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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI RAJENDRA & SHRI AMIT SHUKLA
आदेश ORDER अिमत शु�ला, �या. स.: PER AMIT SHUKLA, JM:
The aforesaid appeal has been filed by the revenue against impugned order dated 11.02.2014, passed by CIT(A)-14, Mumbai in relation to the order passed u/s 201(1)/201(1A) for the assessment year 2011-12, vide which following grounds have been raised :- “(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 (Lodha Crown Buildmart Pvt Ltd) to the Lessor (MMRD) was not in the nature of rent, as defined in the Explanation (i) to section 194I 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 194I from the payment made by the assessee to MMRD for acquisition of the plot of land on lease form MMRDA.
2 Lodha Crown Build Mart P Ltd. (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 form the payment made to MMRDA and levying 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 restoring 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 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”.
At the outset, both the parties agreed that the issue involved in the aforesaid appeal is covered by series of Tribunal decisions in various cases, wherein it has been consistently held that payment of lease premium paid to MMRDA towards acquiring rights and use of land is not covered under definition of rent, within the section 194I and, therefore, assessee is not required to deduct TDS on such payment and, therefore, assessee cannot be treated as assessee in default u/s 201 and consequently no liability for interest 201(1A).
Brief facts are that, during the course of survey proceedings, in the case of MMRDA, it was found that the assessee company had made payment of lease premium of Rs. 405,00,00,000/- to Mumbai Metropolitan Regional Development Authority (MMRDA) for the allotment of plot at Wadala Truck Terminal, Mumbai. The assessee had made payments in two installments i.e. on 25.05.2010 and 23.10.2011 of Rs. 25 crores being the earnest money amount which was subsequently adjusted against lease premium and Rs. 380 crores respectively. The AO held that, the said payments were in the nature of lease rent on which assessee has not deducted tax at source hence there was contravention of provisions of section 194I.
3 Lodha Crown Build Mart P Ltd.
Before the AO, the assessee has made a very detailed submission that amount of one time lease payment was in the nature of premium for acquiring the rights in respect of the plots and it was not in the nature of rent as contemplated u/s 194I. The assessee’s submissions in this regard has been dealt in detail by the AO. However, the AO held that such a payment will fall within the definition of rent u/s 194I, because after the amendment w.e.f. 13.07.2006, even if the payment has been made for lease, sub- lease, tenancy or other agreement either separately or together for any land or building, then it will amount to “rent”. Thus, he held that assessee was liable to deduct TDS on such payment.
Before CIT(A), the assessee has made very detailed submission which has been incorporated by CIT(A) in para 4.2. The Ld. CIT(A) held that, the premium is not paid under any lease but was made upon granting of rights and allotment of plot as it was considered a payment for acquisition of land rights and not merely a payment of rent for the use of the land. The amount charged was as per the stamp duty ready recokner, therefore, such a premium paid is capital in nature and not a rent as contemplated u/s 194I. After following the decision of ITAT Mumbai Bench in the case of M/s. Wadhwa Associates Realtors [2013] 36 Taxman 526, assessee was not liable to deduct TDS, therefore, assessee cannot held to be assessee in default u/s 201(1) and consequently no interest u/s 201(1A) could be charged.
As admitted by both the parties this issue had come up for consideration in series of decisions, some of which are as under :- 1 ITO vs Reliance Industries Limited ITA 1910/Mum2012 2 DCIT vs Paradise Infra-Con Pvt ltd ITA 6193/Mum/2012 3 TRO vs Shree Sawan Builders & Developers P. Ltd. ITA 6148/Mum/2012 4 ITO vs Shah Group Builders Limited ITA 4523/Mum/2012 5 ITO(TDS) vs Wadhwa & Associates Realtors Pvt Ltd. ITA 695/Mum/2012 6 ITO(TDS) vs Parinee Developers Pvt Ltd. ITA 4457/Mum/2012 7 ITO (TDS) vs M/s Trent Ltd. ITA 4629/Mum/2012