TaxTMI 
TaxTMI 
2016 (6) TMI 498
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....are applicable in respect of payment for acquisition of leasehold right for 99 years as the same was nothing but rent. He accordingly confronted the assessee. The assessee in his reply submitted that as per the lease agreement with PCNTDA the lease is for perpetuity and is nothing but a sale transaction only for the plot in question. Therefore, the provisions of section 194I are not applicable. 3. However, the AO was not satisfied with the explanation given by the assessee and held that the lease premium is in the nature of rent as defined in Explanation to section 194I and TDS was required to be made on the said amount. Since the assessee has paid lease premium for plot No.46(c) in sector 10 of Rs. 2,54,67,840/- to PCNTDA, therefore, the AO treated the assessee as an assessee in default in respect of non deduction of TDS on lease rent payment of Rs. 2,54,67,840/-. He accordingly determined the TDS u/s.201(1) at Rs. 25,46,784/- and interest u/s.201(1A) at Rs. 7,13,099/-, thus raising a total demand of Rs. 32,59,883/-. 4. In appeal the Ld.CIT(A) allowed the appeal of the assessee and deleted the demand raised by the AO by holding that the payment of lease premium to PCNTDA was a p....
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....ion of tax at source from the lease premium paid to PCNTDA amounting to Rs. 2,54,67,840/- for acquisition of leasehold right for 99 years. We find in appeal the Ld.CIT(A) following various decisions of the Mumbai Bench of the Tribunal deleted such demand raised by the AO u/s.201(1)/201(1A). We find identical issue had come up before the Coordinate Bench of the Tribunal in the case of Shri Ajay N. Yerwadekar (Supra). The Tribunal after considering various decisions upheld the order of the CIT(A) and dismissed the appeal filed by the Revenue in respect of lease premium paid to PCNTDA. The relevant observation of the Tribunal from Para 6 to 8 of the order read as under : "6. After hearing both the sides, we find an identical issue had come up before the Tribunal in the case of ITO Vs. Preetam Medical Foundation & Research Centre vide ITA No.190/PN/2014 order dated 16-01-2015 wherein similar demand u/s.201(1) & 201(1A) was raised by the AO in respect of lease premium paid to PCNTDA. The CIT(A) deleted such demand and on appeal filed by the Revenue, the Tribunal dismissed the appeal filed by the Revenue by holding as under : "5. We have heard the rival contentions and perused the re....
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....ghts on the said plot of land, with the option either to renew the lease for further period and take back the possession of the land. However, the preliminary clause of the lease agreement reflects that the payment of lease premium was a pre-condition for entering into lease agreement. The CIT(A) has reproduced the preliminary clause of the lease agreement at page 7 of the appellate order, which are not being reproduced for the sake of brevity. The CIT(A) thus, held that the payment of lease premium of Rs. 1,37,36,963/- was a pre- condition for entering into the lease agreement and the same was not under the lease deed, therefore, the payment of lease premium fell outside the purview of definition of rent as provided under section 194I of the Act. It was further pointed out by the CIT(A) that there is no merit in the reliance placed upon the decision of Chennai Bench of the Tribunal in Foxconn India Developer (P) Ltd. Vs. ITO (TDS) (supra) as the same was distinguishable on facts. In the facts of the case before the Tribunal, the issue in question was upfront payment of lease and further the said upfront payment was part of the conditions for acquiring leasehold rights, unlike the ....
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....remium was a pre-condition for obtaining the lease rights and it was only after payment of the lease premium, the lease agreement was entered into and bundle of rights were obtained by the assessee. 7. The Assessing Officer held the assessee to be default in respect of the TDS payable on such lease rent payment to PCNTDA. Reliance was placed on the ratio laid down by the Chennai Bench of the Tribunal in Fox Conn India Developer (P) Ltd. (supra). The assessee was held to be in default for non- deduction of tax on source under section 194I of the Act on the lease premium paid to PCNTDA and demand under section 201(1) of the Act was raised and interest under section 201(1A) of the Act was charged, raising a demand of Rs. 22,90,585/-. 8. The CIT(A) vide para 8 referred to the preliminary clauses of the agreement entered into between assessee and PCNTDA and pointed out that the lease premium finds mention in the Lease Deed but the said payment of lease premium was a pre-condition for entering into lease agreement. The CIT(A) thus, held that same was not under the lease deed and the payment of lease premium falls outside the purview of definition of rent as specified in section 194I ....