ITO (TDS) 2(5), MUMBAI V. PARINEE DEVELOPERS P.LTD, MUMBAI

ITA 1734/MUM/2012

• Counselvise Citation: 173419914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Assessee Lawyers: J D MISTRY; A T JAIN
• Keywords: Maximum Marginal Rate; Capital expenditure
• Section: 37(1); 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , / !' , # $ % BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 1734/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2008-09 . / ITA NO. 4457/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2010-11 THE ITO (TDS) 2(5), ROOM NO.703,SMT.KG MITTAL HOSPITAL BLDG., CHARNI ROAD(W) MUMBAI 400002 / VS. M/S. PARINEE DEVELOPERS PVT. LTD., CRESCENZO, C-38, & 39, G- BLOCK, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI 51. ( # ./ )* ./ PAN/GIR NO. : AADCP 8384H ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) C.O. NO.42/MUM/2013 (ARISING OUT OF ITA NO.1734/MUM/12,A.Y.2008-09) C.O. NO.167/MUM/2013 (ARISING OUT OF ITA NO.4457/MUM/12,A.Y.2010-11) M/S. PARINEE DEVELOPERS PVT. LTD., CRESCENZO, C-38, & 39, G- BLOCK, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI 51. / VS. THE ITO (TDS) 2(5), ROOM NO.703,SMT.KG MITTAL HOSPITAL BLDG., CHARNI ROAD(W) MUMBAI 400002 ( # ./ )* ./ PAN/GIR NO. : AADCP 8384H CROSS OBJECTOR .. APPELLANT IN APPEAL REVENUE BY SHRI S.D.SRIVASTAVA, CIT DR ASSESSEE BY S/SHRI J.D.MISTRY & A.T. JAIN . / ITA NO.S 1734&4457/MUM/2012 C.O. NOS.42&167/MUM/2013 2 . /# / DATE OF HEARING : 26/09//2013 01' . /# / DATE OF PRONOUNCEMENT : 26/09/2013 2 / O R D E R PER BENCH: BOTH THESE APPEALS ARE FILED BY THE REVENUE AND CROSS APPEALS FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST TWO SE PARATE ORDERS PASSED BY LD. CIT(A)-14, MUMBAI DATED 27/04/2012 FOR ASSESSMENT Y EARS 2008-09 AND 2010-11 RESPECTIVELY. 2. IT WAS SUBMITTED BY LD. AR THAT THE ISSUE RAISE D BY THE REVENUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF I TAT DATED 3/6/2013 IN ITA NO.695/MUM/2012 AND CO NO.6/MUM/2013 IN THE CASE OF M/S. WADHAWA & ASSOCIATES REALTORS PVT. LTD., WHEREIN THE APPEAL FILED BY THE REVENUE WAS DISMISSED AND CO FILED BY THE ASSESSEE WAS CONSIDER ED TO BE INFRUCTUOUS. COPY OF THE SAID ORDER WAS PLACED ON OUR RECORD AND LATER ON OTHER BENCHES OF MUMBAI TRIBUNAL ALSO FOLLOWED THE SAME AND REFERENC E WAS MADE TO THE FOLLOWING DECISIONS: 1. ITO (OSD) (TDS) 3(2) VS. SHREE NAMAN DEVELOPER S LTD. & OTHERS ORDER DATED 14/08/2013 IN ITA NOS. 686 TO 687/MUM/12 & OTHERS 2. ITO (OSD) (TDS)3-(2) VS. M/S. TRENT LIMITED & VI CE VERSA ORDER DATED 21/8/2013 IN ITA NO.4629/MUM/2012 & CO 161/MUM/201 3 3. ITO (TDS) -3(4) VS. M/S. TCG URBAN INFRASTRUCTU RE HOLDINGS PVT. LTD. & VICE VERSA, ORDER DATED 14/08/2013 IN ITA NO.4563/MUM/20 12 & OTHERS. 4. ITO (TDS) (OSD) VS. M/S. NAVI MUMBAI SEZ PVT. LTD. ORDER DATED 16/8/2013 IN ITA NOS.738 TO 741/MUM/2012. 5. ITO VS. THE INDIA NEW PAPERS SOCIETY , ORDER DATED 20/6/2013 IN ITA NOS. 5207 & 5208/DEL/2012. . / ITA NO.S 1734&4457/MUM/2012 C.O. NOS.42&167/MUM/2013 3 3. TO UNDERSTAND THE ISSUE REFERENCE CAN BE MADE T O THE FACTS RELATING TO ASSESSMENT YEAR 2008-09 AND THE FACTS FOR A.Y 2010- 11 ARE ALSO THE SAME EXCEPT DIFFERENCE IN FIGURES. THE ASSESSEE MADE A PAYMENT OF RS.260,19,80,000/- TO MUMBAI METROPOLITAN REGIONAL DEVELOPMENT AUTHORITY (MMRDA) FOR ADDITIONAL BUILT UP AREA. ACCORDING T O AO SUCH PAYMENT MADE BY THE ASSESSEE IS IN THE NATURE OF RENT FOR THE US E OF LAND, THEREFORE, THE ASSESSEE WAS REQUIRED TO TAX UNDER SECTION 194I OF THE ACT. ACCORDINGLY, VIDE ORDER DATED 29/3/2011 PASSED UNDER SECTION 201(1) AND 201(1A) THE ASSESSEE HAS BEEN FASTENED WITH THE TAX LIABILITY AS UNDER: TAX UNDER SECTION 201 - RS.58,95,94,618/- INTEREST U/S. 201(1A) - RS. 23,58,37,848/- LD. CIT(A) HAS DELETED SUCH ADDITION MADE BY THE A O. THE DEPARTMENT IS AGGRIEVED AND HENCE HAS FILED AFOREMENTIONED APPEAL . 3.1 FIGURES FOR ASSESSMENT YEAR 2010-11 ARE AS UNDE R: 1. PAYMENT MADE FOR ADDITIONAL BUILT UP AREA TO MMRDA - RS.39,18,30,000 2. TAX U/S. 201(1) - RS. 4,03,58,490 3. INTEREST UNDER SECTION201(IA) - RS. 1,04,,93,207 4. TOTAL TAX LIABILITY - RS. 5,08,51,697 4. AFTER HEARING BOTH PARTIES WE FOUND THAT THE I SSUE IS COVERED BY THE AFOREMENTIONED DECISION OF ITAT. FOR THE SAKE OF C OMPLETENESS THE RELEVANT PORTION OF ORDER PASSED IN THE CASE OF ITO VS. M/ S.WADHAWA & ASSOCIATES REALTORS PVT. LTD.(SUPRA) IS AS UNDER: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE ORDER OF THE LOWER AUTHORITIES AND THE MATERIAL EVIDENCE BROUGHT ON RE CORD IN THE FORM OF PAPER BOOK AND THE JUDICIAL DECISIONS RELIED UPON BY THE RIVAL PARTIES. THE ENTIRE GRIEVANCE REVOLVES AROUND THE PREMIUM PAID BY THE ASSESSEE TO M/S. MMRDA LTD. FOR THE LEASEHOLD RIGHTS ACQUIRED BY THE ASSESSEE THROUGH T HE LEASE DEED DT. 22 ND . / ITA NO.S 1734&4457/MUM/2012 C.O. NOS.42&167/MUM/2013 4 NOVEMBER, 2004. IT IS THE SAY OF THE REVENUE THAT THIS LEASE PREMIUM WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE FAILING WHICH THE AS SESSEE IS TO BE TREATED AS ASSESSEE IN DEFAULT. IT IS THE SAY OF THE ASSESSEE THAT SUCH LEASE PREMIUM IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE THE RE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE. FURTHER, THE SAID LEASE PREMIUM DOES NOT COME WITHIN THE PURVIEW OF THE DEFINITION OF RENT AS PROVIDED U/S. 194-1 OF THE ACT. 10. WE HAVE CAREFULLY PERUSED THE LEASE DEED AS EXH IBITED FROM PAGE-1 TO 42 OF THE PAPER BOOK. A CAREFUL READING OF THE SAID L EASE DEED TRANSPIRES THAT THE PREMIUM IS NOT PAID UNDER A LEASE BUT IS PAID AS A PRICE FOR OBTAINING THE LEASE, HENCE IT PRECEDES THE GRANT OF LEASE. THEREFORE, B Y ANY STRETCH OF IMAGINATION, IT CANNOT BE EQUATED WITH THE RENT WHICH IS PAID PERIO DICALLY. A PERUSAL OF THE RECORDS FURTHER SHOW THAT THE PAYMENT TO MMRD IS AL SO FOR ADDITIONAL BUILT UP ARE AND ALSO FOR GRANTING FREE OF FSI AREA, SUCH PAYMEN T CANNOT BE EQUATED TO RENT. IT IS ALSO SEEN THAT THE MMRD IN EXERCISE OF POWER U /S. 43 R.W. SEC. 37(1) OF THE MAHARASHTRA TOWN PLANNING ACT 1966, MRTP ACT AND O THER POWERS ENABLING THE SAME HAS APPROVED THE PROPOSAL TO MODIFY REGULATION 4A(II) AND THEREBY INCREASED THE FSI OF THE ENTIRE G BLOCK OF BKC. THE DEVELOPMENT CONTROL REGULATIONS FOR BKC SPECIFY THE PERMISSIBLE FSI. P URSUANT TO SUCH PROVISIONS, THE ASSESSEE BECAME ENTITLED FOR ADDITIONAL FSI AND HAS FURTHER ACQUIRED/PURCHASED THE ADDITIONAL BUILT UP AREA FOR CONSTRUCTION OF AD DITIONAL AREA ON THE AFORESAID PLOT. THUS THE ASSESSEE HAS MADE PAYMENT TO MMRD UNDER DEVELOPMENT CONTROL FOR ACQUIRING LEASEHOLD LAND AND ADDITIONA L BUILT UP AREA. THE DECISIONS OF THE TRIBUNAL IN THE CASE OF M/S. NATIONAL STOCK EXCHANGE (SUPRA) AND MUKUND LTD (SUPRA) HAVE BEEN WELL DISCUSSED BY THE LD. CIT (A) IS HIS ORDER. THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF KHIMLINE PUMPS LTD. (SUPRA) SQUARELY AND DIRECTLY APPLY ON THE FACTS OF THE CASE WHEREIN THE HONBLE JURISDICTIONAL 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 DECISIONS VIS--VIS PROVISIONS OF SEC. 194 -1, DEFINITION OF RENT AS PROVIDED UNDER THE SAID PROVISION, WE DO NOT FIND ANY REASON TO TAMPER OR INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) WHICH WE CONFIRM. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. C.O. NO. 06/MUM/2013 13. AS WE HAVE DECIDED THAT THE ASSESSEE IS NOT LIA BLE TO DEDUCT TAX AT SOURCE IN REVENUES APPEAL IN ITA NO. 695/M/2012, THE CROS S OBJECTION RAISED BY THE ASSESSEE BECOME OTIOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. 4.1 IT MAY BE MENTIONED HERE THAT LD. DR DID NOT DI SPUTE THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO TH E FACTS AND CIRCUMSTANCES OF CASES REFERRED TO BY LD. AR. . / ITA NO.S 1734&4457/MUM/2012 C.O. NOS.42&167/MUM/2013 5 4.2 ACCORDINGLY, RESPECTFULLY FOLLOWING THE AFOREME NTIONED DECISION WE DISMISS THE DEPARTMENTAL APPEALS AND CROSS OBJECTIO NS OF THE ASSESSEE HAVING BECOME INFRUCTIOUS ARE ALSO DISMISSED IN VIEW OF T HE DISMISSAL OF DEPARTMENTAL APPEALS. 5. IN THE RESULT, THE APPEALS AS WELL AS CROSS OBJE CTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2013 2 . 01' # 3 45 26 /09/2013 1 . 6 % SD/- SD/- ( !' / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 4 DATED 25/09/2013 2 2 2 2 . .. . ,/78 ,/78 ,/78 ,/78 98'/ 98'/ 98'/ 98'/ / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. 8;6 ,/ , , / DR, ITAT, MUMBAI 6. 6< = / GUARD FILE. 2 2 2 2 / BY ORDER, -8/ ,/ //TRUE COPY// > >> > / ? ? ? ? ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS