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2016 (6) TMI 498 - ITAT PUNE

2016 (6) TMI 498 - ITAT PUNE - TMI - TDS u/s 194I - non deduction of tax at source from the lease premium paid to PCNTDA for acquisition of Lease hold rights for 99 years - assessee in default - Held that:- We find in appeal the Ld.CIT(A) following various decisions of the Mumbai Bench of the Tribunal deleted such demand raised by the AO u/s.201(1)/201(1A). We find identical issue had come up before the Coordinate Bench of the Tribunal in the case of Shri Ajay N. Yerwadekar (2015 (11) TMI 1382 - .....

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14 - Dated:- 30-5-2016 - Shri R. K. Panda, AM And Shri Vikas Awasthy, JM For the Assessee : Shri M.K. Kulkarni For the Department : Shri Hitendra Ninave ORDER Per R. K. Panda, AM This appeal filed by the Revenue is directed against the order dated 26-09-2014 of the CIT(A)-V, Pune relating to Assessment Year 2011-12. 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of Promoters and Developers of properties. During the course of TDS verification i .....

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of section 194I of the I.T. Act are applicable in respect of payment for acquisition of leasehold right for 99 years as the same was nothing but rent. He accordingly confronted the assessee. The assessee in his reply submitted that as per the lease agreement with PCNTDA the lease is for perpetuity and is nothing but a sale transaction only for the plot in question. Therefore, the provisions of section 194I are not applicable. 3. However, the AO was not satisfied with the explanation given by the .....

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/s.201(1A) at ₹ 7,13,099/-, thus raising a total demand of ₹ 32,59,883/-. 4. In appeal the Ld.CIT(A) allowed the appeal of the assessee and deleted the demand raised by the AO by holding that the payment of lease premium to PCNTDA was a precondition for entering into lease agreement. Further, stamp duty has been paid on the market value of the plot represented by lease premium. Therefore, the AO was not justified in raising demand u/s.201(1)/201(1A) of the Act. 5. Aggrieved with such .....

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) erred in not appreciating the fact that the deed entered into by the deductor with PCNTDA was not a transfer deed but a lease deed and explanation to section 1941 clearly stipulates that any payment by whatever name called under any lease deed/agreement is to be taken as rent for TDS purpose. 3. The appellant craves leaves to add, alter or amend any or all the grounds of appeal. 6. The Ld. Counsel for the assessee at the outset referring to the decision of the Pune Bench of the Tribunal in the .....

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ltors Pvt. Ltd. and Vice versa - ITA No.695/Mum/2012 order dated 03-07-2013. 3. ITO Vs. M/s. Navi Mumbai SEZ Pvt. Ltd. - ITA Nos.738 to 741/Mum/2012 order dated 16-08-2013. 7. The Ld. Departmental Representative on the other hand fairly conceded that the issue has been decided in favour of the Assessee and against the Revenue by the order of the Tribunal. 8. We have considered the rival arguments made by both the sides, perused the order of the AO and the CIT(A) and the various decisions relied .....

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of the Tribunal in the case of Shri Ajay N. Yerwadekar (Supra). The Tribunal after considering various decisions upheld the order of the CIT(A) and dismissed the appeal filed by the Revenue in respect of lease premium paid to PCNTDA. The relevant observation of the Tribunal from Para 6 to 8 of the order read as under : 6. After hearing both the sides, we find an identical issue had come up before the Tribunal in the case of ITO Vs. Preetam Medical Foundation & Research Centre vide ITA No.190 .....

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mium 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 ₹ 1,37,36,963/- for the said plot and further agreed to pay sum of S .....

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e Assessing Officer was of the view that the transaction between the parties was not that of transfer, but of lease and there was no transfer of ownership of the property, but the same was leased for use either for commercial or residential purposes as approved by the Lessor. However, the Assessing Officer referred to the various restrictions on the Lessee / assessee put up by the Lessor and it was observed by the Assessing Officer that this was not a case of freehold transfer or sale and the as .....

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bunal in Foxconn India Developer (P) Ltd. Vs. ITO (TDS) (supra). 6. The CIT(A) after considering the facts and reply filed by the assessee, observed that no doubt, after 99 years of lease, the lease hold right expired and the Lessor was vested with the full rights on the said plot of land, with the option either to renew the lease for further period and take back the possession of the land. However, the preliminary clause of the lease agreement reflects that the payment of lease premium was a pr .....

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tion 194I of the Act. It was further pointed out by the CIT(A) that there is no merit in the reliance placed upon the decision of Chennai Bench of the Tribunal in Foxconn India Developer (P) Ltd. Vs. ITO (TDS) (supra) as the same was distinguishable on facts. In the facts of the case before the Tribunal, the issue in question was upfront payment of lease and further the said upfront payment was part of the conditions for acquiring leasehold rights, unlike the present case where, the payment of l .....

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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 registere .....

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was not paid within period of 3 months, 25% of the Tender deposit was to be fortified and balance amount was to be refunded without any interest. The Tender document stated that the Tender was for the purpose of sale of reserved plots and as per the document full premium was to be paid to PCNTDA and lease agreement would be entered with the party. The assessee entered into a lease agreement with PCNTDA for 99 years and the lease rent was ₹ 100/- per annum for the period of 99 years. The a .....

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entered into and bundle of rights were obtained by the assessee. 7. The Assessing Officer held the assessee to be default in respect of the TDS payable on such lease rent payment to PCNTDA. Reliance was placed on the ratio laid down by the Chennai Bench of the Tribunal in Fox Conn India Developer (P) Ltd. (supra). The assessee was held to be in default for non- deduction of tax on source under section 194I of the Act on the lease premium paid to PCNTDA and demand under section 201(1) of the Act .....

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ide 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 pre- condition for entering into lease agreement and therefo .....

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ated 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 a period of 60 years, was not required to be subject to deduction at source under section 194I of the Act. Further another Bench of the Mumbai Tribunal in the case of M/s. Wadhwa Associates in ITA No.695/Mum/2012, vide order dated 03.07.2013, held that TDS was not required to be deducted under section 194I .....

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troverted by the learned Departmental Representative for the Revenue. Relying upon the ratio laid down by the Mumbai Bench of the Tribunal in three different cases, we uphold the order of CIT(A) in holding that the lease premium paid by the assessee is outside the purview of section 194I of the Act and the Assessing Officer was not justified in raising the demand under section 201(1) and 201(1A) of the Act. The grounds of appeal raised by the Revenue are thus, dismissed. 8. Following the same pa .....

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