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2023 (9) TMI 1348 - AT - Income TaxTDS u/s 194I - additional premium paid by the assessee - whether the additional premium paid by the assessee to MMRDA is in the nature of rent within the meaning of section 194-I ? - Assessee in default - HELD THAT:- The lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any of the property were considered to be not in the nature of rent within the meaning of section 194-I of the Act. We find that in the present case, it is undisputed that the assessee agreed to pay a lease premium for the 80 years lease as per the agreement to lease dated 04/07/2000 entered into with MMRDA. For the grant of extension of time for construction of the building, the assessee was liable to pay an additional premium. Since the aforesaid Circular has been issued by CBDT after the orders passed u/s 201(1) and 201(1A) in the present appeals and the conditions laid down in the Circular have not been examined in any of the cases before us, therefore we deem it appropriate to remand this issue of deduction of tax u/s 194-I on the additional premium paid by the assessee to the file of AO for de novo adjudication in light of the CBDT Circular No. 35/2016 dated 13/10/2016. Accordingly, the order passed by the CIT(A) for the assessment years 2008-09, 2010-11, and 2011-12 to this extent is set aside. As a result, the appeals by the Revenue for the assessment years 2008-09, 2010-11, and 2011-12 are allowed for statistical purposes. Deduction of tax at source u/s 194-A on the interest paid by the assessee on delayed payment of additional premium - As in the exercise of the power conferred by the aforesaid provision, the Central Government vide Notification No. S.O.3489 dated 22/10/1970, inter-alia, notified any corporation established by a Central, State, or Provincial Act for the purpose of section 194A(3)(iii)(f) - Since MMRDA has been established under the Mumbai Metropolitan Region Development Authority Act, 1974, therefore we are of the considered view that the payment made to MMRDA will fall under the exclusion provided under sub-section (3) of section 194-A of the Act. Thus, the assessee cannot be held to be "assessee in default" for non-deduction of tax on the payment of interest on delayed payment of additional premium. Accordingly, the demand raised by the AO u/s 201(1) for non-deduction of tax under section 194A of the Act and interest levied u/s 201(1A) of the Act for the assessment year 2008-09 is deleted. As a result, the appeal by the assessee for the assessment year 2008-09 is allowed.
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