9911796707
TMI Blog2014 (4) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is to be seen to determine nature of an item and thus viewed lease premium is nothing but rent because what is described as rent in case of properties leased by MMRDA is incredibly low and does not reflect market valuation. 4. The Ld. CIT(A) has erred in law and on facts in giving the word rent restrictive meaning as against the plain meaning clearly specified in Explanation to section 194I which contains exclusive definition of the rent. In this regard: i. The Ld. CIT(A) has erred in law and on facts in holding that although the section 194I is wide enough to include all types of payments as "rent" within its fold, still use of the words "for the use of" requires that rent is not interpreted beyond its meaning in common parlance. ii. The Ld. CIT(A) has erred in law and on facts in totally ignoring the settled principle of law that where a definition of a word is given by legislature by incorporating the same in the statute, even the courts have no competence to seek such definition by resorting to interpretative process. iii. The Ld. CIT(A) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tenancy. v. The Ld. CIT(A) has erred in law and on facts by holding that only if the tenant/lessee uses the property for his own purpose or employees it for his own benefit, the consideration paid would be rent as defined in sec.194I of the Act, but if the property is exploited in a manner that its identity does not remain the same and is sold for a profit, it cannot be called "use" of property by the tenant and instead amounts to exploitation of property which would be over and above the rights of a tenant. vi. The Ld. CIT(A) has erred in law and on facts in not appreciating that the use of the words 'use of', either separately or together, any land or building or land appurtenant to a building or machinery, or plant or equipment or furniture or fittings clearly shows that use encompasses within its fold the improvement and creation of new structures/ facilities and any other exploitation by the lessee and therefore, restrictive meaning to the word given by CIT(A) is repugnant to the context in which the term "use of" is used in Explanation to sec. 194I of the Act. 6. The Ld. CIT(A) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in ignoring the established principles of jurisprudence that reference to the other Act is required only in case of doubt for deciding the issue pertaining to interpretation and not when the definition of the rent is specifically enshrined in the Act in clear expression of legislative intendment to preclude such exercise as has been undertaken by the Ld. CIT(A). ii. The Ld. CIT(A) has erred in law and on facts by failing to appreciate the fact that usual distinction between the premium and rent becomes irrelevant when the term rent defined in Explanation to section 194I clearly encompasses any payment by whatever name called under lease sub-lease, tenancy or any other agreement or arrangement for the use of any land. iii. The Ld. CIT(A) has erred in law and on facts in relying on definition of lease u/s 105 because such definition in no way has any bearing on the point in issue, namely the definition of rent which is clearly given in Explanation to Section 194I. The Ld. CIT(A) has erred in law and on facts in holding that the lease premium is a payment which precedes the grant of lease where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s all encompassing and covers 'any payment', 'by whatever name called', 'under a lease or sub-lease, tenancy or any other agreement or arrangement'. 11. The Ld. CIT(A) has erred in law and on facts in applying the maxim of Approbate and Reprobate to hold that a decision taken by the revenue authorities in assessment proceedings cannot be ignored for the purpose of TDS provision. In this regard: i. The Ld. CIT(A) has failed to appreciate that the proceedings for assessment of income of the payee stand on a different footing, from the proceedings u/s.201 in the case of the deductor where liability to deduct TDS is to be determined as per the specific provisions enshrined in sec.194I of the Act. ii. The Ld. CIT(A) has erred in law and on facts in failing to appreciate that TDS provisions in Chapter XVIIB are attracted even in respect of acquisition of capital assets as evident from the provision of law contained in sec.194IA of the I. T. Act, 1961. iii. The Ld. CIT(A) has erred in law and on facts in engaging into academic exercise of Approbate and Repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01(1) of the Act on the lease premium paid of Rs. 11,00,001/- by treating the appellant company as "assessee in default" and charging interest under section 201(1)A of the Act. The Appellant submits that the tax levied u/s. 201(1) and interest levied u/s.201(1A) of the Act by the AO is not warranted on the facts and circumstances of the case and the same ought to be deleted. 3. The CIT erred in confirming the action of the AO and holding that the Appellant has failed to comply with the provisions of Section 194I of the Act since it has not deducted TDS on lease premium of Rs. 11,00,001/-, paid by the appellant to M/s. Mumbai Metropolitan Regional Development Authority (MMRDA). The Appellant submits that on the facts and circumstances of the case the TDS was rightly not deducted u/s. 194I of the Act. 4. The CIT erred in confirming the action of the AO and holding that lease premium of Rs. 11,00,001/- paid to M/s MMRDA was payment of Income by way of Rent since the appellant had not acquired any rights in land. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the order of the AO passed u/s. 201/201(1A) of the Act,he held that assessee was granted lease of plot of land for total lease premium of Rs. 9,18,03,05,550/-, that as per the lease-deed, dated 15.07.2008 assessee had to pay premium in two installments of Rs. 4,49,01,52,775/- and Rs. 4,59,01,52,775/-, that assessee had paid lease premium to MMRDA, that the right of the assessee in the land allotted to it was not only to use the land but it required all the rights belonging to owner of the land 4 a period of 80 years other than the right to the mineral and ores,that by virtue of payment of lease premium a large bundle of right attached to the land acquired by the assessee, that another premium of Rs. 6.96 Crores was paid by the assessee to MMRDA in pursuance of the supplementary lease-deed dated 13.07.2007 by virtue of which assessee was permitted to additional built up area i.e. floor space of 72,500 sq mts. FAA referred to clause-2 of the supplementary lease-deed and held that above lease premium was charged for additional built up area on plot No. C-64 already leased to the assessee vide lease-deed dated 01. 09.2006 and for which premium was paid by the assessee and the lesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said lease premium does not come within the purview of the definition of rent as provided u/s. 194-1 of the Act. 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 proceeds 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 MMRD is also for additional built up are and also for grating free of FSI area, such payment cannot be equated to rent. It is also seen that the MMRD in exercise of power u/s. 43 r.w. Sec. 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 Regulations for BKC specify the permissible FSI. Pursuant to such provisions, the assessee became entitled for additional FSI and has further acquired/p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any legal rights in the plot of land,that it had not shown by way of any document that it had acquired any lease hold right in the land or any capital asset, that payment of Rs.11 lacs was in nature of payment by way of rent, that assessee was required to deduct TDS on the above payment, that provisions of section 201 and 201(1A) would be applicable in respect of the payment of Rs. 11 lacs for the block No. RG-1-A in the G Block of BKC. He upheld the order of the AO. 8. Before us, AR submitted that FAA had differentiated the cases of plot C64&C-66 and plot no. RG-1A on the basis of signing of lease deed,that because of certain technical problems lease agreement was signed later on,that for purpose of section 201 and 201(1A) of the Act there could not any difference on the basis of date of signing of lease deed, that the payment was not in nature of rent. DR supported the order of the FAA. We have heard the rival submission and perused the material before us. We find that vide letter dated 04.05.2007 MMRDA had informed the assessee that it had approved the proposal of offer of allotment of the plot of land for construction of two level underground car park with ground above. Leas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
