TDS on annual lease rent paid to development authority affirmed by applying Rajesh Projects, with prospective application sustaining assessee relief.

Whether tax deduction at source applies to annual lease rent paid to a development authority was decided by applying Rajesh Projects (India) (P.) Ltd.; the Court held that TDS is payable on such annual lease rent because the present facts were indistinguishable from Rajesh Projects, and noted that Rajesh Projects was affirmed by the Supreme Court. The Rajesh Projects doctrine was applied prospectively, and consequently the Tribunal's allowance in favour of the assessee was upheld on the basis of prospective application while the appeals challenging that outcome were rejected.

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Issues: Whether tax deduction at source (TDS) is required to be deducted from payment of annual lease rent paid to a development authority and whether the precedent in Rajesh Projects (India) (P.) Ltd. applies.

Analysis: The Court applied the reasoning in Rajesh Projects (India) (P.) Ltd., which held that TDS is required to be deducted from annual lease rent paid to the development authority, and noted that this judgment was affirmed by the Supreme Court in New Okhla Industrial Development Authority v. Commissioner of Income-tax. The appellant was unable to distinguish the facts of the present matters from the facts in Rajesh Projects. The Rajesh Projects decision was applied prospectively.

Conclusion: The appeals challenging the Tribunal's allowance of the assessee's appeals are rejected; the decision in favour of the assessee (on the basis of prospective application of Rajesh Projects) is affirmed.

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