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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
आदेश / O R D E R Per Joginder Singh (Judicial Member) This bunch of five appeals is by the assessee, aggrieved by the impugned orders all dated 29/11/2013 of the First Appellate Authority, Mumbai. The common ground raised in the present appeals is with respect to holding that the amount of lease premium on purchase of built up area, addition FSI, additional basement area, etc and the respective amounts i.e. Rs.5,70,000/- (A.Y.1995-96), Rs.2,30,000/- and let payment charges of Rs.32,85,000/- (A.Y. 1996-97), Rs.52,71,655/- and let payment charges of Rs.17,28,345/-(Assessment year 1997-98), Rs.19,22,909/- (Assessment year 2007-08) and Rs.1,05,09,375/- (Assessment year 2006-07) and consequently holding the assessee as assessee is default and liable u/s 201 and 201(1A) of the Act.
During hearing of these appeals, at the outset, the ld. counsel for the assessee, Shri Mandar Vaidya, claimed that the impugned issue is covered in favour of the assessee by the decision of the Tribunal dated 04/12/2015 for Assessment year 2009-10( ITA No.3889/Mum/2014). The ld. counsel for the assessee only argued the issue of liability u/s 201 and 201(1A) for failure to deduct tax at source. This factual matrix was consented to be correct by the ld. DR, Shri Rajguru.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal dated 04/12/2015 for ready reference:-
The revenue has filed the appeal against the order of learned Commissioner of Income Tax (Appeals)-14, Mumbai [hereinafter referred to as the “learned CIT(A)
] dated 07.03.2014 relevant to the A.Y. 2003-04 passed u/s 201(1)/201(1A) of the Income Tax Act, 1961( in short “the Act”).
2. The revenue has raised the following grounds of appeal:- “(i) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the amount paid by the Lessee (M/s. Mumbai Pune Motor Malak Shramivan Premises C.H.S. Ltd.) to the Lessor (MMRDA) was not in the nature of rent, as defined in the Explanation (i) to section 1941 of the Act for the purpose of deduction of tax at source.”
“(ii) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in accepting the claim of the assessee that no tax was deductible under section 1941 from the payment made by the assessee to MMRDA for acquisition of the plot of land on lease from MMRDA.” “(iii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not confirming the order of the Assessing Officer treating the assessee as an assessee in default u/s. 201 (1) in respect of the amount of tax which has not been deducted under section.194I from the payment made to MMRDA and levyinq interest under section 201(1A).”
“ (iv) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in ignoring the definition of rent, as contained in section 194I and in resorting to interpretative reasoning whereas as per the settled principle of jurisprudence, this exercise is required only when the law is unclear.”
“(v) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in going into the question of taxability of the payment made by the assessee to MMRDA despite the decision of the Apex Court in the case of The Aggarwal Chambers of Commerce V. Ganpat Rai Hiralal, 33 ITR 245, where it has been held that the persons who are responsible for deduction of tax at source are not concerned with the ultimate result of assessment.”
In brief, a survey proceeding u/s. 133A was carried out in the case of M/s.Mumbai Metropolitan Area Development authority (MMRDA) on 09.02.2011. In the course of survey proceedings, it was noticed that M/s. Mumbai Pune Motor Malak Shramjivan Premises Coop. Scty. Ltd.(the assessee) had entered into a lease agreement with MMRDA and the assessee paid Rs,20,25,416/- on 27.08.2008. The payment was in the nature of lease rent. However, in accordance with the provisions of section 194I of the Act, the assessee did not deduct of tax at source. Thereafter, giving proper opportunity of being heard the assessee was directed to pay the tax along with interest to the tune of Rs.5,96,204/- vide assessment order dated 30.03.2011. Being not satisfied with the order of Assessing Officer, the assessee filed the appeal before learned CIT(A) and learned CIT(A) accepted the appeal of the assessee and held that the assessee was not liable to deduct the tax u/s.194I on the lease premium paid to MMRDA. Aggrieved by the order, the assessee has filed the present appeal before the Tribunal.
We have heard the arguments advanced by the learned representative of the parties and have gone through the case files carefully. Mainly, the revenue has contended that assessee has paid lease premium in the nature of rent to MMRDA, therefore, the assessee was liable to deduct the income tax at source payable to the department. Lease
agreement dated 17th January 2007 and lease agreement (rectification) dated 13th September 2007 lies in the paper book speaks about the lease agreement of the assessee firm with MMRDA. The receipt which also lies at page 28 in the paper book speaks about the payment to MMRDA to the tune of Rs.20,25,416/- on account of lease premium which had been paid by the assessee in view of receipt attached with the paper book at page 30. Whether the lease premium can be treated as rent or not, this question the come before the Mumbai, Tribunal in case of M/s. Wadhwa Associates Realtors (P) Ltd. (2013) 36 Taxman 526, Mumbai wherein it is held that the lease premium paid to the MMRDA is not liable to be taxed u/s 194I of the Act. On the basis of aforesaid order the learned CIT(A) has passed the order in question dated 07.03.2014. The relevant para in case of M/s. Wadhwa Associates Realtors (P) Ltd. (2013) 36 Taxman 526, Mumbai is hereby held as under: We have carefully perused the lease deed as exhibited from page l to,42 o 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 MMRDA is also for additional built up area and also for granting free of FSI are, such payment cannot be equated to rent. It is also seen that MMRDS 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 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 plant. 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 M/s. 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 M/s.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 decision vis a vis provisions of section 194I, definition of rent as provided under the said provisions, we. do not find any reason to tamper or interfere with the findings of the Ld CIT(A) which we confirm.”
Subsequently, the matter was again considered by the Hon’ble Tribunal of Mumbai in ITA 1298/M/14 order dated 24.11.2015 in case titled as ITO(TDS) 2(5) Vs. Palton Yarn Pvt. Ltd., Mumbai vide which the order passed by the Mumbai Tribunal mentioned above has been followed. The learned CIT(A) has passed the order on the basis of Tribunal order and we are also by honoring the order of the Mumbai Tribunal, nowhere found any ground to interfere with.
Accordingly section 194I is not applicable to this case hence, the question of interest in view of the provision u/s. 201(1)/201(1A) also does not arise.
Accordingly, the appeal filed by the revenue is hereby dismissed.
2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel and the finding recorded in the aforesaid order of the Tribunal dated 04/12/2015, if kept in juxtaposition and analyzed, we find that on identical issue of the amount paid by the lessee (present assessee) to the lessor (MMRDA), is concerned, the Tribunal held that 194 I is not applicable in the case of the assessee, thus, there was no question of interest under the provisions of section 201(1) and 201(1A) of the Act. It is also noted that while coming to that conclusion, the Tribunal has already relied upon the decision in M/s Wadhwa Associates Realtors Pvt. Ltd. (2013) 36 taxman 526 (Bom.) and the decision in order dated 14/11/2015 in ITO(TDS) vs Palton Yarn Pvt. Ltd., therefore, following the aforesaid decision, the appeals of the assessee are allowed. The ld. counsel for the assessee has not argued any other ground, thus, on the issue in hand, all the appeals of the assessee are allowed. Finally, the appeals of the assessee are allowed. This order was pronounced in the open court in the presence of Ld. representative from both sides at the conclusion of the hearing on 27/04/2016.