TaxTMI 
TaxTMI 
2015 (6) TMI 209
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....ing into academic exercise of Approbate and Reprobate without appreciating the established legal principle that Chapter XVIIB of which Section 194 I is a part, contains a self contained code for the purpose of TDS and other sections of the I.T.Act which involve interpretative issues such as revenue or capital have no bearing on the point in issue. 4. The Learned CIT CA) has erred in law and on facts of case in holding that the amount paid by M/s Paradise Infra- Con Pvt. Ltd to City Industrial Development Corporation C shortly called "CIDCO Ltd ') as premium" for acquiring lease hold rights and additional FSI in respect of the leased plot is not in the nature of rent as defined u/s 1941 of the Act. 5. The Learned CIT CA) has erred in law and on facts of case in holding that tax deduction u/s 1941 is not required on the amount lease premium paid by M/s Paradise Infra - Con Pvt. Ltd to CIDCO Ltd. 6. The Learned CIT CA) has erred in law and on facts in failing to appreciate that the amended definition of "Rent" in explanation to section 1941 of the Act w.e.f 13-07-2006 is very comprehensive and covers 'any payments" by whatever name called" under any lease, sub leases, tenan....
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....nds to contest deletion made by Ld. CIT(A) who has deleted this demand following the judicial precedences mentioned in the impugned order passed by Ld. CIT(A). 4. During the course of hearing it was submitted by Ld. AR that this issue is covered in favour of the assessee by the decision of Mumbai ITAT passed in several cases. It was submitted that identical grounds were raised by the Revenue against similar deletion in the case of ITO vs. Shah Group Builders Ltd. which is decided by ITAT vide its order dated 14/8/2013 in ITA No.4523/Mum/2012. He has placed copy on our record and copy was also given to Ld. DR. He submitted that similar view has been taken in the case of ITO vs. Dhirendra Ramji Vora vide order dated 9/4/2014 in ITA No.3179/Mum/2012, copy of this order is also placed on our record and given to Ld. DR. Thus, it was pleaded by Ld. AR that the issue raised by the Revenue in the present appeal is in favour of the assessee and accordingly Revenue's appeal should be dismissed. 5. However, on the other hand, Ld. DR relied upon order passed by AO and Ld. DR could not dispute that the issue is covered in favour of the assessee by the aforementioned decision and no contrary d....
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....Group Builders Ltd. (assessee) has been made to avoid recurring payment by instalments by the them to the Lessor. The payment so made by the assessee is a Rent for enjoyment and occupancy of the impugned land. The one time payment does not change the character of this payment and therefore it squarely falls within the parameter of section 1941. This inference also gathers support from the judicial pronouncements of Hon'ble Karnataka High Court in the case of CIT v/s HMT Limited - 203 ITR 820 and that of Hon'ble Calcutta High Court in the ease of Braithwaite & Co. (1) Ltd. v/s CIT - 111 ITR 542. Both the High Courts in these cases have ruled that lease premium paid in lump sum is nothing but the rent paid in advance to obviate periodical payments. Going by the verdict of these Hon'ble High Courts, the rulings are squarely applicable to the facts of the instant case. Therefore, the obligation was cast upon the Assessee to deduct tax at source from the lease premium paid to CIDCO as per the provisions u/s 194-I of the Income Tax Act, 1961. It is further necessary to mention that admittedly vide Lease Agreement referred to above the assessee has acquired right of occupancy and right o....
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....sessee in default and directed to make payment of interest u/s. 201(1A)." 4. Against the order passed by the A.O. u/s 201(1)/201(1A) of the Act, the assessee filed its appeal before the ld. CIT(A) and elaborate submissions were made on its behalf before the ld. CIT(A) in support of the stand that the lease premium paid to CIDCO not being in the nature of advance rent within the meaning of section 194-1 of the Act, the assessee was not liable to deduct tax at source and therefore it could not be treated as assessee in default u/s 201(1) & 201(1A) of the Act. The said submissions made on behalf of the assessee before him were forwarded by the ld. CIT(A) to the A.O. for his comments. In the remand report submitted to the ld. CIT(A), the A.O. offered his comments on the submissions made on behalf of the assessee. After considering the submissions made on behalf of the assessee and the comments offered by the A.O. on the said submissions in the remand report as well as the material available on record, the ld. CIT(A) found that a similar issue involving identical facts and circumstances was considered and decided by him in detail vide his order passed in the case of Navi Mumbai SEZ Pvt....
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.... page-1 to 42 of the Paper Book. A careful reading of the said lease deed transpires that the premium is not paid under a lease but is paid as a price for obtaining the lease, hence it precedes the grant of lease. Therefore, by any stretch of imagination, it cannot be equated with the rent which is paid periodically. A perusal of the records further show that the payment to MMRD is also for additional built up are and also for granting free of FSI area, such payment cannot be equated to rent. It is also seen that the MMRD in exercise of power u/s. 43 r.w. Sec. 37(1) of the Maharashtra Town Planning Act 1966, MRTP Act and other powers enabling the same has approved the proposal to modify regulation 4A(ii) and thereby increased the FSI of the entire 'G' Block of BKC. The Development Control Regulations for BKC specify the permissible FSI. Pursuant to such provisions, the assessee became entitled for additional FSI and has further acquired/purchased the additional built up area for construction of additional area on the aforesaid plot. Thus the assessee has made payment to MMRD under Development Control for acquiring leasehold land and additional built up area. The decisions of the Tr....