2017 (2) TMI 1201

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....e nature of rent as defined in Explanation (i) to section 194-I of the Act for the purpose of tax deduction at source. 3. At the outset, the ld. Counsel for the assessee submits that the issue in appeal is squarely covered by various decisions of the Tribunal of the Mumbai benches, where the Hon'ble Tribunal consistently holding that lease premium paid by the assessee to MMRDA is not in the nature of rent u/s 194I of the Act. The ld. Counsel for the assessee further submits that the ld. CIT (Appeals) following the decisions of the Co-ordinate bench in the case of Wadhwa & Associates Realtors Pvt. Ltd and Shree Naman Developers Ltd. held that lease premium paid by the assessee to MMRDA during the year under consideration was not in the natu....

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....he assessee as defaulter u/s 201(1) and 201(1A) of the Act. 6. The question before us to be decided is whether the premium paid by the assessee to MMRDA for acquiring the stair case, lifts, lift room, lobbies etc. for free of FSI is in the nature of rent for the purpose of the provisions of 194I of the Act or not. We find that the Co-ordinate bench in the case of ITO Vs. Wadhwa & Associates Realtors Pvt. Ltd [36 Taxman.com 526] considered similar issue and held that premium paid by the assessee to MMRDA for the construction of building and for additional built up area for grant of free of FSI cannot be equated to rent. Similar view has been taken by the Tribunal in the case of ITO Vs. Shree Naman Developers Ltd. in ITA Nos. 686 and 687/M/2....

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....sesses thus was nothing but the transaction of transfer of property and the lease premium agreed to be paid was the consideration for the acquisition of such leasehold rights in the property. In this regard, a reference was made by the ld.CIT(A) to the decision in the case of Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income tax, (1943) 11 ITR 513 (PC) wherein it was held that the payment of salami under the lease agreement was a capital receipt being a single payment made for the acquisition of the right by the lessee to enjoy the benefits granted to them under the lease. He also relied on the decision of Hon'ble Supreme Court in the case of Member for the Board of Agricultural Income Tax vs. Sindhurani Chaudhran....

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....on of the Tribunal in the case of National Stock Exchange of India Limited (ITA No.1955/Mum/99 and others) and noted that in the similar facts and circumstances involved in that case, it was held by the Tribunal that a consideration paid for acquiring leasehold rights in land was a capital expenditure and not rent. Accordingly, the ld.CIT(A) held that the payment made by the assessees to MMRDA on account of lease premium for acquiring leasehold rights and additional FSI in respect of the lease property was not in the nature of rent as contemplated in section 194-I of the Act and the assessees were not required to deduct tax at source from the said payment. Accordingly, the demand raised by the AO treating the assessees in default u/s.201(l)....