TMI Blog2007 (3) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... it, which means that this amount was adjustable against rent and the same was adjusted also, and thus this amount was in the nature of advance rent. Since, this amount paid by the assessee was not fully refundable deposit amount thus this amount was in fact the advance rent and as per the provision of section 194-I of the Act, the assessee was required to deduct tax at the source from the payment of such advance rent at the time of its assessment. Accordingly, we hold that the Tribunal was wrong in law in holding that the amount (termed as security deposit) paid by the assessee to its landlord under the agreement to lease dated March 10, 1995, was not rent as defined in the Explanation to section 194-I of the Act and, accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted tax at source under section 194-I of the Act, on the actual payment of rent made by it. 4. The Assessing Officer vide his order dated March 16, 2000, held that the amount of security deposit was nothing but advance rent and hence as per the provisions of section 194-I of the Act, the assessee should have deducted tax at source therefrom and as such he raised a demand of Rs. 7,62,674 under section 201(1A) of the Act. 5. Aggrieved against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who allowed the appeal of the assessee. 6. Being dissatisfied, the Revenue filed an appeal before the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hindu undivided family, who is responsible for paying to any person any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct Income-tax thereon at the rate of (a) fifteen per cent. if the payee is an individual or a Hindu undivided family ; and (b) twenty per cent., in other case : Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount for occupation of a tenanted portion. After taking into account the definition of rent, it apparently appears to be a composite concept. Once the rent is comprehended as a composite concept then it is not capable of being fragmented. The moment any attempt will be made to have the germane expression fragmented by splitting up the amount covered by the rent, it will cease to be rent and the same will not satisfy the test of the definition. 12. The relevant clauses of the lease agreement are Nos. 3 and 14, which read as under : 3.1. The rent for the premises shall be Rs. 6,26,000 (rupees six lakhs twenty-six thousand only) per month for the term of this lease commencing February 1, 1995. Unless otherwise agreed the rent shall beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce/security deposit paid by REEBOK under clause 3.2(a). Hereof, failing which ABCO shall be liable to pay interest thereon at the rate of 18 per cent. (eighteen per cent.) per annum from the date REEBOK delivers vacant possession to ABCO unto and until the date of refund. 13. A bare reading of clause 3.2(a) shows that the sum of Rs. 1,50,24,000 paid by the assessee to ABCO is in the nature of advance rent and not as security deposit as according to this clause such security deposit shall stand reduced every six months when the rent becomes due and payable . 14. If it had been the security amount, then, firstly, it would have been in the nature of refundable amount at the time of the termination of the lease. Secondly, there wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
