MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES CO OPERATIVE SOCIETY LTD, MUMBAI V. ITO (TDS) 2(3), MUMBAI

ITA 1002/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3845 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1995-1996
• Appeal Filed On: 13-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJGURUDR
• Keywords: Opportunity of being heard; Maximum Marginal Rate; Non-deduction of tax; Capital expenditure
• Section: 133A; 37(1); 201(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NOS.1002 TO 1006/MUM/2014 ASSESSMENT YEARS: 1995-96 TO 1997-98 & 2006-07 TO 2007-08 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD. 4/212, ABHYUDAYA NAGAR, KALA CHOWKI, MUMBAI-400033 / VS. ITO-(TDS)-2(3), MUMBAI ( ! /ASSESSEE) ( ' / REVENUE) PAN. NO . AAAAM8387M ! / ASSESSEE BY SHRI MANDAR VAIDYA ' / REVENUE BY SHRI RAJGURU-DR # '$ % ! & / DATE OF HEARING : 27/04/2016 % ! & / DATE OF ORDER: 27/04/2016 ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS BUNCH OF FIVE APPEALS IS BY THE ASSESSEE, AGGR IEVED BY THE IMPUGNED ORDERS ALL DATED 29/11/2013 OF THE FIRST APPELLATE AUTHORITY, MUMBAI. THE COMMON GROUND RAIS ED IN THE PRESENT APPEALS IS WITH RESPECT TO HOLDING THAT THE AMOUNT OF LEASE PREMIUM ON PURCHASE OF BUILT UP ARE A, ADDITION FSI, ADDITIONAL BASEMENT AREA, ETC AND THE RESPECTIVE AMOUNTS I.E. RS.5,70,000/- (A.Y.1995-96) , RS.2,30,000/- AND LET PAYMENT CHARGES OF RS.32,85,0 00/- (A.Y. 1996-97), RS.52,71,655/- AND LET PAYMENT CHAR GES OF RS.17,28,345/-(ASSESSMENT YEAR 1997-98), RS.19,22,9 09/- (ASSESSMENT YEAR 2007-08) AND RS.1,05,09,375/- (ASSESSMENT YEAR 2006-07) AND CONSEQUENTLY HOLDING THE ASSESSEE AS ASSESSEE IS DEFAULT AND LIABLE U/S 201 AND 201(1A) OF THE ACT. 2. DURING HEARING OF THESE APPEALS, AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE, SHRI MANDAR VAIDYA, C LAIMED THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL DATED 04/12/2015 FOR ASSES SMENT YEAR 2009-10( ITA NO.3889/MUM/2014). THE LD. COUNSE L FOR THE ASSESSEE ONLY ARGUED THE ISSUE OF LIABILITY U/S 201 AND 201(1A) FOR FAILURE TO DEDUCT TAX AT SOURCE. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. DR, SHRI RAJ GURU. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 3 AFORESAID ORDER OF THE TRIBUNAL DATED 04/12/2015 FO R READY REFERENCE:- THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-14, MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT(A)] D ATED 07.03.2014 RELEVANT TO THE A.Y. 2003-04 PASSED U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961( IN SHOR T THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE AMOUNT PAID BY THE LESSEE (M/S. MUMBAI PUNE MOTOR MALAK SHRAMIVAN PREMISES C.H.S. LT D.) TO THE LESSOR (MMRDA) WAS NOT IN THE NATURE OF RENT, AS DEFINED IN THE EXPLANATION (I) TO SECTION 1941 OF THE ACT FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ACCEPTING THE CLAIM OF THE ASS ESSEE THAT NO TAX WAS DEDUCTIBLE UNDER SECTION 1941 FROM THE PAYMENT MADE BY THE ASSESSEE TO MMRDA FOR ACQUISITION OF THE PLOT OF LAND ON LEASE FR OM MMRDA. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONFIRMING THE ORDER OF T HE ASSESSING OFFICER TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT U/S. 201 (1) IN RESPECT OF THE AMOUNT OF TAX WHICH HAS NOT BEEN DEDUCTED UNDER SECTIO N.194I FROM THE PAYMENT MADE TO MMRDA AND LEVYINQ INTEREST UNDER SE CTION 201(1A). (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN IGNORING THE DEFINITION OF REN T, AS CONTAINED IN SECTION 194I AND IN RESORTING TO INTERPRETATIVE REA SONING WHEREAS AS PER THE SETTLED PRINCIPLE OF JURISPRUDENCE, THIS EXERCISE IS REQUIRED ONLY WHEN THE LAW IS UNCLEAR. (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN GOING INTO THE QUESTION OF TAX ABILITY OF THE PAYMENT MADE BY THE ASSESSEE TO MMRDA DESPITE THE DECISION OF THE APEX COURT IN THE CASE OF THE AGGARWAL CHAMBERS OF COMMERCE V. GANPA T RAI HIRALAL, 33 ITR 245, WHERE IT HAS BEEN HELD THAT THE PERSONS WHO ARE R ESPONSIBLE FOR ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 4 DEDUCTION OF TAX AT SOURCE ARE NOT CONCERNED WITH THE ULTIMATE RESULT OF ASSESSMENT. 3. IN BRIEF, A SURVEY PROCEEDING U/S. 133A WAS CAR RIED OUT IN THE CASE OF M/S.MUMBAI METROPOLITAN AREA DEVELOP MENT AUTHORITY (MMRDA) ON 09.02.2011. IN THE COURSE OF SURVEY PROCEEDINGS, IT WAS NOTICED THAT M/S. MUMBAI PUNE M OTOR MALAK SHRAMJIVAN PREMISES COOP. SCTY. LTD.(THE ASSE SSEE) HAD ENTERED INTO A LEASE AGREEMENT WITH MMRDA AND THE A SSESSEE PAID RS,20,25,416/- ON 27.08.2008. THE PAYMENT WAS IN THE NATURE OF LEASE RENT. HOWEVER, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194I OF THE ACT, THE ASSESSEE DID NOT DEDUCT OF TAX AT SOURCE. THEREAFTER, GIVING PROPER OPPORTUNITY OF BEING HEARD THE ASSESSEE WAS DIRECTED TO PAY THE TAX ALONG WITH INTEREST TO THE TUNE OF RS.5,96,204/- VIDE ASS ESSMENT ORDER DATED 30.03.2011. BEING NOT SATISFIED WITH T HE ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED THE APPEAL BE FORE LEARNED CIT(A) AND LEARNED CIT(A) ACCEPTED THE APPEAL OF TH E ASSESSEE AND HELD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TAX U/S.194I ON THE LEASE PREMIUM PAID TO MMRDA. AGGRIE VED BY THE ORDER, THE ASSESSEE HAS FILED THE PRESENT APPEA L BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND HAVE GONE THROUGH THE CASE FILES CAREFULLY. MAINLY, THE REVENUE HAS CONTENDED THAT ASSESSEE HAS PAID LEASE PREMIUM IN THE NATURE OF RE NT TO MMRDA, THEREFORE, THE ASSESSEE WAS LIABLE TO DEDUCT THE INCOME TAX AT SOURCE PAYABLE TO THE DEPARTMENT. LE ASE ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 5 AGREEMENT DATED 17 TH JANUARY 2007 AND LEASE AGREEMENT (RECTIFICATION) DATED 13 TH SEPTEMBER 2007 LIES IN THE PAPER BOOK SPEAKS ABOUT THE LEASE AGREEMENT OF THE ASSESS EE FIRM WITH MMRDA. THE RECEIPT WHICH ALSO LIES AT PAGE 28 IN THE PAPER BOOK SPEAKS ABOUT THE PAYMENT TO MMRDA TO THE TUNE OF RS.20,25,416/- ON ACCOUNT OF LEASE PREMIUM WHICH HAD BEEN PAID BY THE ASSESSEE IN VIEW OF RECEIPT ATTACH ED WITH THE PAPER BOOK AT PAGE 30. WHETHER THE LEASE PREMIUM C AN BE TREATED AS RENT OR NOT, THIS QUESTION THE COME BEFO RE THE MUMBAI, TRIBUNAL IN CASE OF M/S. WADHWA ASSOCIATES REALTORS (P) LTD. (2013) 36 TAXMAN 526, MUMBAI WHEREIN IT IS HELD THAT THE LEASE PREMIUM PAID TO THE MMRDA IS NOT LIABLE T O BE TAXED U/S 194I OF THE ACT. ON THE BASIS OF AFORESAID ORD ER THE LEARNED CIT(A) HAS PASSED THE ORDER IN QUESTION DATED 07.0 3.2014. THE RELEVANT PARA IN CASE OF M/S. WADHWA ASSOCIATES REALTORS (P) LTD. (2013) 36 TAXMAN 526, MUMBAI IS HEREBY HEL D AS UNDER: WE HAVE CAREFULLY PERUSED THE LEASE DEED AS EXHIBITED FROM PAGE L TO,42 O THE PAPER BOOK. A CAREFUL READING OF THE SAI D LEASE DEED TRANSPIRES THAT THE PREMIUM IS NOT PAID UNDER A LEASE BUT IS PA ID AS A PRICE FOR OBTAINING THE LEASE, HENCE IT PRECEDES THE GRANT OF LE ASE. THEREFORE, BY ANY STRETCH OF IMAGINATION, IT CANNOT BE EQUATED WITH THE RENT WHICH IS PAID PERIODICALLY. A PERUSAL OF THE RECORDS FURTHER SHOW THAT THE PAYMENT TO MMRDA IS ALSO FOR ADDITIONAL BUILT UP AREA AND ALSO FOR GRANTING FREE OF FSI ARE, SUCH PAYMENT CANNOT BE EQUATED TO RENT. IT IS ALSO SEEN THAT MMRDS IN EXERCISE OF POWER U/S.43 R.W.S. 37(1) OF THE MAHARASH TRA TOWN PLANNING ACT, 1966, MRTP ACT AND OTHER POWERS ENABLING THE SAME HAS APPROVED THE PROPOSAL TO MODIFY REGULATION 4A(II) AND THEREBY INC REASED THE FSI OF THE ENTIRE 'G' BLOCK OF BKC. THE DEVELOPMENT CONTROL REGU LATIONS FOR BKC SPECIFY THE PERMISSIBLE FSI. PURSUANT TO SUCH PROVISI ONS, THE ASSESSEE BECAME ENTITLED FOR ADDITIONAL FSI AND HAS FURTHER A CQUIRED/PURCHASED THE ADDITIONAL BUILT UP AREA FOR CONSTRUCTION OF ADDITI ONAL AREA ON THE AFORESAID PLANT. THUS THE ASSESSEE HAS MADE. PAYMENT T O MMRDA UNDER DEVELOPMENT CONTROL FOR ACQUIRING LEASEHOLD LAND AND ADDITIONAL BUILT UP AREA. THE DECISION OF THE TRIBUNAL IN THE CASE OF NAT IONAL STOCK EXCHANGE ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 6 [SUPRA] AND M/S. MUKUND LTD. [SUPRA] HAVE BEEN WELL DISCUSSED BY THE LD. CIT(A) IN HIS ORDER. THE DECISION OF THE HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF M/S.KHIMLINE PUMPS LTD. [SUPRA] SQUARELY AND DIRECTLY APPLY ON THE FACTS OF THE CASE WHEREIN THE HON'BLE JURISDICTI ONAL HIGH COURT HAS HELD THAT PAYMENT FOR ACQUIRING LEASEHOLD LAND IS A CAPITAL EXPENDITURE. CONSIDERING THE ENTIRE FACTS IN TOTALITY IN THE LIGHT OF THE JUDICIAL DECISION VIS A VIS PROVISIONS OF SECTION 194I, DEFINITION OF REN T AS PROVIDED UNDER THE SAID PROVISIONS, WE. DO NOT FIND ANY REASON TO TAMPER OR INTERFERE WITH THE FINDINGS OF THE LD CIT(A) WHICH WE CONFIRM. 5. SUBSEQUENTLY, THE MATTER WAS AGAIN CONSIDERED BY THE HONBLE TRIBUNAL OF MUMBAI IN ITA 1298/M/14 ORDER D ATED 24.11.2015 IN CASE TITLED AS ITO(TDS) 2(5) VS. PAL TON YARN PVT. LTD., MUMBAI VIDE WHICH THE ORDER PASSED BY THE MUM BAI TRIBUNAL MENTIONED ABOVE HAS BEEN FOLLOWED. THE LE ARNED CIT(A) HAS PASSED THE ORDER ON THE BASIS OF TRIBUNA L ORDER AND WE ARE ALSO BY HONORING THE ORDER OF THE MUMBAI TRI BUNAL, NOWHERE FOUND ANY GROUND TO INTERFERE WITH. 6. ACCORDINGLY SECTION 194I IS NOT APPLICABLE TO TH IS CASE HENCE, THE QUESTION OF INTEREST IN VIEW OF THE PROV ISION U/S. 201(1)/201(1A) ALSO DOES NOT ARISE. 7. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE FINDING RECORDED IN THE AFORESAID ORDER OF THE TRIBUNAL DAT ED 04/12/2015, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT ON IDENTICAL ISSUE OF THE AMOUNT PAID BY THE L ESSEE (PRESENT ASSESSEE) TO THE LESSOR (MMRDA), IS CONCER NED, THE ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 7 TRIBUNAL HELD THAT 194 I IS NOT APPLICABLE IN THE C ASE OF THE ASSESSEE, THUS, THERE WAS NO QUESTION OF INTEREST U NDER THE PROVISIONS OF SECTION 201(1) AND 201(1A) OF THE ACT . IT IS ALSO NOTED THAT WHILE COMING TO THAT CONCLUSION, THE TRI BUNAL HAS ALREADY RELIED UPON THE DECISION IN M/S WADHWA ASSO CIATES REALTORS PVT. LTD. (2013) 36 TAXMAN 526 (BOM.) AND THE DECISION IN ITA NO.1298/MUM/2014, ORDER DATED 14/11 /2015 IN ITO(TDS) VS PALTON YARN PVT. LTD., THEREFORE, FO LLOWING THE AFORESAID DECISION, THE APPEALS OF THE ASSESSEE ARE ALLOWED. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT ARGUED ANY OTHER GROUND, THUS, ON THE ISSUE IN HAND, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 27/04/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ' DATED : 27/04/2016 F{X~{T? P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / 0! ( )* ) / THE CIT, MUMBAI. ITA NO.1002 TO 1006/MUM/2014 MUMBAI PUNE MOTOR MALAK SHRAMJIVAN PREMISES COOPERATIVE SOCIETY LTD 8 4. / / 0! / CIT(A)- , MUMBAI 5. 2'3-! , / )*&) 4 , / DR, ITAT, MUMBAI 6. 56 / GUARD FILE. ! / BY ORDER, .2*!-! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI