ITO (TDS) RG 2(3), MUMBAI vs. MAHAVIR IMPEX, NAVI MUMBAI

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ITA 2344/MUM/2013Status: DisposedITAT Mumbai08 August 2016AY 2010-113 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 lease premium paid for acquiring leasehold rights in land is not in the nature of rent as defined under Section 194I of the Income Tax Act. Therefore, TDS was not deductible on this payment.

What were the facts?

The assessee firm acquired leasehold rights for plots from CIDCO for developing a commercial complex, paying a significant lease premium. The Revenue sought to tax this premium as rent, requiring TDS deduction.

What were the issues?

Whether the lease premium paid for acquiring leasehold rights in land constitutes 'rent' for the purpose of TDS deduction under Section 194I of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 194I

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI “B” BENCH, MUMBAI

Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL & SHRI RAJESH KUMAR.

Hearing: 03.08.2016Pronounced: 08.08.2016

अपीलाथ� की ओर से /By Appellant : Shri Randhir Gupta, D.R. ��यथ� क� ओर से/By Respondent : Shri Subodh Ratnaparkhi, A.R. सुनवाई क� तारीख/Date of Hearing : 03.08.2016 घोषणा क� तारीख/Date of Pronouncement : 08.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by Revenue against the order of Commissioner of Income-Tax (Appeals)-14, Mumbai, dated 31.01.2013 for A.Y. 2010-11 on the point of deduction of TDS.

A.Y. 10-11 [ITO(TDS) vs. M/s. Mhavir Impex] Page 2 2. Assessee is a partnership firm engaged in the business of building construction and real estate development. Assessee acquired Plot Nos. 89 & 90 at Sector-15, Belapur, Navi Mumbai, under agreements to lease dated 09.03.2010 from City and Industrial Development and Corporation (hereinafter called ‘CIDCO’), for development of a commercial complex. The total lease premium paid to CIDCO for the acquisition of the said plot was as under: Sr. No. Plot No. Lease Premium Amount (Rs.) 1 89/Belapur 14,84,71,180/- 2 90/Belapur 14,56,11,180/- Total 29,40,82,360/- 2.1 Issue is regarding deduction of TDS u/s.194I of the Act. Assessing Officer has taken action against assessee for deduction of TDS u/s.194I of the Act. In appeal, CIT(A) granted relief to assessee.

2.2 At the outset of hearing, ld. Authorized Representative pointed out that this issue at hand is covered in favour of assessee by the decision of ITAT, Mumbai ‘C’ Bench in case of ITO (TDS) vs. M/s. Progressive Civil Engineers Pvt. Ltd. in ITA No.2930/Mum/2014. Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar, so following same reasoning, we are not inclined to interfere in the finding of CIT(A) who has held that amount paid by assessee to CIDCO as premium for acquiring leasehold rights in respect of leased land and the same is not in the nature of rent as defined A.Y. 10-11 [ITO(TDS) vs. M/s. Mhavir Impex] Page 3 under the provisions of Section 194I of the Act. So, CIT(A) has rightly granted relief to assesse. We uphold the same.

3.

In the result, the appeal filed by Revenue is dismissed.

Pronounced in the open Court on this the 08th day of August, 2016.

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