2015 (8) TMI 1248

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.... brief facts are that on 9.11.2005 the appellants who own industrial property entered into a Lease Agreement with M/s Granada Services Pvt. Ltd. to lease 2,00,000 Sq. Ft. industrial property in Noida in favour of Granada Services (P) Ltd. (GSPL), As per the agreement the consideration agreed was such that GSPL/ Lessee has to pay to the appellant a sum of Rs. 20,00,00,000/- (Rupees Twenty Crores only) as interest free security deposit at the time of execution of agreement and monthly Rent was fixed as Rs. 5,000/- (Rupees Five Thousand only). The above interest free security deposit is refundable on termination of agreement. The appellant paid Service Tax on monthly of rent of Rs. 5,000/- from the date on which such services became taxable. I....

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....e of leasing/renting of immovable property, and that it occurs when the transfer of right takes place i.e.; at the time of execution of the agreement. That such event which takes place at the time of execution lease agreement is a one time event. Receiving of rental income every month does not make it a continuous service. That in the appellant's case the agreement was executed on 9.11.2005. The taxable event if any occurred at the time of execution of the agreement, when renting of immovable property was not a taxable service. Further, that the appellants have been discharging the service tax liability on monthly rentals received after the services became taxable. The learned Counsel vehemently contended that loading of notional intere....

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....he rent agreed between the parties is the gross amount charged for leasing the premises. According to them the security deposit cannot form part of these charges as it is refundable. In the present case, the appellants have received a huge sum of Rs, 20 crores, interest free as security deposit at the time of execution of the agreement. The monthly rental fixed is so nominal in regard to the property that is leased. Again, the renewal terms of the agreement are that the agreement can be renewed up to 20 years. If renewed to such extended period, the refund of the security deposit need to be made only after 20 years. But as to the rate of rent, it is specifically stated that the rent shall not be revised or enhanced even if the agreement is ....