GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (3) TMI 591 - ITAT MUMBAI

2016 (3) TMI 591 - ITAT MUMBAI - TMI - TDS U/S 194I - disallowance u/s 40(a)(ia) - compensation paid by the assessee to the tenants towards alternative accommodation - Held that:- On a plain reading of the definition of rent, it becomes clear that the payment made by the assessee does not come within the purview of rent as prescribed in the said provision as the assessee is not making such payment for use of any land, building, etc. On the contrary, if the facts involved are considered as a whol .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cannot be treated as rent. Moreover, such compensation cannot be treated as rent for the simple reason that not only the assessee is not using any land and building but it may also be a fact that persons to whom such payments have been made may not be incurring any expenditure on account of rent. In any case of the matter, payments made by assessee under no circumstances can be construed to be coming within the meaning of “Rent” as provided under section 194I. Thus, we are of the considered opi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Uttamchand Bothra For The Revenue : Shri Premanand J. ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeal of the assessee is directed against the order dated 9th July 2013, passed by the learned Commissioner (Appeals)- 18, Mumbai, for the assessment year 2010-11. 2. Grounds no.1 to 3 raised by the assessee are against addition of ₹ 51,84,000 under section 40(a)(ia) of the Income Tax Act, 1961 (for short "the Act") for non-deduction of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t proceedings, the Assessing Officer found that assessee had debited to the Profit & Loss account an amount of ₹ 1,06,16,000 on account of compensation payment out of which on an amount of ₹ 51,84,000, assessee has not deducted any tax at source. On further verification, it was found by the Assessing Officer that the aforesaid amount of ₹ 51,84,000 was paid to 21 tenants on account of compensation. As the payment made to each individual was more than ₹ 1,20,000, the A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hanagar Palika held that the compensation paid by the assessee to the tenants is actually rent, hence, provisions of section 194I are applicable. Accordingly, invoking the provisions of section 40(a)(ia) of the Act, the Assessing Officer disallowed amount of ₹ 51,84,000, alleging non-deduction of tax at source by the assessee. Being aggrieved of such disallowance, assessee preferred appeal before the learned Commissioner (Appeals) who also sustained the disallowance made by the Assessing O .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

concerned to demolish the said building and build a new building under SRA project. As per the terms of development agreement between the assessee, who was entrusted to construct the building under the SRA Project, and the society constituted by the inhabitant of the building during the construction period, the assessee was required to provide alternative accommodation to the tenants as they have to vacate the building for the purpose of construction. However, as the assessee was not able to pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der section 40(a)(ia) alleging non-deduction of tax at source is not valid. Learned counsel submitted, assessee is a developer who has been entrusted the work of constructing the building for the dwellers of old dilapidated building under the SRA Project. Therefore, the payments made by the assessee under the terms of the agreement being purely in the nature of compensation cannot be treated as rent as provided under section 194I of the Act. Learned counsel also relied upon the decision of the T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

modation to the tenant. However, instead of providing such alternative accommodation, the assessee has made payments to the tenants towards rent to be paid by them for the alternative accommodation. Therefore, the payment made by the assessee being in the nature of rent will come within the purview of section 194I and the assessee having not deducted tax at source, disallowance under section 40(a)(ia) is justified. Learned Departmental Representative further submitted, for a particular payment t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

concerned decided to demolish the said building and construct a new building in its place under the SRA Project and the construction of the new building was entrusted to the assessee. It is also a fact that since the entire building had to be demolished for the purpose of constructing the new building, the tenants had to vacate the said premise and alternative accommodation was required to be provided to them. On a perusal of the agreement entered into between the assessee and the society formed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not construct the building within the stipulated time period for various reasons. From the aforesaid facts, it is very clear that the concerned persons to whom the assessee had made the payment are neither tenants of the assessee nor the assessee has in reality paid rent on behalf of them. Only because the assessee was not able to provide alternative accommodation to these tenants the assessee had to pay compensation for enabling the tenants to meet the expenditure to be incurred by them towards .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of (either separately or together) any,- (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; 7. On a plain reading of the aforesaid definition of rent, it becomes clear that the payment made by the assessee does not come within the purview of rent as prescribed in the said provis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version