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2015 (6) TMI 209 - ITAT MUMBAI

2015 (6) TMI 209 - ITAT MUMBAI - TMI - Liability to TDS u/s 194I- payment made by the assessee being lease premium - CIT(A)deleted the addition - Held that:- As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Wadhwa & Associates Realtors Pvt. Ltd. (2013 (9) TMI 261 - ITAT MUMBAI) as well as Shree Naman Hotels Pvt. Ltd. (2013 (9) TMI 309 - ITAT MUMBAI) decided by the Tribunal, we respectfully follow the decisions rendered in the .....

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No. 6193/MUM/2012 - Dated:- 13-5-2015 - I P Bansal, JM And Rajendra, AM,JJ. For the Appellant : Shri Premanand J For the Respondent : Shri Harsh Bhuta ORDER Per I P Bansal,JM. This is an appeal filed by the Revenue and it is directed against order passed by Ld. CIT(A)-II, Thane dated 24/07/2012 for assessment year 2010- 11. Grounds of appeal read asunder: 1. The Learned CITCA) has failed to appreciate that the proceedings for assessment of income of the payee stand on a different footing from t .....

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ng into academic exercise of Approbate and Reprobate without appreciating the established legal principle that Chapter XVIIB of which Section 194 I is a part, contains a self contained code for the purpose of TDS and other sections of the I.T.Act which involve interpretative issues such as revenue or capital have no bearing on the point in issue. 4. The Learned CIT CA) has erred in law and on facts of case in holding that the amount paid by M/s Paradise Infra- Con Pvt. Ltd to City Industrial Dev .....

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at the amended definition of "Rent" in explanation to section 1941 of the Act w.e.f 13-07-2006 is very comprehensive and covers 'any payments" by whatever name called" under any lease, sub leases, tenancy or any8 other agreements or arrangements" and would include all payments made by M/s. Paradise Infra - Con Pvt. Ltd to CIDCO Ltd under the lease agreements. 7. The Learned CIT (A) has erred in law and on facts of case in holding that the premium under a lease is hel .....

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and it was noticed that CIDCO had received lease premium of ₹ 13,63,73,734/- on the sale of plot to the assessee company. According to AO such payment made by the assessee being lease premium was liable for deduction of tax under section 194-I of the Income Tax Act, 1961 (the Act) and since tax was not deducted AO raised the demand of ₹ 1,95,70,459/- under section 201(1) and 201(1A) of the Act. Ld. CIT(A) has deleted the addition on the basis of decision of ITAT Mumbai, in which on s .....

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148 & 6149/M/2012 order dated 12/06/2014. Copy of all these decisions are placed in the paper book. 4. We have heard both the parties and their contentions have carefully been considered. Mumbai Tribunal has been taking consistent view that on lease payment made by the assessee to CIDCO there was no liability of deduction of tax. For the sake of brevity reference to all these decision is not made. Reference is made to the decision in the case of TRO(TDS) v. M/s. Shree Sawan Builders & De .....

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hat identical grounds were raised by the Revenue against similar deletion in the case of ITO vs. Shah Group Builders Ltd. which is decided by ITAT vide its order dated 14/8/2013 in ITA No.4523/Mum/2012. He has placed copy on our record and copy was also given to Ld. DR. He submitted that similar view has been taken in the case of ITO vs. Dhirendra Ramji Vora vide order dated 9/4/2014 in ITA No.3179/Mum/2012, copy of this order is also placed on our record and given to Ld. DR. Thus, it was pleade .....

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inate Bench, we decide the issue raised by the Revenue in these appeals in favour of the assessee. For the sake of completeness the conclusion of the order passed by the Tribunal in the case of ITO vs.Shah Group Builders Ltd.,(supra) is reproduced below. "2. Although the Revenue has raised as many as 12 grounds in this "appeal, the solitary issue arising out of the same is whether the assessee is required to deduct tax at source from the payment of lease premium made to CIDCO during th .....

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CO as per the provisions of section 194-1 of the Act and since no such tax was deducted by the assessee from the said payments, he issued notice to the assessee requiring it to show cause as to why it should not be treated as the assessee in default for its failure to deduct the tax at source from the payment of lease premium made to CIDCO. The assessee filed its reply to show cause notice issued by the A.O. explaining its stand on the issue and after considering and discussing the same in detai .....

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no requirement of deduction of tax from such payment made to CIDCO. The land under question has been given by the Lessor to the assessee on Lease and for which it has paid the premium of ₹ 70,85,01,870/-. This lump-sum payment made by the Leasee i.e. M/s. Shah Group Builders Ltd. (assessee) has been made to avoid recurring payment by instalments by the them to the Lessor. The payment so made by the assessee is a Rent for enjoyment and occupancy of the impugned land. The one time payment do .....

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bviate periodical payments. Going by the verdict of these Hon ble High Courts, the rulings are squarely applicable to the facts of the instant case. Therefore, the obligation was cast upon the Assessee to deduct tax at source from the lease premium paid to CIDCO as per the provisions u/s 194-I of the Income Tax Act, 1961. It is further necessary to mention that admittedly vide Lease Agreement referred to above the assessee has acquired right of occupancy and right of enjoyment of the impugned pl .....

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the relevant part of explanation (i) to Sect. 1941 is reproduced hereunder:- "(i) "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any - (a) land; or (b) to (h) -" whether or not any or all of the above are owned by the payee" The Assessee conveniently ignored to read the crux of the definition of rent provided in explanation (i) to section 194-I of .....

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inology by providing a comprehensive definition of Rent in the section itself. In the light of the facts of the case, statutory provisions of Sect. 1941 especially definition of Rent provided in explanation thereto and the case laws cited above the undersigned has no slightest hesitation in arriving at the conclusion that assessee was required to deduct tax u/s. 1941 and pay it to the Govt. Treasury within the stipulated time as required by provisions of chapter XVI1 B of the income Tax Act. Adm .....

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O. u/s 201(1)/201(1A) of the Act, the assessee filed its appeal before the ld. CIT(A) and elaborate submissions were made on its behalf before the ld. CIT(A) in support of the stand that the lease premium paid to CIDCO not being in the nature of advance rent within the meaning of section 194-1 of the Act, the assessee was not liable to deduct tax at source and therefore it could not be treated as assessee in default u/s 201(1) & 201(1A) of the Act. The said submissions made on behalf of the .....

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idered and decided by him in detail vide his order passed in the case of Navi Mumbai SEZ Pvt. Ltd. Accordingly, following the decision in the case of Navi Mumbai SEZ Pvt. Ltd. on a similar issue involving identical facts, the ld. CIT(A) held that the premium paid by the assessee in respect of leased plot of land to CIDCO during the year under consideration was not in the nature of rent as contemplated u/s 194-I of the Act and the assessee was not required to deduct tax at source from the payment .....

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olved in the case of Shree Naman Hotels Pvt. Ltd. has been decided by us in favour of the assessee vide an order of even date passed in ITA No. 688 to 691/Mum/2012 by following the order of the co-ordinate Bench of this Tribunal passed in the case of M/s Wadhwa & Associates Realtors Pvt. Ltd. vide order dated 3-7-2013 passed in ITA No. 695/Mum/2012. In the case of M/s Wadhwa & Associates Realtors Pvt. Ltd. (supra), a similar issue was decided by the Tribunal in favour of the assessee for .....

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the say of the Revenue that this lease premium was liable for deduction of tax at source failing which the assessee is to be treated as assessee in default. It is the say of the assessee that such lease premium is in the nature of capital expenditure and therefore there is no question of deduction of tax at source. Further, 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 exhibite .....

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nt. 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/purchased the additional built up area for co .....

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