TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 562
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....#39;ble Bombay High Court in the case of assessee (ITA No. 918/2015 and ITA No. 920/2015) without demonstarating the factual similarity in these cases? 2.1 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in allowing relief following the order dated 10/12/2015 of the Hon'ble Bombay High Court in the case of assessee (ITA No. 918/2015 and ITA No. 920/2015) without holding that the sum of Rs. 13,81,17,243/- had been treated as capital receipt by MMRDS as done by the Hon'ble Bombay High Court? 2.2 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in allowing relief following the order dated 10/12/2015 of the Hon'ble Bombay High Court in the case of assessee (ITA No. 918/2015 and ITA No. 920/2015) without demonstarating the factual similarity in the cases particularly when the payments made by the assessee in the Assessment years (AYs) 2008-09 and 2010-11 mentioned in the order of the Hon'ble Bombay High Court were for acquisition of land as per the agreement dated 09/04/2008 with MMRDA whereas the sum of Rs. 13,81,17,243/- of the relevant A.Y. was for acquiring right for ad....
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....le Tribunal's detailed orders dated 20,06.2013 and for preceding assessment years totally cover controversies in present appeal whose reasoning, rationale, findings, conclusions and holdings are approved by jurisdictional Delhi Court through aforementioned pronouncements. 2. Respondent-Assessee further submits that issues raised in present departmental appeal are also covered in favour of Respondent- Assessee by several other verdicts of Supreme Court, High Court and Tribunal which Respondent-Assessee craves leave to refer and rely upon before or at time of hearing. 3. Respondent-Assessee craves leave to make further arguments and file written submissions before Honourable Tribunal before or at time of hearing of appeal. 4. Abovementioned cross objections broadly and fundamentally support CIT(A)'s order and humbly prays that departmental appeal be dismissed. 5. Aforesaid cross objections are independent, alternative and without prejudice to one another. 6. Appellant craves leave to add to and/or alter and/or modify and/or delete and/or amend aforesaid grounds of cross-objection before or at the time of hearing." (B) The Assessee is a company registered U/s ....
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....I have gone through order u/s 201(1)/201(1A) of the I. T. Act, 1961 dated 27.03.2014 and also carefully considered the submissions, decision relied upon and the CBDT Circular No. 35/2016 dated 13.10.2016 on applicability of TDS provisions of section 194-1 of the Income-tax Act, 1961 on lump sum lease premium paid for acquisition of long term lease. 4.2.1 The Appellant Society has been allotted a plot of land admeasuring 10415 sq. meters in Bandra Kurla Complex (BKC) on lease for 80 years by MMRDA vide letter dated 22nd January 2008 for the construction of office complex for a consideration of lease premium of Rs. 88,52,75,000/-. 4.2.2 Subsequently, MMRDA has granted additional Floor Space Index (FSI) on the said Bandra land for further built-up area of 20,830 sq. meters for a total premium of Rs. 204.02 crore. Amounts of Rs. 65.80 crore and Rs. 16.93 crore was paid by the appellant during F.Y, 2009-10 and 2010-11 respectively. During the financial year under reference premium of Rs. 13,81,17,243/- was paid by the appellant to MMRDA for its BKC project on 05.02.2012, being further part payment of the total premium of Rs. 204.04 crore for the additional built-up area. 4.2.3 ....
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....hts easements and appurtenances in respect of the said land were in effect transferred to the lessee for 80 years and since there was no provision/m lease agreement for adjustment of premium amount paid against annual rent payable, the payment of lease premium was a capital expense not requiring deduction of tax at source under section 194-1 of the Act. 4. Further, in the case Foxconn India Developer Limited (Tax Case Appeal No. 801/2013), the Hon'ble Chennai High Court held that the one- non-refundable upfront charges paid by the assessee for the acquisition of leasehold rights over an immovable property for 99 years could not be taken to constitute rental income in the hands of the lessor, obliging the lessee to deduct tax at source under section 194-1 of the Act and that in such a situation the lease assumes the character of "deemed sale". The Hon'ble Chennai High Court has also in the case of Tril Infopark Limited (Tax Case Appeal No. 882/2015) ruled that TDS was not deductible on payments of lump sum lease premium by the company for acquiring a long-term lease of 99 years. 5. In all the aforesaid cases, the Department has accepted the decisions of the High Courts and has....
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....late Tribunal, Delhi ("ITAT", for short) in assessee's own case for Assessment Year 2011-12(vide order dated 27.01.2014 in ITA No. 4660/Del/2013) and for Assessment Years 2007-08 and 2009-10 ( vide order dated 20.06.2013 in ITA Nos. 5207 & 5208/Del/2012). The aforesaid order dated 20.06.2013 of Co-ordinate Benches of ITAT, Delhi, in assessee's own case has also been reported in Income-tax Officer v. Indian Newspapers Society [2013] 37 taxmann.com 401 (Delhi-Trib.); the relevant portion of which is reproduced as under: "4. Briefly suited, the facts giving rise to these appeals are that the assessee is a nonprofit- making company formed and registered under section 25 of the Companies Act, 1956 with the object of functioning as an apex organization to protect the interest of press in India. The Mumbai Metropolitan Regional Development Authority (MMRDA) offered to the assessee's land situated at Randra Kurt a complex on lease for a period of 80 years to enable construction of office complex by the assessee in order to provide space at subsidised rates to the assessee's members, inter alia, for a consideration comprising lease premium of Rs. 88,52,75,000 which was paid on Decembe....
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....cted all the contentions of the assessee and proceeded to saddle the demand of Rs. 8,39,81,641 under section 201(1) of the Act. Rs. 6,58,05,970 and under section 201(1 A) of Rs. 81.75,671, respectively. 6. Being aggrieved by the above order of the Assessing Officer, the assessee carried the matter in appeal before the Commissioner of Income-tax {Appeals) which was partly allowed. Now the Revenue is before ibis Tribunal with the grounds as mentioned hereinabove. Ground No, I of ITA No. 5207./Del/2012 7. Apropos ground No. 1. the learned Departmental representative submitted that the Commissioner of Income-tax (Appeals) has erred in treating the order passed by the Assessing Officer/TDS Officer under section 201 (1 )/201 (1 A| of the Act as barred by limitation by ignoring the fact that the same was passed in order to give effect to the order of the hon'ble High Court of Bombay. Replying to the above, learned counsel for the assesses submitted that the assessee's ease falls within the ambit of section 201(3)(i) of the An which prescribes deadline of two years from the end of the financial year in which the tax at source return was furnished by the assessee. The return fo....
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.... in this regard, at the outset, we observe that as per facts recorded by the Commissioner of Income-tax (Appeals), the hon'ble High Court of Mumbai quashed the order of the TDS Officer, Mumbai} leaving the issue open for appropriate competent authority to initiate TDS proceedings. The Departmental representative appearing For the Revenue has not disputed the point that the hon'ble High Court of Mumbai left the issue open for the appropriate competent authority to initiate TDS proceedings, keeping in view the law of limitation, meaning thereby that the hon'ble High Court of Mumbai simply quashed the order of the TDS Officer,' Mumbai, perhaps on the ground of jurisdiction and the issue was left to be decided by the competent authority but the period of limitation has to be taken from the relevant provisions of the Act which cannot be extended by judicial pronouncements. On careful perusal of the relevant para of the impugned order, we observe that the Commissioner of Incometax (Appeals) has dealt with the issue of limitation as per the relevant provisions of the Act and righty held that the order was passed by crossing the period of limitation as prescribed by the Act. Ac....
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.... enshrined in Section 105 of the Transfer of Property Act, 1882. The essence of premium lies in that fact it is paid prior to the creation of the landlord and tenant relationship, that is, before the commencement of the tenancy and constitutes the very superstructure of the existence of that relationship. Its another vital characteristic is that it is a onetime non-recurring payment for transferring and purchasing the right to enjoy the benefits granted by the lessor resulting in conveyance of some of the rights, title and interest in the property out of such a bundle of rights. ii) In the Appellant's case, the premium Rs. 88,52,75,000/- has been paid in two installments on 27.12.2005 [Rs. 22,13,18,750/-] and 18.02.2008 [Rs. 66,39,56,250/-] to Mumbai Metropolitan Regional Development Authority in respect of the Bandra land and as per the lease agreement dated 09.04.2008 read with the possession receipt dated 10.04.2008 issued by Mumbai Metropolitan Regional Development Authority the lease starts from 09.04.2008 and hence the payment of Rs. 88,52,75,000/- is before the initiation of the tenancy relationship between the Appellant and Mumbai Metropolitan Regional Development Au....
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.... of leasehold rights even for temporary period of 10 years has been held to give rise to chargeable capital gains where the Apex Court followed its earlier decision in R.K. Palshikar (HUF) v. CIT 172 ITR 311 (SC) where the lease for 99 years was concluded to be of an enduring nature. Similar view has been upheld in JCIT v. MUKUND LTD. [2007] 291 ITR (AT) 249 (Mum) [SB], CIT v. INTERNATIONAL HOUSING COMPLEX (KER) BEARING ITA NO 770 OF 2009 which was converse case where the Assessee offered the lease premium received for 99 years as rental income in each year, but the revenue assessed the same as capital gains which was ratified by the High Court. The abovementioned view has been approved by the jurisdictional Delhi High Court in KRISHAK BHARATI Co-operative Ltd. v. Dy. CIT [2013] 350 ITR 24 (Delhi) decided ON 12.07.2012 to which my attention was drawn by the learned counsel vide letter dated 23.07.2012 enclosing the copy of the same. Thus in conformity with the consistent stand of the judiciary including the latest pronouncement of the jurisdictional High Court, in my view, undoubtedly premium in relation to leased land is a payment on capital account not liable to be classified as ....
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.... is a capital expenditure not falling within the ambit of section 194-I of the Act. We also observe that the payment of lease premium was not to be made on periodical basis but it was one time payment to acquire the land with right to construct a commercial complex thereon and the lease premium was paid to Mumbai Metropolitan Regional Development Authority in four installments, therefore, we are unable to see any perversity, infirmity or any other valid reason to interfere with the findings of the Commissioner of Income Tax(A). Accordingly, this issue is decided in favour of the assessee by disposing ground no.2 of ITA 5207/D/12 and ground no.1 of ITA 5208/D/12. Ground no.3 of ITA No.5207/D/12 and ground no.2 of ITA 5208/D/12. 13. Apropos these grounds, the DR submitted that the Commissioner of Income Tax(A) has erred in not treating the assessee as assessee in default within the meaning of section 201(1) of the Act for non-payment of TDS on payment made to Mumbai Metropolitan Regional Development Authority. The DR further contended that as per section 201 of the Act where any person including the Principal Officer of a company who is required to deduct any sum in accordance ....
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.... the Commissioner of Income Tax(A) has erred in not treating the assessee as assessee in default within the meaning of section 201(1) of the Income Tax Act for non-deduction of TDS on payment of lease premium to MMRDA. At the cost of repetition, it is worthwhile to mention that for invoking the provisions of section 201(1) of the Act, this is a precondition that the person should be required to deduct any sum in accordance with the provisions of this Act and he does not deduct, or does not pay or after deduction fails to pay the whole or in part of the tax as required under the provisions of the Act, then only such person shall be deemed to be an assessee in default in respect of payment of such tax. In the case in hand, the assessee was not liable to deduct any tax on payment of lease premium to MMRDA because it was capital expenditure to acquire land on lease with substantial right to construct a commercial building complex. 17. To sum up, we finally hold that the assessee was not liable to deduct tax at source from the payment made to MMRDA as lease premium, therefore, the Commissioner of Income Tax(A) rightly decided this issue in favour of the assessee and we have no reason....
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.... falling within the ambit of section 194-I of the Act. We also observe that the payment of lease premium was not to be made on periodical ITA No.5207 & 5208/Del/2012. Para 16. In view of discussions made hereinabove, we are not in agreement with the findings of the Assessing Officer and we decline to hold that the Commissioner of Income Tax(A) has erred in not treating the assessee as assessee in default within the meaning of section 201(1) of the Income Tax Act for non-deduction of TDS on payment of lease premium to MMRDA. At the cost of repetition, it is worthwhile to mention that for invoking the provisions of section 201(1) of the Act, this is a precondition that the person should be required to deduct any sum in accordance with the provisions of this Act and he does not deduct, or does not pay or after deduction fails to pay the whole or in part of the tax as required under the provisions of the Act, then only such person shall be deemed to be an assessee in default in respect of payment of such tax. In the case in hand, the assessee was not liable to deduct any tax on payment of lease premium to MMRDA because it was capital expenditure to acquire land on lease with substan....
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....ax at source under section 194-1 of the Act. 4. Further, in the case Foxconn India Developer 1 .muted (Tax Case Appeal No. 801/2013), the Hon'ble Chennai High Court held that the one-time non-refundable upfront charges paid by the assessee for the acquisition of leasehold rights over an immovable property for 99 years could not be taken to constitute rental income in the hands of the lessor, obliging the lessee to deduct tax at source under section 194-1 of the Act and that in such a situation the lease assumes the character of "deemed sale". The Hon'ble Chennai) High Court has also in the cases of Tril Infopark Limited (Tax Case Appeal No. 882/2015) ruled that TDS was not deductible on payments of lump sum lease premium by the company for acquiring a long-term lease of 99 years. 5. In all the aforesaid cases, the Department has accepted the decisions of the High Courts and has not filed an SL,P. Therefore, the issue of whether or not TDS under section 194-1 of the Act is to he made on lump sum lease premium or one-time upfront lease charges paid for allotment of land or any other property on long-term lease basis is now settled in favour of the assessee. 6. In view of....