DCIT,CIRCLE-77(1), NEW DELHI V. SIKKA INFRASTRUCTURE P.LTD, NEW DELHI

ITA 2495/DEL/2022

AI Insights

The case revolves around the dispute concerning the applicability of TDS on lease rent payments made by M/s Sikka Infrastructure Pvt. Ltd. to NOIDA Authority. The Revenue contended that such payments fall under the definition of rent as per section 194I of the Income Tax Act, 1961, and thus should attract TDS. However, the assessee argued that NOIDA, being a statutory authority, the payments made were not subject to TDS. The Ld. CIT(A) agreed with the assessee, leading to the Revenue's appeal to the Tribunal. The Tribunal, referencing the Delhi High Court's decision in Rajesh Projects and its own earlier ruling, upheld the CIT(A)'s decision, confirming that the lease rent payments were not subject to TDS for the specified assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471505 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Other Referred Cases: Rajesh Projects (India) (P.) Ltd. vs CIT(TDS), Mahagun (India) (P.) Ltd. vs ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: MADHAV KAPOOR
• Keywords: Set aside; TDS
• Section: 13; 10; 201(1); 194C; 194L; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘G’: NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.2495/Del/2022 [Assessment Year: 2012-13 Dy. Commissioner of Income Tax, Circle-77(1), Room No.307, Aayakar Bhawavn, Lakshmi Nagar, New Delhi-110092 Vs M/s Sikka Infrastructure Pvt. Ltd. C-60, Sikka House Preet Vihar, New Delhi-110092 PAN-AAOCS8666H Revenue Assessee Assessee by Shri Madhav Kapoor, Adv. Revenue by Shri Sahil Kumar Bansal, Sr. DR Date of Hearing 20.03.2025 Date of Pronouncement 28.03.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This appeal by the Revenue is directed against the order of Ld. Commissioner of Income Tax(Appeals)-23, New Delhi dated 25.07.2022, arising out of order passed u/s 201(1)/201(1A) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’), dated 28.03.2019 for Assessment Year 2012-13. 2. Ground of appeal raised by the Revenue are as under:- “On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-23, Delhi has erred 1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that the definition of rent provided u/s 194I is wide enough to cover lease rent payments. Lease Rent payments are in the nature of rent u/s 1941 and therefore are required to be subjected to TDS accordingly. 2 ITA No.2495/Del/2022 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that the cost of land is paid to NOIDA which transfers and gives possession of land private builders. NOIDA develops urban infrastructure on land by undertaking EDWs. NOIDA transfers land to private builders who has to pay user fee the developers urban infrastructure which is named as lease rent under the license to set up commercial set ups. Therefore lease rent ought to be subject to TDS under section 1941@10% 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not appreciating the fact that judgments relied upon by the Ld. CIT(A) are of no avail in the present case as issue in those case before the Hon'ble Tribunal was whether EDC payments are subject to TDS u/s 194C rather than u/s 194l as claimed in the instant case. 4. That the order of the CIT(A) being erroneous in law and on facts and needs to be vacated. 3. Brief facts of the case:- The assessee is a private limited company incorporated under the provisions of Companies Act, 1956 having its registered office at C-60, Sikka House, Preet Vihar, New Delhi. The assessee has participated in the tender for allotment of Group housing plots of New Okhla Industrial Development Authority (Noida). On information received from the office of the Ld. CIT(A), Kanpur, UP, vide letter dated 12/28-03- 2014 that various companies were not deducting tax on lease rent paid to NOIDA/Greater/Yamuna Expressway, the Assessing Officer initiated the present proceedings in this case. 3.1. The Ld. AR verbally submitted that provisions of section 194I of the Act was not applicable upon the assessee as NOIDA Authority is a statutory authority established under U.P. Industrial Area Development Act, 1976 and TDS is not required to be deducted in respect of any payment made to Government entity exempt u/s 10 of the Act. The Assessing Officer did not accept the above explanation of the assessee and after dealing with the provisions of section 194I of the Act held that the definition of rent as given 3 ITA No.2495/Del/2022 in section 194I is wide enough to cover the payment of lease rent to NOIDA Authority. The Assessing Officer also referred to the decision of the Hon’ble Allahabad High Court in Writ Petition no.1338 of 2005 dated 28.02.211, wherein, it was held that NOIDA Authority is not a local authority within the meaning of Section 10(20) of the Act after amendment in section 10(20) through Finance Act, 2002, w.e.f. 01.04.2003. The Assessing Officer further held that the nature of payment received by NOIDA in the form of lease rent is certainly revenue in nature and provisions of section 194I was attracted in the case of the assessee. The Assessing Officer noted that total lease rent paid by the assessee to NOIDA authority was 3,55,41,360/- @ 1% of total premium during F.Y. 2011-12 which is revenue in nature and NOIDA authority has been showing as its income and therefore liable for TDS u/s 1941 being the lease rent. Accordingly, the Assessing Officer determined the tax liability of Rs.68,19,117/- u/s 201(1) and 201(1A) up to March, 2019, in the case of the assessee. 4. Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) relied upon the decision of the Hon’ble Apex Court in the case of Rajesh Projects (India) (P.) Ltd. vs CIT(TDS) [2017] 78 taxmann.com 263/392 ITR 483 (Del.) and other judgments and held that the payment of lease rent is not for carrying out any specific work to be done by NOIDA for and on behalf of the assessee but rather NOIDA which is a Government Department which levies these charges for acquisition of plot of land for 90 years lease. According to the ld. CIT(A), the assessee was not required to deduct tax at source at the time of payment of lease rent as the same was not out of any statutory or contractual liability towards NOIDA. 4 ITA No.2495/Del/2022 Accordingly, the Ld. CIT(A) deleted the tax liability u/s 201(1) and 201(1A) of the Act amounting to Rs.68,19,117/-. 5. Against the above order, the Revenue is in appeal before us. 6. The Ld. Sr. DR supported the order of the Assessing Officer and the grounds of appeal filed by the Department. 7. The ld. Counsel for the assessee submitted that the Co-ordinate Bench of Delhi Tribunal in the case of Mahagun (India) (P.) Ltd. vs ACIT after noting the decision of the Hon’ble Delhi High Court in Rajesh Projects (India) (P.) Ltd. vs CIT(TDS) [2017] 78 taxmann.com 263/392 ITR 483 (Del.) dated 16.02.2017, where, it was stated that it was not correct to say that NOIDA Authority was not subject to TDS Provisions of lease rent and the payer was not under statutory obligation to deduct TDS u/s 194I of the Act. But, it further noted that Hon’ble Delhi High Court in para 20 of its order had also held that the operation of judgment in the case of Rajesh Projects (India) (P.) Ltd. vs CIT(TDS) (supra) has been made prospective. In view of this order, the Ld. AR submitted that there was no liability on the part of the assessee to deduct TDS u/s 194I of the Act for the present Assessment Year 2012-13 and therefore, the decision of the Ld. CIT(A) was correct and the same may be confirmed. 8. We have heard both the parties and perused the material available on record. The facts of the present case are similar to the decision of the Co- ordinate Bench of the Delhi Tribunal in the case of Mahagun (India) (P.) Ltd. vs ACIT(supra). The relevant paragraph of the said order is reproduced as under:- 5 ITA No.2495/Del/2022 “7. We have carefully considered the rival submissions and perused the material available on record. 8. The applicability of Section 201(1)/201(1A) qua nondeduction of TDS obligated under Section 194-I in relation to lease rent payment to NOIDA Authority by the assessee is under controversy. 8.1 It is the case of the assessee that the assessee cannot be held as ‘assessee in default’ so as to attract the provisions of Section 201(1)/201(1A) in the peculiar factual matrix. The assessee contends that (i) the assessee acted under bona fide belief that payment towards lease rental is not susceptible to provisions of Section 194-I in view of specific communications made by the NOIDA Authorities on the applicability of Section 194-I of the Act; (ii) the proceedings under Section 201(1) and 201(1A) has already been completed and this is only a second round of proceedings under the same provisions; (iii) the applicability of the observations and conclusions in Rajesh Projects (surpa) is prospective. The Hon’ble High Court has visualized the difficulties of the tax payers and made the operation of judgment prospective in its wisdom and therefore, the cause of action if any, arising from Rajesh Projects (supra) is not available to the Revenue in A.Y. 2012-13 in question. 9. On appraisal of the factual matrix and the position of law, we find considerable force in the plea raised on behalf of the Assessee. The assessee has successfully demonstrated the existence of bona fide belief. This demonstration on standalone basis enables us to exonerate the assessee from the clutches of Section 201(1) and 201(1A) of the Act. We however further find that the operation of the judgment in Rajesh Projects (supra) have been made prospective as mentioned in paragraph 20 of the judgment. The cause of action under Section 201(1)/201(1A) in pursuance of the judgment of the Hon’ble Delhi High Court is thus not available to the Revenue for A.Y. 2012-13 in question. We also find that in the identical factual matrix, the Co-ordinate Bench in ITA No.997/Del/2020 order dated 15.12.2023 has granted relief similar to what is claimed in the present case. Thus, we have no hesitation to set aside the first appellate order and quash the impugned order dated 29.03.2019 passed under Section 201(1) and 201(1A) of the Act under challenge.” 9. Like the cited case, the present case of the assessee is also for Assessment Year 2012-13. Therefore, respectfully following the decision of the Hon’ble Delhi High Court in the case of Rajesh Projects (India) Pvt. Ltd.(supra) and the order of the Co-ordinate Bench of the Tribunal in the case of Mahagun (India) (P.) Ltd. vs ACIT (supra), it is held that the cause of 6 ITA No.2495/Del/2022 action under Section 201(1)/201(1A) in pursuance of the judgment of the Hon’ble Delhi High Court is thus not available to the Revenue for A.Y. 2012- 13 in question. Therefore, the TDS liability u/s 201(1) and 201(1A) of the Act amounting to Rs.68,19,117/- deleted by the Ld. CIT(A) is confirmed. Hence, grounds no.1 to 3 of the Revenue’s appeal are dismissed. 10. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 28th March, 2025. Sd/- Sd/- [YOGESH KUMAR US] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 28.03.2025 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Assessee 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "