TaxTMI 
TaxTMI 
2016 (1) TMI 566
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.... 201(1) of the Act for failure to deduct and pay TDS and for levying interest u/s 201(1A) of the Act. 3.The Brief facts of the case are that during the course of survey u/s 133A of the Act on 04.02.2011 in the case of the CIDCO ,it was found by Revenue that the CIDCO had given plots to the assessee company on lease through tender against which the assessee company has made payment by way of lease rent and other sums termed as premium of Rs. 1,38,12,158/- during the assessment year 2010-11 against which the assessee company has not deducted TDS on such lease premium and ground rent paid to the CIDCO. 4. The assessing officer (Hereinafter called "the AO") issued notices u/s 201(1) and 201(1A) of the Act to the assessee company asking it to explain why sums paid termed as premium/other sums should not be treated as lease rent falling under the provisions of Section 194I of the Act and why the assessee should not be treated as an assessee in default as per provisions of Section 201(1) and 201(1A) of the Act. 5. The assessee company submitted before AO that it has been allotted plot no 166 in Sector 27 of Belapuron on 5.5.2009 which is leased to the assessee company under the provisi....
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....the assessee company has acquired the land or acquired the rights in property rather it is a clear cut case of lease arrangement whereby the lessee is paying to the lessor prespecified lease premium for a lease which is for a substantially long period running into 60 years which cannot change the inherent nature of the transaction which is giving land on lease basis by the CIDCO and hence TDS is deductible on the said payments. The agreement with CIDCO contains several clauses restricting usage of land that even sign board and advertisements cannot be put by the assessee company. Other restrictive clauses in the agreement relate to not to excavate, not to erect beyond the building line, sanitation, alteration, to repair , to enter and inspect, not to create nuisance, not to assign , transfer or otherwise dispose off the land without the prior approval of the Metropolitan Commissioner , restriction on change in the status of lessee , to use the premises for purpose of commercial/office only. These restrictive clauses indicate that the assesee company has not acquired any right of ownership in the plot but merely right to use the land although the period is substantially long on whic....
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....ssee company with CIDCO and no TDS is deducted while the said payment is duly covered under the provisions of Section 194I of the Act and since assessee has not deducted TDS u/s 194I of the Act on payment of Rs. 1,38,12,158/- to CIDCO towards lease premium, the AO has rightly declared the assessee as 'assessee in default' u/s 201(1) and 201(1A) of the Act and raised the demand against the assessee company. 11. The assessee company at the outset submitted that the payment of Rs. 1,38,12,158/- towards lease premium is made to CIDCO for acquiring the plot of land which is for acquisition of capital asset being long term holding rights in the plot. The assessee company reiterated its submissions as made before authorities below. The assessee company relied upon the orders of CIT(A) and submitted that one time payment of Rs. 1.38 crores has been made for acquiring long lease of plot of land for 60 years. The assessee company relied upon the decision of Mumbai Tribunal in DCIT v. Paradise Infra-con Private Limited in ITA No. 4592/Mum/2012 - (2014) 40 CCH 0567 (Mum-Trib.), whereby Mumbai Tribunal has held that the lease premium is capital expenditure to acquire land with substantial righ....
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....ards lease premium was within the definition of rent as stipulated under section 194-I of the Act. 6. The learned Commissioner (Appeals), after considering the detail submissions of the assessee and analyzing various decisions and also the lease deed between the assessee and CIDCO, came to the conclusion that such a payment cannot be treated as in the nature of rent within the meaning of section 194-I. The Tribunal in Shelton Infrastructures Pvt. Ltd. (supra), after noting series of decisions of the Tribunal, decided the issue in favour of the assessee and against the Revenue after observing and holding as under:- "6. We have heard the rival contentions and have perused the various decisions of the Tribunal relied upon by the assessee. We find that the Tribunal, Mumbai Bench, of the Tribunal has taken a consistent view that such a payment of lease premium do not fall within the realm of "rent" as contemplated in section 194-I. Therefore, the assessee is not liable for deducting the TDS on such a payment. The main reason is that the lease premium is capital expenditure to acquire land with substantial right to construct and cover the building complex. For the sake of ready ref....
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....at 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 M/s. Paradise Infra-con Pvt. Ltd. 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 Tribunal in the case of M/s. National Stock Exchange (supra) and Mukund Ltd (supra) have been well discussed by the Ld. CIT(A) is his order. The decision of the Hon‟ble Jurisdictional High Court in the case of Khimline Pumps Ltd. (supra) squarely and directly apply on the facts of the case wherein the Hon‟ble Jurisdictional High Court has held that payment for acquiring leasehold land is a capital expenditure. Considering the entire facts in totality in th....