2013 (9) TMI 1098 - AT - Income Tax

Tds u/s 194I - on deduction of TDS and levy of interest under section 201(1) / 201(1A) - Held that - Learned Commissioner (Appeals) was justified in coming to the conclusion that the payment made by the assessee to MMRDA is not in the nature of rent within the ambit of section 194 I. Consequently the order passed by the learned Commissioner (Appeals) is hereby upheld and the ground raised by the Revenue is treated dismissed.

Summary

Issues involved:
1. Non-deduction of TDS and levy of interest under section 201(1) / 201(1A)
2. Interpretation of section 194-I in relation to payment of lease premium
3. Applicability of previous Tribunal decisions in similar cases

Issue 1: Non-deduction of TDS and levy of interest under section 201(1) / 201(1A):
The appeal by the Revenue and cross objection by the assessee challenged the order related to non-deduction of TDS and levy of interest under section 201(1) / 201(1A) for the assessment year 2009-10. The Revenue contended that the assessee did not comply with section 194-I, leading to 13 grounds of challenge. However, the Tribunal decided the appeal based on the issues presented and challenged. The Assessing Officer found that the payment made by the assessee to MMRDA for additional FSI was in the nature of rent under section 194-I, thus requiring TDS deduction and resulting in interest under section 201(1) / 201(1A).

Issue 2: Interpretation of section 194-I in relation to payment of lease premium:
The assessee argued that the payment made to MMRDA was not in the nature of rent under section 194-I, citing previous Tribunal decisions and facts similar to those in the case of Shree Naman Developers Ltd. The Commissioner (Appeals) agreed with the assessee, stating that the payment for additional FSI was not rent as per section 194-I. The Tribunal upheld this decision, emphasizing that the lease premium paid did not fall within the purview of section 194-I, as it was considered a capital expenditure rather than rent.

Issue 3: Applicability of previous Tribunal decisions in similar cases:
The Tribunal referred to previous decisions, including the case of Wadhwa & Associates Realtors Pvt. Ltd., where it was held that the premium paid for leasehold land did not require TDS deduction under section 194-I. The Tribunal also highlighted that the payment for additional FSI was not periodic rent and, therefore, not subject to TDS deduction. Based on these precedents and the similarity of facts, the Tribunal dismissed the Revenue's appeal, affirming that the payment made to MMRDA was not in the nature of rent under section 194-I.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal, stating that the payment made by the assessee to MMRDA was not subject to TDS deduction under section 194-I. The cross objection by the assessee was also dismissed as it became infructuous based on the Tribunal's findings.