TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 591
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 (for short "the Act") for non-deduction of tax at source under section 194I of the Act. 3. Briefly stated the facts are, the assessee a company is engaged in the business as a builder / developer of real estate. As stated by the assessee, it is also engaged in carrying out SRA Projects (Slum rehabilitation), wherein it has to provide for free of cost flats to hut dwellers. For the assessment year under consideration, assessee filed its return of income on 30th September 2010, declaring loss of Rs. 2,46,555. In the course of assessment proceedings, the Assessing Officer found that assessee had debited to the Profit & Loss account an amount of Rs. 1,06,16,000 on account of compensation payment out of which on an amount of Rs. 51,84,000, as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id building were actually the tenants of the municipal corporation. Learned counsel submitted, since the subject property where the tenants were staying was dilapidated and become dangerous to the life and property of inhabitant, a decision was taken by the authorities concerned to demolish the said building and build a new building under SRA project. As per the terms of development agreement between the assessee, who was entrusted to construct the building under the SRA Project, and the society constituted by the inhabitant of the building during the construction period, the assessee was required to provide alternative accommodation to the tenants as they have to vacate the building for the purpose of construction. However, as the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vide alternative accommodation to the tenant. However, instead of providing such alternative accommodation, the assessee has made payments to the tenants towards rent to be paid by them for the alternative accommodation. Therefore, the payment made by the assessee being in the nature of rent will come within the purview of section 194I and the assessee having not deducted tax at source, disallowance under section 40(a)(ia) is justified. Learned Departmental Representative further submitted, for a particular payment to qualify as rent it is not necessary that the deductor should be the owner of the property. 6. We have considered the submissions of the parties and perused the material available on record. Undisputedly, the property in quest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the assessee has in reality paid rent on behalf of them. Only because the assessee was not able to provide alternative accommodation to these tenants the assessee had to pay compensation for enabling the tenants to meet the expenditure to be incurred by them towards rent payable whether they are actually paying rent or not. This is for the simple reason that tenants were displaced from the property where they were staying for construction of new building. On a perusal of section 194I of the Act, it is seen that under clause (i) rent has been defined as under:- "Explanation.-For the purposes of this section,- (i) "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangeme....