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Income Tax Appellate Tribunal - Mumbai

Dcit Cir. 3(3)(2), Mumbai vs Small Industries Development Bank Of ... on 20 December, 2016

IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI

BEFORE SRI B. R. BASKARAN, AM AND SRI AMIT SHUKLA, JM

                     ITA No.2342/Mum/2015
                          (A.Y:2009-10)

The Income Tax Officer(TDS), Vs.         M/s. Bawa Developers Pvt.
Ward -1 (1) (3),Room No.806,             Ltd., Plot No.22, Road No.11,
K.G.Mittal Hospital Building,            Vital Nagar Co-op. Society,
Charni Road, Mumbai-2                    JYPD       Scheme,     Juhu,
                                         Mumbai 400 049
                                         PAN:AAACB 5232F

            Appellant               ..           Respondent

        Appellant by                ..   Shri Vaibhav Jain, DR
       Respondent by                ..   Shri Sanjiv M. Shah, AR


   Date of hearing                  ..   15-12-2016
 Date of pronouncement              ..   20-12 -2016


                               ORDER
PER AMIT SHUKLA, JM:

The aforesaid appeal has been filed by the Revenue against the impugned order dated 19-02-2015 passed by the learned CIT (A)-59, Mumbai in relation to the order passed u/s 201 (1)/201(1A) of the Income Tax Act, 1961 for the assessment year 2009-10. The Revenue has taken the following grounds of appeal:-

"(i) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the amount paid by the Lessee (M/s. Bawa Developers Pvt. Ltd.) to the Lessor (CIDCO) was not in the nature of rent, as defined in the Explanation (i) to Section 194 I of the Act for the purpose of deduction of tax at source."

(ii) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the claim of the assessee that no tax wax deductible under section 194 I from t he payment made by the assessee to CIDCO for acquisition of the plot of land on lease from CIDCO."

Assessment Year: 2009-10

(iii) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not confirming the order of the Assessing Officer treating the assessee as an assessee in default u/s. 201(1) in respect of the amount of tax which has not been deducted under section 194 I from t he payment made to CIDCO and levying interest under section 201(1A)."

(iv) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the definition of rent, as contained in section 194 I and in resorting to interpretative reasoning whereas as per the settled principle of jurisprudence, this exercise is required only when the law is unclear."

(v) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in going into the question of taxability of the payment made by the assessee to CIDCO despite the decision of the Apex Court in the case of The Aggarwal Chambers of Commerce V. Ganpat Rai Hiralal, 33 ITR 245, where it has been held that the persons who are responsible for deduction of tax at source are not concerned with the ultimate result of assessment."

2. At the outset, the learned Counsel for the assessee submitted that the issue of payment of lease premium to CIDCO, whether falls within the ambit of rent u/s 194-I or not has been the subject matter of dispute in various appeals before this Tribunal. Consistently, this Tribunal has been holding that such a lump sum payment of lease premium does not fall within the ambit of „rent‟, therefore, the assessee is not liable to deduct TDS u/s 194-I and the assessee cannot be held to be the "assessee in default" in terms of section 201(1). In support, he filed compilation of various Tribunal decisions before us. He also pointed out that, there is a judgment of the Hon‟ble Delhi High Court in the case of CIT Vs Indian News Paper Society order dated 18-12-2015 in ITA No.918 & 920 of 2015, wherein payment of lease premium paid to MMRDA was held to be capital expenditure.

Assessment Year: 2009-10

3. On the other hand, the learned DR strongly relied upon the order of the Assessing Officer.

4. After considering the rival submissions and on perusal of the impugned order, we find that the assessee has made payment of Rs.20,93,38,272/- to CIDCO as lease premium. The Assessing Officer held that the same is to be treated as rent and, therefore, the assessee should have deducted TDS u/s 194-I. Before the learned CIT (A), it was contended that this issue is covered by the decision of the Tribunal in the case of ITO Vs. Navi Mumbai SEZ Pvt. Ltd. passed in ITA Nos. 738 to 741/Mum/2012 dated 16-08- 2013. When confronted the Assessing Officer by the learned CIT (A), the Assessing Officer in his remand report stated that the said decision has not been accepted by the Department and the Revenue has filed appeal before the Hon‟ble Mumbai High Court. The learned CIT (A) after noting down the following facts held that the premium paid to CIDCO is capital in nature and the same cannot be considered as rent for the purpose of deduction of TDS u/s 194-I. The relevant observation of the CIT (A) reads as under:-

"3.3 I have perused the facts of the case, submission of the appellant and the order u/s. 201(1)/201(1A) and the remand report submitted by the A.O. Thus, from the RR it is apparent that the A.O. has not brought any distinguishing facts but has simply stated that the decision of ITAT is not accepted by the Department. On perusal of submissions filed by the appellant, it is observed that the Plot No.87 was allotted through tender and Rs.78,00,000/- were paid as initial Tender Deposit which would be adjusted against Lease Premium if the plot is sold/allotted to the appellant. The balance lease premium was to be paid in two installment of Rs.10,07,69,136/- before 23.01.2009 & 24.02.2009. Hence by paying Rs.20,15,272/-, the appellant would have become the owner of the plot and there is no TDS on payment for the purchase of any asset.

3.4 The payment is for acquisition of leasehold land. The payment made is not made for lease rent and therefore, no TDS deducted by the appellant as it was considered as a payment for acquisition of Land Rights. The amount charged is equal to the rate prevalent as per Stamp Duty Ready Reckoner.

Assessment Year: 2009-10 Therefore, the premium paid to CIDCO is capital in nature and the same cannot be considered as rent liable for TDS u/s. 194-I of the Act."

Thereafter, he referred to catena of other decisions to strengthen his finding. We find that this issue is covered by the various Tribunal decisions like order of the Tribunal dated 19-05-2015 passed in ITA No.5678/Mum/2012 in the case of ITO Vs Shelton Infrastructure Pvt. Ltd. for assessment year 2010-11. Following decisions were relied upon:-

1. The Indian News Papers Society (ITA No.5207/Del/2012) dated 20 June 2013 (Del);

2. M/s. Wadhwa & Associates Realtors Pvt. Ltd. (ITA No.695/M/2012) dated 3 July 2013 (Mum);

3. Shree Naman Developers Ltd. (ITA No.686 & 687/M/2012) dated 14 August 2013 (Mum);

4. M/s. Shah Group Builders Ltd. (ITA No.4523/M/2012) dated 14 August 2013 (Mum);

5. M/s. TCG Urban Infrastructure Holding Pvt. Ltd. (ITA No.4563/M/2012) dated 14 August 2013 (Mum);

6. M/s. Navi Mumbai SEZ Pvt. Ltd. (ITA No.738/M/2012) dated 16 August 2013 (Mum);

7. M/s. Trent Limited (ITA No.4629/M/2012) dated 21 August 2013 (Mum);

8. Naman BKC CHS Ltd. (ITA No.708/M/2012) dated 12 September 2013 (Mum);

9. Parinee Developers Pvt. Ltd. (ITA No.1734/M/2012) dated 26 September 2013 (Mum);

10. Dhirendra Ramji Vora (ITA No.3179/M/2012) dated 9 April 2014.

The Hon‟ble Delhi High Court in the case of CIT Vs Indian News Paper Society (cited supra) wherein it has been held that lease premium paid to MMRDA is capital expenditure. Once that is so, then there is no requirement to deduct TDS. Thus, following the 5 ITA No.2342/Mum/2015 Assessment Year: 2009-10 view taken by this Tribunal that such payment of lease premium does not fall within the meaning of „rent‟ as contemplated u/s 194-I, we hold that the assessee is not liable to deduct TDS on such payment. The main reason being that the lease premium was paid to acquire plot of land with substantial rights so as to become the owner of the plot. Once, the payment is for acquisition of land rights and then, the same is to be reckoned as capital expenditure. Thus, we uphold the order of the learned CIT (A) and dismiss the grounds raised by the Revenue.

5. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 20-12-2016.

                 Sd/-                                                 Sd/-
         (B. R. BASKARAN)                                         (AMIT SHUKLA)
       ACCONTANT MEMBER                                          JUDICIAL MEMBER
     Mumbai, Dated: 20-12-2016
 Lakshmikanta Deka/Sr.PS


 Copy of the Order forwarded to:


1.     The Appellant
2.     The Respondent.
3.     The CIT (A), Mumbai.
4.     CIT
5.     DR, ITAT, Mumbai
6.     Guard file. //True Copy//

                                                                            BY ORDER,

                                                                      Assistant Registrar
                                                                       ITAT, MUMBAI
Sr.       Particulars                                 Date     Initials     Member
No.                                                                         concerned
1         Dictation given on                          16.12.16 LK Deka      JM
2         Draft placed before author                  19.12.16
                                                      20.12.16
3         Draft proposed/placed before the second
          Member
4         Draft discussed/approved by second
          member
5         Approved Draft comes to the Sr.PS           20.11.16
6         Kept for pronouncement on                   -
7         File sent to the Bench Clerk                21.11.16
8         Date on which file goes to the Head Clerk
9         Date of dispatch of Order