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TMI Blog2023 (9) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... nal premium paid by the assessee. While the assessee in its appeal for the assessment year 2008-09 is aggrieved against the findings of the learned CIT(A) treating the assessee to be "assessee in default" for non-deducting tax under section 194-A of the Act on the amount of interest paid by the assessee. 3. The brief facts of the case are that the assessee is a nationalised bank, being a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its head office in New Delhi and Circle office in Mumbai. In terms of the agreement to lease dated 04/07/2000 entered into between the assessee and the Mumbai Metropolitan Region Development Authority ("MMRDA"), MMRDA allotted the plot of land bearing Plot No. C-9, in G Block of Bandra-Kurla Complex, to the assessee on 80 years lease for a lease premium of Rs. 45,62,20,060 on the terms and conditions stipulated in the said agreement. As per clause 7 of the aforesaid agreement, the annual ground rent payable to MMRDA is as under:- (i) First 3 years of lease - Nil (ii) From 4th year to 20th year of lease - 1% of the Lease Premium (iii) From 21st year to 50th year of lease - 2% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium. Being aggrieved, the assessee and the Revenue are in appeal by way of cross-appeal for the assessment year 2008-09, while the Revenue is in appeal for the assessment years 2010-11 and 2011-12. 7. We find that these appeals were earlier heard on 28/03/2016. Vide separate order, the Hon'ble Judicial Member held that neither the additional premium paid is in the nature of rent nor the amount paid in addition to the additional premium is in the nature of interest as defined under the Act and therefore the assessee is not liable to deduct TDS on the said payments. However, the Hon'ble Accountant Member, vide separate order, decided both the issues in favour of the Revenue. Accordingly, reference on the point of difference was made to the Hon'ble President under section 255(4) of the Act. Vide order dated 18/11/2016 the Hon'ble Third Member decided the said reference, by observing as under:- "3. During the course of arguments learned Counsel submitted that irrespective of the controversy raised, the assessee being fully covered by the provisions of section 194A(3)(iii)(f) is not liable to deduct tax at source as it is exempt under the provisions aforesaid. I find from the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench to give effect to the order of the Third Member and do the needful at their end. With these observations, I dismiss the Miscellaneous Applications filed by the assessee." 9. Thereafter, the assessee again filed miscellaneous applications, however, the same were disposed of as withdrawn vide order dated 30/12/2022. 10. During the hearing before us, the learned Authorised Representative ("learned AR") submitted that as per the CBDT Circular dated 13/10/2016 lease premiums are not payments in the nature of rent within the meaning of section 194-I of the Act, and therefore such payments are not liable for TDS under the aforesaid section. As regards the liability to deduct TDS under section 194-A of the Act, the learned AR by placing reliance upon Notification No.S.O. 3489 dated 22/10/1970 submitted that the assessee‟s case is covered under the provisions of section 194A(3)(iii)(f) of the Act. 11. On the other hand, the learned Departmental Representative ("learned DR") vehemently relied upon the orders passed by the AO. 12. We have considered the submissions of both sides and perused the material available on record. In the present case, there is no dispute among the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easehold rights over an immovable property for 99 years could not be taken to constitute rental income in the hands of the lessor, obliging the lessee to deduct tax at source under section 194-1 of the Act and that in such a situation the lease assumes the character of "deemed sale". The Hon'ble Chennai High Court has also in the cases of Tril Infopark Limited (Tax Case Appeal No. 882/2015) ruled that TDS was not deductible on payments of lump sum lease premium by the company for acquiring a long-term lease of 99 years. 5. In all the aforesaid cases, the Department has accepted the decisions of the High Courts and has not filed an SLP. Therefore, the issue of whether or not TDS under section 194-1 of the Act is to be made on lump sum lease premium or one-time upfront lease charges paid for allotment of land or any other property on long-term lease basis is now settled in favour of the assessee. 6. In view of the above, it is clarified that lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any other property-are-not-payments in the nature of rent w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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