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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: S/SHRI B.R.BASKARAN & AMARJIT SINGH
Assessee by: Shri Hari S. Raheja Department by: Ms. Radha K. Narang सुनवाई की तारीख / Date of Hearing: 30.12.2015 घोषणा की तारीख /Date of Pronouncement: 22.01.2016 आदेश / O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 07.04.2013 passed by the Commissioner of Income Tax (Appeals)-14, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2008-09.
ITA No.4430/Mum/14 A.Y. 2008-09
The facts of the case are that survey u/s. 133A of the Income Tax Act, 1961( in short “the Act”) was carried out on 09.02.2011 in the case of The Mumbai Metropolitan Region Development Authority (MMRDA). It was found that the MMRDA had given plots to the assessee company on lease through tender. For the same, the assessee company has made payments by way of lease rent and other sums termed as premium of Rs.81,50,729/- in financial year 2007-08. It was understood that no tax was deductable on such payment of lease premium by the assessee company. Notice dated 15.02.2011 was served upon the assessee and the assessee company was asked to show cause as to why sum paid termed as premium/other sums should not be treated as lease rent falling under the provisions of section 194(I) of the Act and why the assessee should not be treated as an assessee in default as per provisions of section 201(1) and 201(1A) of the Act. In reply to that the assessee took the plea that lease premium was paid in pursuance of agreement, therefore, lease premium was required to be treated as capital expenditure and was not subject to TDS. Since lease rent was not paid to the MMRDA, therefore provision of 194(I) of the Act is not applicable. Subsequently, the Assessing Officer treated the lease premium as lease rent and applied provision of 194I of the Act. The assessee filed the appeal before learned CIT(A) and the learned CIT(A) deleted the said addition and held that the provision u/s. 194I, 201(1) and 201(1)A are not applicable to the case of assessee. Feeling aggrieved the revenue has filed the present appeal.
ITA No.4430/Mum/14 A.Y. 2008-09
We have heard the arguments advanced by the learned representative of the parties and perused the record. The CIT(A) has passed the order in view of the observations in case of M/s. Wadhwa Associates Realtors (P) Ltd. [2013] 36 Taxman 526 The relevant para 10 of the order is hereby reproduced below:-
10. 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 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 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 has approved the proposal to modify regulation 4A(ii) and thereby increased the FSI of the entire ‘G’ Block of BKC. The Development Control Regulation 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 MMRDS 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 A.Y. 2008-09 totality in the light of the judicial decision vis-a-vis provisions of section 1941, 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.
However, it came into notice that in the case of assessee relevant to the A.Y.2010-11 in ITA No.1298/M/14 Income Tax Appellate Tribunal, Mumbai bench has passed the order on 24.11.2015 and upheld the finding of learned CIT(A) on similar facts and circumstances. There is no need to go into further finding as this issue has already been adjudicated by the Tribunal in the case M/s. Wadhwa Associates Realtors (P) Ltd.[2013] 36 Taxman 526. Therefore in view of the said circumstances, we are of the view that the learned CIT(A) has passed the order judicially and correctly which does not required to interfere with at this appellate stage.