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TMI Blog2025 (2) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the ld. CIT(A) is justified in holding that the payments made by the assessee company of Rs. 2,28,88,500/- as compensation paid towards alternative accommodation not being in the nature of rent as defined in section 194I of the Income Tax Act, 1961, there was no requirement of deduction of tax under the said provision, rent towards compensation for alternate accommodation cannot be treated as payments towards rent within the meaning of section 194I of the Act and thus would not make these payments liable for TDS w/s. 194T of the Act. 2. Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact that by virtue of development agreement entered into by 'Jankalyan Sahakari Grahnirman Sanstha', it was liable to provide each of the members rent as compensation which is clear rental compensation; it was a joint agreement and when the agreement itself was very clear and uses the term rental compensation, there was no scope available with assessee to interpret the compensation as hardship compensation. 3. Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to compensate for the hardship caused by displacement from the accommodation. 5. The AO (TDS) vide order dated 25.03.2021 passed under section 201(1)/201(1A) of the Act disagreed with the submission of the assessee and held that by virtue of the development agreement entered into by the assessee with the occupants of the building under redevelopment, the assessee is liable to provide each occupant rent as compensation which is clearly rental compensation to enable them to procure temporary accommodation elsewhere. As regards the contention of the assessee that the payment made does not fall within the ambit of the provisions of section 194-I of the Act, the AO (TDS) held that w.e.f. 01.04.2017, section 194-IC has been inserted in the Act, whereby the assessee is liable to deduct TDS on payment made as compensation for rent. Accordingly, the AO (TDS) held that the assessee clearly falls within the ambit of the provisions of section 194-IC of the Act and was required to deduct TDS @ 10%. Accordingly, it was held that the assessee is an assessee in default within the meaning of section 201(1)/201(1A) of the Act due to failure to deduct TDS under section 194-IC of the Act. 6. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 194-IC of the Act and thus the assessee is assessee in default within the meaning of section 201(1)/201(1A) of the Act. 10. We find that a similar issue came up for consideration before the Coordinate Bench of Tribunal in Nathani Parekh Construction Pvt. Ltd. (supra), wherein while deciding the issue in favour of the taxpayer the Co-ordinate Bench of the Tribunal vide order dated 11.07.2024 held that alternate accommodation charges/rent cannot be treated as consideration paid as part of share in land and building or both under the specified agreement and therefore, would not fall within the provisions of section 194-IC of the Act. The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are reproduced as follows: - "6. The assessee is in appeal against the order of the CIT(A) before the Tribunal. The common issue arising out of the various grounds raised by the assessee is whether the payment made by the assessee to the tenants of M/s Dalal Estate Co-operative Housing Society Ltd. towards alternate accommodation charges/hardship allowance/rent are liable for tax deduction under section 194IC of the Act. 7. The Id. AR submitted that the provisions of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4IC 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. 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 section 48, the stamp duty value, on the date of issue of the said certificate, 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 deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the developer towards hardship suffered by the owner/ tenant due to dispossession and is not paid as part of a share in the land or building or both. The terms of the agreement in assessee's case makes it clear that the payment is made towards compensation for handing over the vacant possession of the property and towards rent if any payable by the tenants in the alternate accommodation until the completion of the re-development. Therefore we are of the view that the "Alternate accommodation charges / rent" cannot be treated as a consideration paid as part of a share in the land or building or both under the specified agreement, and would not fall within the provisions of section 194IC. Accordingly we hold that the assessee cannot be treated as an assessee in default for non-deduction and non- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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