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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI B R BASKARAN & SHRI AMIT SHUKLA
आदेश ORDER �ी अिमत शु�ला, �या स: PER AMIT SHUKLA, JM:
The aforesaid appeal have been filed by the revenue against common order dated 13.01.2013, passed by Ld. CIT(Appeals)-14, Mumbai for the assessment year 2010- 11 and 2011-12 in relation to the order under section 201(1) / 201(1A). In both the appeals, the common issue involved is that, assessee has been treated to be assessee-in-default for
2 कामधेनु �ब�डरस अँड देवेलोपेस� M/s Kamdhenu Builders & Developers ITA No. : 2397/Mum/2013 ITA No. : 2399/Mum/2013 non-deducting of tax-at-source on the amount paid to City Industrial Development Corporation (CIDCO) towards a premium for house hold rights in respect of leasehold plot which has been treated by the AO as “rent” within the ambit and definition of section 194I.
The assessee which is engaged in the business of construction and real estate development was allotted a plot in Navi Mumbai by CIDCO for development of commercial complex. For the allotment of such a plot, total lease premium for the acquisition of the said plot was at Rs.24,12,30,536/-. The details of which are as under:- Asst. yr. Amount (Rs.) 2010-11 12,80,15,268 2011-12 11,32,15,268 Total Rs. 24,12,30,536
The AO held that, such a payment of lease premium falls under the nature of “rent”, as defined under section 194I and, therefore, assessee should have deducted TDS on such payments. Thus, failure to deduct TDS is default under section 201(1) and accordingly, the assessee would be treated as assessee-in-default under section 201(1) and also liable for interest under section 201(1A). The AO’s contention can be summarized in the following manner:-
a) The definition of rent under the Act is of widest amplitude and scope and encompasses within its fold, payment by way of lease premium. The amended definition of ‘rent’ w.e.f. 13/07/2006 has further winded its scope, made it more comprehensive for a period of 60 years.
3 कामधेनु �ब�डरस अँड देवेलोपेस� M/s Kamdhenu Builders & Developers ITA No. : 2397/Mum/2013 ITA No. : 2399/Mum/2013 b) The payment of lease premises by the appellant to CIDCO is nothing but ‘advance rent’ paid by the appellant for a period of 60 years.
c) The nomenclatures given by the parties concerned for making payment to the payee are of no significance as the same is covered by the definition of rent in the Act. It is the substance of the transaction which gains precedence and supremacy over the nomenclature.
d) The payment could be under any lease, sublease, tenancy or other agreement or arrangement’. This, in itself signifies that the legislature has covered all sorts of agreements or arrangements to cover the transaction within the meaning of section 194I by defining such payments as ‘rent’.
e) The definition of ‘rent’ for the purpose of section 194I has included within its ambit ‘any payment’ made ‘under any lease’. Thus, the definition of ‘rent’ is wider in its text and context than the meaning commonly assigned to the rent in the context of a ‘lease’. The use of the expression ‘any’ before ‘payment’ further enlarges the ambit and scope of the definition of ‘rent’ u/s 194I.
f) The AO has concluded that all kinds of payments in respect of a lease are covered under the term ‘rent’ defined in section 194I of the Act. It is the substance of the transaction which gains precedence and supremacy over form or nomenclature.
g) Also, it is immaterial whether the CIDCO has shown this payment as a revenue receipt or as a capital in its books of
4 कामधेनु �ब�डरस अँड देवेलोपेस� M/s Kamdhenu Builders & Developers ITA No. : 2397/Mum/2013 ITA No. : 2399/Mum/2013 account. The TDS provisions are attracted whenever a payment or credit is made on account of certain types of payments specified in chapter XVII-B of the Act. As an example the AO has cited section 194LA where even payments in the nature of capital receipts are subject to TDS.
h) There are various restrictive clauses in the lease agreement which indicate that the lease transaction is merely for the use of the land. Hence it cannot be said that there was any intention on the part of the CIDCO to grant or allow acquisition of land rights”.
Besides this, he also relied upon various decisions.
On the other hand, the assessee’s contention had been that, the lease premium is not in the nature of rent, because it has been paid as a premium for allotment of a plot for a period of 60 years at Rs.100/- per month. Such a lease premium is the cost of the plot of land. In support, clause 21 of “Allotment Letter” was referred and relied upon. The Ld. CIT(A) in the impugned order after detail discussion has held that the premium paid in respect of these plots will not fall in the nature of “rent” as contemplated under section 194I, therefore, assessee is not required to deduct tax at source.
Before us, it has been admitted by both the parties, that this issue is squarely covered by catena of Tribunal decisions in various cases for similar payment of lease premium to SIDCO, some of which are as under:
5 कामधेनु �ब�डरस अँड देवेलोपेस� M/s Kamdhenu Builders & Developers ITA No. : 2397/Mum/2013 ITA No. : 2399/Mum/2013 Sr.N. Case Law Citation/ITA No. 1 ITO(TDS) v. Wadhwa & Associates Realtors (P) Ltd. 146 ITD 694(Mum) 2 ITO(TDS) v. Navi Mumbai SEZ(P) Ltd. 147 ITD 261(Mum) 3 CIT v. Khimline Pumps Ltd.[2012] 258 ITR 459 (Bom) 4 ITO(TDS) v. Kantadevi Chaudhary, ‘A’ Bench Order ITA 624/M/2014 Dated 02.07.2015 5 ITO(TDS) v. Keystone Lifespaces Pvt Ltd-‘A’ Bench ITAs 2088 & 2089 Order dated 16.03.2016 /Mum/2014 5. After considering the relevant finding given in the impugned order as well as various decisions of the Tribunal, we agree that, now this issue stands covered by various decisions of the Tribunal, wherein consistently it has been held that the consideration paid for acquiring the leasehold right is a capital expenditure and does not fall within the ambit of ‘rent’ under section 194I. Accordingly, we also hold that lease premium paid by the assessee for acquiring development of leasehold rights for the period of 60 years cannot be reckoned as ‘rent’ under section 194I and such a single payment for acquisition of rights of lease to enjoy the leasehold rights on a plot of the land is a capital expenditure, which is not liable for deduction of tax-at-source. Accordingly, the ground raised by the department in both the impugned assessment years does not stand and as such we dismiss the same. 6. In the result, both appeals filed by the department are dismissed. Order pronounced in the open court on 2nd August, 2016.
Sd/- Sd/- (बी आर भा�करन) (अिमत शु�ला) लेखा सद�य �याईक सद�य (B R BASKARAN) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 2nd August, 2016
6 कामधेनु �ब�डरस अँड देवेलोपेस� M/s Kamdhenu Builders & Developers ITA No. : 2397/Mum/2013 ITA No. : 2399/Mum/2013 ��त/Copy to:- 1) अपीलाथ� /The Appellant. 2) ��यथ� /The Respondent. 3) The CIT –25, Mumbai. 4) The CIT –City -25, Mumbai 5) िवभागीय �ितिनिध “ए”, आयकर अपीलीय अिधकरण, मुंबई/ The D.R. “A” Bench, Mumbai. 6) गाड� फाईल \ Copy to Guard File. आदेशानुसार/By Order / / True Copy / /
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, मुंबई Dy./Asstt. Registrar I.T.A.T., Mumbai *च�हान व.िन.स *Chavan, Sr.PS