TaxTMI 
TaxTMI 
2021 (1) TMI 562
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....ief 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 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....
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....following its own earlier pronouncement dated 10.12.2015 cited in point (a) supra; and d) Honourable 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 de....
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....Rs. 13,81,17,243/- paid to MMRDA. The relevant portion of the order of Ld. CIT(A) is reproduced as under: " 4. Decision in Appeal; 4.1 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 ....
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....sessee for acquiring a plot of land on an 80 years lease was in the nature of capital expense not falling within the ambit of Section 194-1 of the Act. In this case, the court reasoned that since all the rights 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 no....
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....r of the AO to draw our attention. The Ld. Authorized Representative ("Ld. AR", for shot) for the assessee stated that the issue in dispute is squarely covered in favour of the assessee by orders of the Co-ordinate Benches of Income Tax Appellate 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 pe....
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....le to deduct tax at source under section 194-1 on the lease premium paid to the Mumbai Metropolitan Regional Development Authority and consequently, the assessee cannot be deemed as assessee-in-default. The TDS Officer vide order dated March 30, 2012 rejected 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, l....
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.... to save the impugned order from the taint of crossing the period of limitation. In the result, I allow the plea of limitation raised by the appellant and therefore, ground Nos. 2 and 3 are allowed"' 9. After careful consideration of the contentions and submissions both parties 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 perus....
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....of Authorized Representative's and gone through various arguments canvassed by the learned counsel of the appellant as also taken into account the objections of the Assessing Officer as mentioned in the impugned order. i) It is well settled that premium and rent have distinct and separate connotations in law as 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 ....
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....an Regional Development Authority, the lessor. In the result, I hold that all the yardsticks as judicially held in the foregoing rulings relied upon by the learned counsel for terming the sum of Rs. 88,52,75,000/- as lease premium are fulfilled in the Appellant's case. Moreover, in A. R. KRISHANAMURTHY v. CIT 176 ITR 417 (SC), the transfer 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 whi....
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....ncome Tax(A) has also dealt with other cases pertaining to the land leased by Mumbai Metropolitan Regional Development Authority in the same or adjoining area and has held that the impugned deposit of lease premium does not constitute advance rent but it is a lease premium for acquiring land with right to construct a commercial building although with certain restrictions, but it 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 Commissione....
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.... 350 ITR 24 (Del)/[2012] 23 taxmann.com 265/10 Taxman 123 wherein their lordships held that for premium on acquisition of lease hold rights in the land, lease for 90 years with substantial interest in the land, then lease premium constituted capital expenditure. 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 o....
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....- Para 12. In view of above observations, we clearly observe that the Commissioner of Income Tax(A) has also dealt with other cases pertaining to the land leased by MMRDA in the same or adjoining area and has held that the impugned deposit of lease premium does not constitute advance rent but it is a lease premium for acquiring land with right to construct a commercial building although with certain restrictions, but it 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 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 acc....
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.... a plot of land on an 80 years lease was in the nature of capital expense not falling within the ambit of section I94-I of the Act. In this case, the court reasoned that since all the rights 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 in lease agreement for adjustment of premium amount paid against annual rent payable, the payment of lease premium was a capita! expense not requiring deduction of fax 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 deduct....