Income-tax Officer, V. Sadhu Vaswani Mission, Pune

ITA 2081/PUN/2013

• Counselvise Citation: 208124514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Maximum Marginal Rate; Non-deduction of tax
• Section: 12A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2081/PN/2013 ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER, (TDS)-3, PUNE. . APPELLANT VS. SADHU VASWANI MISSION, 10, SADHU VASWANI PATH, PUNE - 1 PAN : AABTS2708Q . RESPONDENT ASSESSEE BY : S / SHRI V.S. KHURANA/ RAJRATTANSINGH AKALI/BHARAT KOKAL DEPARTMENT BY : SHRI RAVI PRAKASH DATE OF HEARING : 06-05-2015 DATE OF PRONOUNCEMENT : 20-05-2015 ORDER PER SUSHMA CHOWLA, JM : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-V, PUNE DATED 05.09.2013 RELATING TO ASSESSMENT YEAR 2012-1 3 AGAINST ORDER PASSED UNDER SECTION 201(1)/201(1A) OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN DELETING THE DEMAND RAISED OF RS.2,72,31,886/- U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 IN RESPECT OF LEASE PRE MIUM PAYMENT PAID TO PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT A UTHORITY (PCNTDA). 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONSIDERING THE FACT THAT THE PREMIUM PAID TO PCNTD A IS UPFRONT PAYMENT AS PRE-CONDITION FOR ENTERING INTO LEASE AG REEMENT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE DEED ENTERED INT O BY THE DEDUCTOR WITH PCNTDA WAS NOT A TRANSFER DEED BUT A LEASE DEE D AND EXPLANATION TO SECTION 194-I CLEARLY STIPULATES THA T ANY PAYMENT BY WHATEVER NAME CALLED UNDER ANY LEASE DEED/AGREEMENT IS TO BE TAKEN AS RENT FOR TDS PURPOSE. ITA NO.2081/PN/2013 2 4. THE APPELLANT CRAVES LEAVES TO ADD, ALTER OR AME ND ANY OR ALL THE GROUNDS OF APPEAL. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RE LATION TO THE DEMAND RAISED UNDER SECTION 201(1) / 201(1A) OF THE ACT IN RESPEC T OF THE LEASE PREMIUM PAID TO PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (IN SHORT PCNTDA). 4. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVE RED BY THE RATIO LAID DOWN BY THE PUNE BENCH OF THE TRIBUNAL IN ITO VS. CAMP EDUC ATION SOCIETY IN ITA NO.2134/PN/2013 RELATING TO ASSESSMENT YEAR 2013-14 , ORDER DATED 27.10.2014. 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE, ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFIC ER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST CARRYING ON S EWA ACTIVITIES IN THE FIELD OF EDUCATION, MEDICAL AND THE UPLIFTMENT OF THE POOR A ND DOWNTRODDEN IN INDIA. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAD P AID/CREDITED RS.24,31,41,846/- ON ACCOUNT OF LEASE AGREEMENT EXE CUTED WITH PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (PCNTD A) AS PER LEASE DATED 31.01.2012 REGISTERED ON 01.02.2012 FOR ACQUISITION OF PLOT NO.1, SECTOR 6. THE ABOVE-SAID LEASE PREMIUM PAYMENT WAS TOWARDS ACQUIS ITION OF LAND FOR CONSTRUCTION OF HIGH SCHOOL, FOR WHICH PURPOSE THE SAID LAND WAS EARMARKED BY PCNTDA. THE ASSESSEE CLAIMS THAT IT HAD MADE THE A FORESAID PAYMENT TOWARDS LEASE PREMIUM IN RESPECT OF THE SAID PLOT FOR LEASE OF 99 YEARS ALLOTTED TO IT BY TENDER PASSED BY PCNTDA. THE CASE OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT THE PREDOMINANT OBJECTIVE FOR PAYMEN T OF LEASE PREMIUM UNDER THE LEASE DEED WAS ACQUISITION OF LEASEHOLD RIGHTS IN THE SAID LEASEHOLD PLOT AND NOT FOR THE LEASE OF THE PLOT. ITA NO.2081/PN/2013 3 7. THE ASSESSING OFFICER HELD THE ASSESSEE TO BE IN DEFAULT IN RESPECT OF THE TDS PAYABLE ON SUCH LEASE PAYMENT TO PCNTDA. RELIA NCE WAS PLACED ON THE RATIO LAID DOWN BY THE CHENNAI BENCH OF THE TRIBUNA L IN FOX CONN INDIA DEVELOPER (P) LTD. VS. ITO (TDS) WARD-II(3), CHENNA I IN ITA NO.492/MAD/2010, ORDER DATED 30.04.2012. THE ASSESSEE WAS HELD TO B E IN DEFAULT FOR NON- DEDUCTION OF TAX AT SOURCE UNDER SECTION 194I OF TH E ACT ON THE LEASE PREMIUM PAID TO PCNTDA AND DEMAND UNDER SECTION 201(1) OF T HE ACT WAS RAISED AND INTEREST UNDER SECTION 201(1A) OF THE ACT WAS CHARG ED, RAISING A DEMAND OF RS.2,72,31,886/-. 8. THE CIT(A) VIDE PARA 8 REFERRED TO THE PRELIMINA RY CLAUSES OF THE AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND PCNTDA AND POINTED OUT THAT THE LEASE PREMIUM FINDS MENTION IN THE LEASE DEED B UT THE SAID PAYMENT OF LEASE PREMIUM WAS 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 DEFINITI ON OF RENT AS SPECIFIED IN SECTION 194I OF THE ACT. THE CIT(A) FURTHER OBSERV ED FROM THE RATIO LAID DOWN IN THE CASE OF FOX CONN INDIA DEVELOPER (P) LTD. VS. I TO (SUPRA) WAS DISTINGUISHABLE ON THE FACTS AS IN THAT CASE, ISSUE IN QUESTION WAS UPFRONT PAYMENT AND NOT LEASE PREMIUM. FURTHER, UPFRONT PA YMENT WAS PART OF CONSIDERATION FOR ACQUIRING LEASEHOLD RIGHTS UNLIKE THE PRESENT CASE WHERE PAYMENT OF LEASE PREMIUM WAS PRE-CONDITION FOR ENTE RING INTO LEASE AGREEMENT AND THEREFORE THE FACTS OF THE CASE WERE CLEARLY DI STINGUISHABLE. FURTHER RELIANCE WAS PLACED ON THE SERIES OF DECISIONS, 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 WHETHER TAX SHOULD BE DEDUCTED AT SOURCE UNDER SECTION 194I OF THE ACT AND FOR SUCH NON-DEDUCTION OF TAX AT SOURCE DEMAND SHOULD BE RAISED UNDER SECTION 201(1) OF THE ACT AN D INTEREST UNDER SECTION ITA NO.2081/PN/2013 4 201(1A) OF THE ACT IS CHARGEABLE IN RESPECT OF LEAS E PREMIUM PAID TO PCNTDA BY THE ASSESSEE, AROSE BEFORE THE TRIBUNAL IN ITO VS. CAMP EDUCATION SOCIETY (SUPRA) AND THE TRIBUNAL HELD AS UNDER :- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS AN EDUCATIONAL SOCIETY REGISTERED UNDE R SECTION 12A OF THE ACT. THE ASSESSEE WAS RUNNING VARIOUS SCHOOLS AND COLLEG ES IN THE CITY OF PUNE. DURING THE YEAR UNDER CONSIDERATION, IN ORDER TO ES TABLISH ANOTHER SCHOOL IN PIMPRI CHINCHWAD AREA, THE ASSESSEE IN REPLY TO AN ADVERTISEMENT BY PCNTDA, APPLIED FOR A PLOT ON LEASEHOLD BASIS. AS PER THE BID DOCUMENT, WHERE THE BID QUOTED BY A PARTY ACCEPTED, THE SAID PARTY WAS REQU IRED TO PAY THE QUOTED AMOUNT I.E. THE PREMIUM WITHIN 3 MONTHS OF THE LETT ER 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 REFUND ED 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 B E PAID TO PCNTDA AND LEASE AGREEMENT WOULD BE ENTERED WITH THE PARTY. T HE ASSESSEE ENTERED INTO A LEASE AGREEMENT WITH PCNTDA FOR 99 YEARS AND THE LE ASE RENT WAS RS.100/- PER ANNUM FOR THE PERIOD OF 99 YEARS. THE ASSESSEE ACC ORDINGLY, DEPOSITED THE PREMIUM AMOUNT OF RS.2,20,24,860/-. AFTER RECEIVIN G THE PREMIUM AMOUNT, THE LICENSER I.E. PCNTDA AGREED TO EXECUTE LEASE DEED T O CONVEY / TRANSFER / ASSIGN THE LEASEHOLD RIGHTS. THE LEASE DEED AUTHORIZES TH E ASSESSEE TO BUILD / CONSTRUCT ANY BUILDING ON THE SAID PLOT OF LAND. T HE 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 DE FAULT 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 TRI BUNAL IN FOX CONN INDIA DEVELOPER (P) LTD. (SUPRA). THE ASSESSEE WAS HELD TO BE IN DEFAULT FOR NON- DEDUCTION OF TAX ON SOURCE UNDER SECTION 194I OF TH E ACT ON THE LEASE PREMIUM PAID TO PCNTDA AND DEMAND UNDER SECTION 201(1) OF T HE ACT WAS RAISED AND INTEREST UNDER SECTION 201(1A) OF THE ACT WAS CHARG ED, RAISING A DEMAND OF RS.22,90,585/-. 8. THE CIT(A) VIDE PARA 8 REFERRED TO THE PRELIMINA RY CLAUSES OF THE AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND PCNTDA AND POINTED OUT THAT THE LEASE PREMIUM FINDS MENTION IN THE LEASE DEED B UT THE SAID PAYMENT OF LEASE PREMIUM WAS 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 DEFINITI ON OF RENT AS SPECIFIED IN SECTION 194I OF THE ACT. THE CIT(A) FURTHER OBSERV ED FROM THE RATIO LAID DOWN IN THE CASE OF FOX CONN INDIA DEVELOPER (P) LTD. (SUPR A) 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 CONS IDERATION FOR ACQUIRING LEASEHOLD RIGHTS UNLIKE THE PRESENT CASE WHERE PAYM ENT OF LEASE PREMIUM WAS PRE-CONDITION FOR ENTERING INTO LEASE AGREEMENT AND THEREFORE THE FACTS OF THE CASE WERE CLEARLY DISTINGUISHABLE. FURTHER RELIANC E WAS PLACED ON THE SERIES OF DECISIONS, UNDER WHICH SUCH SIMILAR PAYMENT OF LEAS E PREMIUM WAS HELD TO BE NOT SUBJECT TO DEDUCTION OF TAX AT SOURCE UNDER SEC TION 194I OF THE ACT. 9. WE FIND THAT SIMILAR ISSUE OF PAYMENT OF LEASE P REMIUM AROSE BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NAVI MU MBAI SEZ (P) LTD. IN ITA NOS.738 TO 740/MUM/2012 FOR ASSESSMENT YEARS 2006-0 7 TO 2009-10, WHEREIN ITA NO.2081/PN/2013 5 THE TRIBUNAL IN ITS ORDER DATED 12.08.2013, HELD TH AT LEASE PREMIUM PAID BY THE ASSESSEE TO THE CITY AND INDUSTRIAL DEVELOPMENT COR PORATION OF MAHARASHTRA LTD. (CIDCO) FOR ACQUIRING DEVELOPMENT AND LEASEHOLD RIG HTS FOR A PERIOD OF 60 YEARS, WAS NOT REQUIRED TO BE SUBJECT TO DEDUCTION AT SOUR CE UNDER SECTION 194I OF THE ACT. FURTHER ANOTHER BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF M/S. WADHWA ASSOCIATES 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, WHEREIN 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 FINDING THAT STAMP DUTY HAD BEEN PAID ON TH E MARKET VALUE OF THE PLOT REPRESENTED BY THE LEASE PREMIUM, WHICH HAS NOT BEE N CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE . RELYING UPON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN TH REE DIFFERENT CASES, WE UPHOLD THE ORDER OF CIT(A) IN HOLDING THAT THE LEAS E 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 UND ER SECTION 201(1) AND 201(1A) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE RE VENUE ARE THUS, DISMISSED. 10. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN ITO VS. CAMP EDUCATION SOCIE TY (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE OUT OF THE LEASE PREMIUM PAYMENTS PAID TO PC NTDA. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) IN HOLDING THAT THE LEASE PREMIUM PAID BY THE ASSESSEE WAS OUTSIDE THE PURVIEW OF SECTION 194I OF THE ACT AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN RAISING THE DEMAND UND ER 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. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF MAY, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH MAY, 2015 SUJEET ITA NO.2081/PN/2013 6 COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE