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TMI Blog2024 (7) TMI 1591X X X X Extracts X X X X X X X X Extracts X X X X ..... xplain whether tax has been deducted at source on the above said amount. The assessee submitted before the AO that it has entered into a re-development agreement dated 30.04.2017 with M/s Dalal Estate Co-operative Housing Society Ltd. which was encumbered with more than 300 tenants and that for the purpose of vacating the premises, the assessee had agreed to pay compensation of hardship according to the nature of tenancy occupied by each tenant. The assessee further submitted that these tenants could not be provided that alternate accommodation and therefore, the assessee agreed to pay the above amount as compensation for the hardship of the tenants. The assessee also submitted that the amount paid towards alternate accommodation/hardship allowance does not fall within the definition "Rent" and therefore, tax was not liable to be deducted at source on the said payments. The assessee accordingly submitted that no tax was deducted at source from the payment of alternate accommodation charges/rent. 4. The AO did not agree with the submissions of the assessee and held the same to be unacceptable. The AO held that even if the payment is not liable for deduction under section 194I, sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum as income-tax thereon.' 7.3.2 Section 45(5A) of the Act is also reproduced as under: Notwithstanding anything contained in sub-section (1), where the capital gain arises to an assesses, being an individual or a Hindu undivided family, from the transfer of a capital asset, being land or building or both, under a specified agreement, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority: and for the purposes of his share, being land or building or both in the project, as increased by the consideration received in cash if any shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset: Provided that the provisions of this sub-section shall not apply where the assessee transfers his share in the project on or before the date of issue of the said certificate of completion, and the capital gains shall be deemed to be the income of the previous year, in which such transfer takes place and the provisions of this Act, other than the provisions of this sub-section, shall appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estate Co-operative Housing Society Lid, hereinafter called and referred to as "the said society The Tenants Occupants/Owners/Members herein were members of the said society. Hence, the conditions of section 45(5A) were fully fulfilled in the case of assessee The amount of hardship compensation or rental compensation, by whatever name called, paid by assessee to the members of the Society was by virtue of this specified agreement. Therefore, the primary condition of section 1941C r.w.s 45(5A) of the Act was fulfilled and the payment was liable for deduction of tax as per section 1941C of the Act. 7.6 The plea of the appellant that the agreement entered into by it was not with the persona "owning" the land or building is also baseless and devoid of merits as the Agreement for Development dated 30.04.2007 is between the Developer and the Society/Trustees/Owners/Members/Tenants and Inhabitants. Thus, the AO has rightly held this to be specified agreement as per the provisions of section 45(5A) and so any sum paid under this agreement would come under the ambit of section 1941C of the Act and would be fable for TDS. 7.7. In view of the detailed discussion above, it is held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the existing property is to be demolished for re-development. From the terms of the said agreement it is clear that the impugned payment made is in the nature of compensation towards hardship the tenants would have to undergo in order to handover the vacant possession of the property for demolition and towards the alternate accommodation charges which the tenant has to bear during the time of re-development. From the observations of the CIT(A) as extracted in the earlier part of this order, the contention of the revenue is that as per section 194IC any sum paid by any person under the specified agreement referred to in section 45(5A) shall be subjected to TDS at the rate of 10% and that since the compensation towards hardship is paid as per specified agreement the TDS provisions under section 194IC is applicable in assessee's case. Therefore before proceeding further we will first look at the relevant provisions of Section 45(5A) and Section 194IC "45(5A) Notwithstanding anything contained in sub-section (1), where the capital gain arises to an assessee, being an individual or a Hindu undivided family, from the transfer of a capital asset, being land or building or both, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions section 194IC of the Act would get attracted at the time of credit / payment of any sum by way of consideration under the specified agreement as defined under section 45(5A). Therefore the question here is whether the alternate accommodation/hardship allowance paid by the assessee is a sum by way of consideration under the specified agreement as claimed by the revenue. The term "consideration" is not specifically defined for the purpose of section 194IC, and its meaning has to be inferred from the definition of the term "specified agreement" as extracted above. As per the definition, it is the agreement entered into between the owner and the developer allowing the developer to develop the real estate project in consideration of share in the land or building or both in such project, with or without payment of part of the consideration in cash. Therefore in our considered view any sum paid under the specified agreement, to be treated as a "consideration" should have been paid as part of a share in the land or building or both including cash payments. In the given case, the payment towards alternate accommodation/hardship allowance is in the nature of a compensation paid by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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