) of the Maharashtra Town Planning Act 1966, MRTP Act and other powers enabling the same has approved the proposal to modify regulation 4A(ii) and thereby increased the FSI of the entire ‘G’ Block of BKC. The Development Control Regulations for 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 area on the aforesaid plot. Thus the assessee has made payment to MMRD under Development Control for acquiring leasehold land and additional built up area. The decisions of the Tribunal in the case of M/s. National Stock CO No. 116/MUM/2015 Assessment Year: 2010-11
Exchange (supra) and Mukund Ltd (supra) have been well discussed by the Ld. CIT(A) is his order. The decision of the Hon’ble Jurisdictional High Court in the case of Khimline Pumps Ltd. (supra) 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-à-vis provisions of Sec. 194-1, definition of rent as provided under the said provision, we do not find any reason to tamper or interfere with the findings of the Ld. CIT(A) which we confirm.”
Since, the facts and circumstances of the present case are identical to the cases referred above in assessee’s own cases and the identical issues involved in the present appeal have already been decided in favour of the assessee, we respectfully follow the view taken by the coordinate Bench and allow the appeal of the assessee.
CO 116/Mum/2015 A.Y. 2010-11.
The assessee has filed the present Cross Objection on the following grounds:- On the facts and in the circumstances of the case, the Learned A.O. has:- Lease rent paid to MMRDA of Rs. 51,32,63,248/-
1. erred in objecting the order of CIT(A) on the ground sum paid of Rs. 51,32,63,248/- to MMRDA for acquiring lease hold rights and additional FSI for the leased plot was in the nature of rent as defined in section 1941 of the Act and liable for TDS.
CO No. 116/MUM/2015 Assessment Year: 2010-11
2. Without prejudice to above erred in not appreciating the fact that State Government and local authority have an overriding title on payment made to MMRDA and hence same does not require deduction of tax at source under section 196 of the Act.
Since, we have upheld the impugned order passed by the Ld. CIT(A), we do not find any merit in the cross objections filed by the assessee. Hence, we dismiss the same as infrutuous.
In the result, the appeal filed by the department and Cross Objection filed by the assessee for the A.Y. 2010-11 are dismissed.
Order pronounced in the open court on 17th August, 2016