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TMI Blog2016 (3) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... Chinchwad New Township Development Authority (PCNTDA in short) within village limits of Chikhali, Taluka Haveli, Pune. The assessee has paid land lease premium of Rs. 73,77,700/- and agreed to pay a sum of Rs. 100/- per annum for the entire period of lease. The AO after examining the provisions of section 194I of the I.T. Act as well as terms of lease deed entered into between the assessee and PCNTDA was of the view that the payment in question was covered by the definition of "rent" as per proviso to section 194I of the I.T. Act. Accordingly, the AO was of the view that TDS u/s.194I was required to be deducted. The AO confronted the assessee on this issue. It was explained by the assesee that lease agreement with PCNTDA was nothing but a sale transaction on which provisions of section 194I were not applicable. The AO, however, was not convinced with the arguments advanced by the assessee. Relying on the decision of the Chennai Bench of the Tribunal in the case of Foxconn India Developer Pvt. Ltd. Vs. ITO, TDS in ITA No.292/Mds/2010 order dated 30-04-2012, the AO held that TDS u/s.194I was required to be deducted on the payment for clearing leasehold rights. The AO accordingly rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as under : "5. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to the demand raised under sections 201(1) and 201(1A) of the Act in respect of the lease premium paid to Pimpri Chinchwad New Township Development Authority (PCNTDA). In the facts of the case before us, the assessee had entered into 99 years lease agreement through its Chairman with PCNTDA for using 3261 sq. mtrs. of land located on Plot No.1, in Sector 13, Chikhali, Taluka Haveli, Pune. The said land was to be used for education purposes as per clause (N) of the lease deed. The assessee paid lease premium of Rs. 1,37,36,963/- for the said plot and further agreed to pay sum of Rs. 100/- per annum for the entire period of lease. The Assessing Officer (TDS) was of the view that the assessee was required to deduct tax at source under section 194 I of the Act at the time of payment of lease premium to PCNTDA. The Assessing Officer issued a show cause notice to the assessee and also issued summons to the deductor. In reply, the assessee explained that the transaction between it and PCNTDA was a transaction of sale and further appropriate tax return had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was part of the conditions for acquiring leasehold rights, unlike the present case where, the payment of lease premium was a pre-condition for entering into a lease agreement. The CIT(A) placed reliance on the decision of Mumbai Bench of the Tribunal in Navi Mumbai SEZ(P) Ltd in ITA No.738 to 7741/Mum/2012, relating to assessment years 2006-07 to 2009-10, vide order dated 12.08.2013, in order to hold that the payment of lease premium to PCNTDA being a pre-condition for entering into lease agreement, could not be said to be paid under the terms of lease agreement. Further, stamp duty had been paid on the market value of the plot represented by lease premium. In view thereof, the Assessing Officer was directed to delete the demand created under sections 201(1) and 201(1A) of the Act. 7. The issue arising in the present appeal is squarely covered by the ratio laid down by the co-ordinate Bench of the Tribunal in ITO Vs. Camp Education Society (supra), wherein it was held as under:- "6. We have heard the rival contentions and perused the record. The assessee was an educational society registered under section 12A of the Act. The assessee was running various schools and colleges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls outside the purview of definition of rent as specified in section 194I of the Act. The CIT(A) further observed from the ratio laid down in the case of Fox Conn India Developer (P) Ltd. (supra) was distinguishable on the facts as in that case issue in question was upfront payment and not lease premium. Further, upfront payment was part of consideration for acquiring leasehold rights unlike the present case where payment of lease premium was precondition for entering into lease agreement and therefore the facts of the case were clearly distinguishable. Further reliance was placed on the series of decisions, under which such similar payment of lease premium was held to be not subject to deduction of tax at source under section 194I of the Act. 9. We find that similar issue of payment of lease premium arose before the Mumbai Bench of the Tribunal in the case of Navi Mumbai SEZ (P) Ltd. in ITA Nos.738 to 740/Mum/2012 for assessment years 2006-07 to 2009-10, wherein the Tribunal in its order dated 12.08.2013, held that lease premium paid by the assessee to the City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) for acquiring development and leasehold rights for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .201(1)/201(1A) of the I.T. Act in respect of lease premium paid to PCNTDA. Accordingly, the order of the CIT(A) is upheld and the grounds raised by the Revenue are dismissed." 7. Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in the case of Shri Ajay N. Yerwadekar (Supra) to which both of us are parties, therefore, in absence of any contrary material brought to our notice, we find no infirmity in the order of the CIT(A) deleting the demand raised u/s.201(1)/201(1A) of the I.T. Act in respect of lease premium paid to PCNTDA. Accordingly, the order of the CIT(A) is upheld and the grounds raised by the Revenue are dismissed. ITA No.2017/PN/2014 (M/s. Nirman Associates) : 8. Grounds raised by the Revenue are as under : "1. The learned Commissioner of Income tax(Appeals) erred in deleting the demand raised of Rs. 68,56,408/- u/s 201(1)/201(1A) of the Income tax Act 1961 in respect of lease premium paid to Pimpri Chinchwad New Township Development Authority. 2. The learned Commissioner of Income tax (Appeals) erred in not considering the fact that the lease premium paid to PCNTDA was covered by the definition of rent as per pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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