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2016 (4) TMI 674 - HC - Income TaxTDS u/s 194I - whether the amount of more than about ₹ 1400 Crores paid by the Joint Venture Company to TIDCO constituted rent or not? - Held that:- Though the amount of ₹ 1412 Crores was paid actually by the lessee to the lessor, it was not paid merely for the purpose of retaining the lease for a period of 99 years. The amount paid was actually determined in an open competitive bidding that took place even before the Joint Venture Company was born. Tata Realty and Infrastructure Limited, which was the Joint Venture Partner, offered this amount for getting the benefit of entering into a Joint Venture Agreement with TIDCO, the benefit of which will spill over to joint venture company in the form of a 99 years lease. Therefore, the mistake of the Department lies in treating the transaction as having commenced from the date of the lease, namely 13.8.2008. The date on which the amount was quantified, the manner in which the amount was quantified and the method of selection of the Joint Venture Partner are the crucial determining factors in this case to understand that the said amount could never constitute rent. To put it differently, a premium or rent irrespective of how they are treated, could be decided only after an agreement for lease is finalised. If an amount has to be determined even before an agreement for lease is finalised, the same would never form part of the rental income. It is this distinction that has been lost sight of by all the authorities. Therefore, question of law has to be answered in favour of the assessee. Whether the payment, which has eventually gone to the coffers of the Government, could be taken to be a payment made to somebody else, for the purpose of attracting the provisions of Section 194-I or not? - Held that:- On facts, there is no dispute that even at the time when the alienation was made by the Government, the amount determined by the parties was agreed to paid to the Government. We have extracted paragraph 5 of G.O.Ms.No.103 earlier. The method of determination of the amount and the method of choosing the lessee alone were left to TIDCO. But, TIDCO was obliged to retain only a sum of ₹ 50/- per sq.ft. and pass on the balance amount to the Government. Therefore, the amount liable to be passed on to the Government cannot be a consideration paid to TIDCO, which is the lessor. It was a consideration paid to the Government. Once it is understood to be a consideration paid to the Government, the question of deducting tax at source does not arise. Therefore, this question of law is also to be answered in favour of the appellant/assessee.
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