Income-tax Officer, V. V.P. Town Planners, Pune

ITA 1372/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1727 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 21-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: ASHOK KUMAR N PAGARIYA
• Keywords: Maximum Marginal Rate
• Section: 12A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 1372 /PN/201 5 / ASSESSMENT YEAR : 20 1 1 - 1 2 THE INCOME - TAX OFFICER (TDS) - 3 , PUNE . / APPELLANT VS. V.P. TOWN PLANNERS, 1, SAGAR PLAZA, NASIK PHATA, KASARWADI, PUNE 4110 3 4 . / RESPON DENT PAN: AA IFV2971P / APPELLANT BY : SHRI ANIL CHAWARE / RESPONDENT BY : SHRI ASHOK KUMAR N. PAGARIYA / DATE OF HEARING : 30 . 0 5 .201 6 / DATE OF PRONOUNCEMENT: 30 . 0 5 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - 10 , PUNE , DATED 06 . 0 8 .20 1 5 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 201(1)/201(1A) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT ) . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DEMAND RAISED OF RS. 36 , 25 , 116 / - U/S 201(1) / 201(1A) OF THE INCOME TAX ACT, 1961 IN RESPECT OF LEASE PREMIUM PAYMENT P AID TO PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (PCNTDA). 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONSIDERING THE FACT THAT THE PREMIUM PAID TO PCNTDA IS UPFRONT PAYMENT AS PRE - CONDITION FOR ENTERING IN TO LEASE AGREEMENT. ITA NO. 1 37 2 /PN/20 1 5 V.P. TOWN PLANNERS 2 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE DEED ENTERED INTO BY THE DEDUCTOR WITH PCNTDA WAS NOT A TRANSFER DEED BUT A LEASE DEED AND EXPLANATION TO SECTION 194I CLEARLY STIPULATED THAT ANY PAYMENT BY W HATEVER NAME CALLED UNDER ANY LEASE DEED / AGREEMENT IS TO BE TAKEN AS RENT FOR TDS PURPOSE. 3 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY VARIOUS OR DERS OF TRIBUNAL . 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PUT FORWARD HIS CONTENTIONS. 5 . THE ISSUE RAISED IN THE PRESENT APPEAL VIS - A - VIS IS THE DEMAND RAISED UNDER SECTION 201(1) AND 201(1A) OF THE ACT AT R S . 36 , 25 , 116 / - IN RESPEC T OF LEASE PREMIUM PAID TO PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (PCNTDA). 6 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS A PARTNERSHIP FIRM. THE ASSESSEE HAD PURCHASED A PLOT AT SECTOR NO.40, PLOT NO.SDC 1/1, VENUNAGAR WAKAD, PCN TDA , FOR WHICH LEASE PREMIUM OF RS. 3,62,51,168/ - WAS PAID DURING THE YEAR UNDER CONSIDERATION . DURING THE COURSE OF TDS VERIFICATION IN THE CASE OF PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (PCNTDA) ON 07.08.2012, IT WAS NOTED THAT THE ASSESSEE HAD ENTERED INTO LEASE AGREEMENT FOR 99 YEARS WITH PCNTDA ON THE TERMS AND CONDITIONS LAID DOWN BY THE LESSOR IN THE LEASE DEED DATED 2 7 . 0 7 .201 1 FOR PLOT N O . SDC 1/1 IN SECTOR N O . 40 WITHIN THE V ILLAGE LIMITS OF RAVET, TALUKA HAVELI, PUNE. THE ASSESSING O FFICER WAS OF THE VIEW THAT AS PER THE LEASE DEED, THE PREMIUM PAID FOR ACQUISITION OF LEASEHOLD RIGHTS FOR 99 YEARS WAS NOTHING BUT RENT AND HENCE, THE PROVISIONS OF SECTION 194 I OF THE ACT WERE APPLICABLE. ACCORDINGLY, HE RAISED THE DEMAND UNDER SECTION 201(1) AND 201(1A) OF THE ACT. ITA NO. 1 37 2 /PN/20 1 5 V.P. TOWN PLANNERS 3 7 . THE CIT(A) CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND THE VIEWS TAKEN BY VARIOUS BENCHES OF TRIBUNAL AND HELD THAT THE PAYMENT OF LEASE PREMIUM MADE TO PCNTDA WAS A PRE - CONDITION FOR ENTERING INTO LEASE AGREEMENT AND T HEREFORE, IT COULD NOT BE SAID THAT THE SAME WAS PAID UNDER THE TERMS OF LEASE AGREEMENT. FURTHER, THE STAMP DUTY HAD BEEN PAID ON THE MARKET VALUE OF PLOT REPRESENTED BY LEASE PREMIUM, THEREFORE, THE DEMAND RAISED UNDER SECTION 201(1) AND 201(1A) OF THE ACT BY THE ASSESSING OFFICER WAS DIRECTED TO BE DELETED. 8 . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9 . WE FIND THAT SIMILAR ISSUE WHETHER TAX SHOULD BE DEDUCTED AT SOURCE UNDER SECTION 194 I OF THE ACT AND FOR SUCH NON - DEDUCTION OF TAX AT SOURCE DEMAND SHOULD BE RAISED UNDER SECTION 201(1) OF THE ACT AND INTEREST UNDER SECTION 201(1A) OF THE ACT IS CHARGEABLE IN RESPECT OF LEASE PREMIUM PAID TO PCNTDA BY THE ASSESSEE, AROSE BEFORE THE TRIBUNAL IN ITO VS. CAMP EDUCATION SOCIETY IN ITA NO.21 34/PN/2013 RELATING TO ASSESSMENT YEAR 2013 - 14, ORDER DATED 27.10.2014. THE TRIBUNAL HELD AS UNDER: - 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS AN EDUCATIONAL SOCIETY REGISTERED UNDER SECTION 12A OF THE ACT. THE ASS ESSEE WAS RUNNING VARIOUS SCHOOLS AND COLLEGES IN THE CITY OF PUNE. DURING THE YEAR UNDER CONSIDERATION, IN ORDER TO ESTABLISH ANOTHER SCHOOL IN PIMPRI CHINCHWAD AREA, THE ASSESSEE IN REPLY TO AN ADVERTISEMENT BY PCNTDA, APPLIED FOR A PLOT ON LEASEHOLD BA SIS. AS PER THE BID DOCUMENT, WHERE THE BID QUOTED BY A PARTY ACCEPTED, THE SAID PARTY WAS REQUIRED TO PAY THE QUOTED AMOUNT I.E. THE PREMIUM WITHIN 3 MONTHS OF THE LETTER OF ALLOTMENT. IN CASE SUCH PREMIUM WAS NOT PAID WITHIN PERIOD OF 3 MONTHS, 25% OF THE TENDER DEPOSIT WAS TO BE FORTIFIED AND BALANCE AMOUNT WAS TO BE REFUNDED WITHOUT ANY INTEREST. THE TENDER DOCUMENT STATED THAT THE TENDER WAS FOR THE PURPOSE OF SALE OF RESERVED PLOTS AND AS PER THE DOCUMENT FULL PREMIUM WAS TO BE PAID TO PCNTDA AND L EASE AGREEMENT WOULD BE ENTERED WITH THE PARTY. THE ASSESSEE ENTERED INTO A LEASE AGREEMENT WITH PCNTDA FOR 99 YEARS AND THE LEASE RENT WAS RS.100/ - PER ANNUM FOR THE PERIOD OF 99 YEARS. THE ASSESSEE ACCORDINGLY, DEPOSITED THE PREMIUM AMOUNT OF RS.2,20,2 4,860/ - . AFTER RECEIVING THE PREMIUM AMOUNT, THE LICENSER I.E. PCNTDA AGREED TO EXECUTE LEASE DEED TO CONVEY / TRANSFER / ASSIGN THE LEASEHOLD RIGHTS. THE LEASE DEED ITA NO. 1 37 2 /PN/20 1 5 V.P. TOWN PLANNERS 4 AUTHORIZES THE ASSESSEE TO BUILD / CONSTRUCT ANY BUILDING ON THE SAID PLOT OF LAND. THE CASE OF THE ASSESSEE WAS THAT THE PAYMENT OF PREMIUM WAS A PRE - CONDITION FOR OBTAINING THE LEASE RIGHTS AND IT WAS ONLY AFTER PAYMENT OF THE LEASE PREMIUM, THE LEASE AGREEMENT WAS ENTERED INTO AND BUNDLE OF RIGHTS WERE OBTAINED BY THE ASSESSEE. 7. THE ASSESSING OFFICER HELD THE ASSESSEE TO BE DEFAULT IN RESPECT OF THE TDS PAYABLE ON SUCH LEASE RENT PAYMENT TO PCNTDA. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE CHENNAI BENCH OF THE TRIBUNAL IN FOX CONN INDIA DEVELOPER (P) LTD. (SUPRA). THE ASSESS EE WAS HELD TO BE IN DEFAULT FOR NON - DEDUCTION OF TAX ON SOURCE UNDER SECTION 194I OF THE ACT ON THE LEASE PREMIUM PAID TO PCNTDA AND DEMAND UNDER SECTION 201(1) OF THE ACT WAS RAISED AND INTEREST UNDER SECTION 201(1A) OF THE ACT WAS CHARGED, RAISING A DEM AND OF RS.22,90,585/ - . 8. THE CIT(A) VIDE PARA 8 REFERRED TO THE PRELIMINARY CLAUSES OF THE AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND PCNTDA AND POINTED OUT THAT THE LEASE PREMIUM FINDS MENTION IN THE LEASE DEED BUT THE SAID PAYMENT OF LEASE PREMIUM WA S A PRE - CONDITION FOR ENTERING INTO LEASE AGREEMENT. THE CIT(A) THUS, HELD THAT SAME WAS NOT UNDER THE LEASE DEED AND THE PAYMENT OF LEASE PREMIUM FALLS OUTSIDE THE PURVIEW OF DEFINITION OF RENT AS SPECIFIED IN SECTION 194I OF THE ACT. THE CIT(A) FURTHER OBSERVED FROM THE RATIO LAID DOWN IN THE CASE OF FOX CONN INDIA DEVELOPER (P) LTD. (SUPRA) WAS DISTINGUISHABLE ON THE FACTS AS IN THAT CASE ISSUE IN QUESTION WAS UPFRONT PAYMENT AND NOT LEASE PREMIUM. FURTHER, UPFRONT PAYMENT WAS PART OF CONSIDERATION FO R ACQUIRING LEASEHOLD RIGHTS UNLIKE THE PRESENT CASE WHERE PAYMENT OF LEASE PREMIUM WAS PRE - CONDITION FOR ENTERING INTO LEASE AGREEMENT AND THEREFORE THE FACTS OF THE CASE WERE CLEARLY DISTINGUISHABLE. FURTHER RELIANCE WAS PLACED ON THE SERIES OF DECISION S, UNDER WHICH SUCH SIMILAR PAYMENT OF LEASE PREMIUM WAS HELD TO BE NOT SUBJECT TO DEDUCTION OF TAX AT SOURCE UNDER SECTION 194I OF THE ACT. 9. WE FIND THAT SIMILAR ISSUE OF PAYMENT OF LEASE PREMIUM AROSE BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE C ASE OF NAVI MUMBAI SEZ (P) LTD. IN ITA NOS.738 TO 740/MUM/2012 FOR ASSESSMENT YEARS 2006 - 07 TO 2009 - 10, WHEREIN THE TRIBUNAL IN ITS ORDER DATED 12.08.2013, HELD THAT LEASE PREMIUM PAID BY THE ASSESSEE TO THE CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF M AHARASHTRA LTD. (CIDCO) FOR ACQUIRING DEVELOPMENT AND LEASEHOLD RIGHTS FOR A PERIOD OF 60 YEARS, WAS NOT REQUIRED TO BE SUBJECT TO DEDUCTION AT SOURCE UNDER SECTION 194I OF THE ACT. FURTHER ANOTHER BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF M/S. WADHWA A SSOCIATES IN ITA NO.695/MUM/2012, VIDE ORDER DATED 03.07.2013, HELD THAT TDS WAS NOT REQUIRED TO BE DEDUCTED UNDER SECTION 194I OF THE ACT IN RESPECT OF PAYMENT OF LEASE PREMIUM TO M/S. MMRD LTD. 10. IN VIEW OF ABOVE SAID FACTS AND CIRCUMSTANCES, WHEREI N THE LEASE PREMIUM WAS PAID TO PCNTDA BY THE ASSESSEE AS A PRE - CONDITION FOR ENTERING INTO A LEASE AGREEMENT, THE SAME CANNOT BE SAID TO HAVE BEEN PAID CONSEQUENT TO THE LEASE AGREEMENT EXECUTED BETWEEN THE PARTIES. FURTHER, THE CIT(A) HAS GIVEN A FINDIN G THAT STAMP DUTY HAD BEEN PAID ON THE MARKET VALUE OF THE PLOT REPRESENTED BY THE LEASE PREMIUM, WHICH HAS NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. RELYING UPON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBU NAL IN THREE DIFFERENT CASES, WE UPHOLD THE ORDER OF CIT(A) IN HOLDING THAT THE LEASE PREMIUM PAID BY THE ASSESSEE IS OUTSIDE THE PURVIEW OF SECTION 194I OF THE ACT AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN RAISING THE DEMAND UNDER SECTION 201(1) AND 201(1A) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. ITA NO. 1 37 2 /PN/20 1 5 V.P. TOWN PLANNERS 5 10 . THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN ITO VS. CAMP EDUCATION SOCIETY (SUPRA) AND FOLLOWING THE SAME PA RITY OF REASONING, WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE OUT OF THE LEASE PREMIUM PAYMENTS PAID TO PCNTDA. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) IN HOLDING THAT THE LEASE PREMIUM PAID BY THE ASSESSEE WAS OUTSIDE THE PURV IEW OF SECTION 194I OF THE ACT AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN RAISING THE DEMAND UNDER SECTION 201(1) OF THE ACT AND CHARGING INTEREST UNDER SECTION 201(1A) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. 1 1 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MAY , 201 6 . SD/ - SD/ - SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH MAY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLA NT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 10 , PUNE ; 4. / THE CIT (TDS), PUNE , ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE