Income-tax Officer, V. Camp Education Society, Pune

ITA 2134/PUN/2013

• Counselvise Citation: 213424514 RSA 2013
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Maximum Marginal Rate; Non-deduction of tax
• Section: 12A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.2134/PN/2013 (ASSESSMENT YEAR: 2013-14) THE INCOME TAX OFFICER, TDS-1, PUNE . APPELLANT VS. CAMP EDUCATION SOCIETY R D VOCATIONAL SECTION SCHOOL 2015/CIT(A) J & N MOHMED STREET CAMP, PUNE 411 001 PAN: AAATC0840Q . RESPONDENT APPELLANT BY : SHRI P.S. NAIK RESPONDENT BY : SHRI C.H. NANIWADEKAR DATE OF HEARING : 20-10-2014 DATE OF PRONOUNCEMENT : 27-10-2014 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A )-V, PUNE DATED 05.09.2013 RELATING TO ASSESSMENT YEAR 2013- 14 IS AGAINST ORDER PASSED UNDER SECTION 201(1) / 201(1A) OF THE INCOME-TAX 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.22,90,585/- U/S. 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 IN RESPECT OF LEASE PREMIUM PAYMENT PAID TO PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (PCNTDA). 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONSIDERING THE FACT LEASE PREMIUM PAID TO PCNTDA AS UPFRONT PAYMENT AS PRE- CONDITION FOR ENTERING IN TO LEASE AGREEMENT. 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 LE ASE DEED AND EXPLANATION TO SECTION 1941 CLEARLY STIPULATES T HAT ITA NO.2134/PN/2013 CAMP EDUCATION SOCIETY, PUNE 2 ANY PAYMENT BY WHATEVER NAME CALLED UNDER ANY LEASE DEED / AGREEMENT IS TO BE TAKEN AS RENT FOR TDS PURPOS E. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION T O THE DEMAND RAISED UNDER SECTION 201(1) / 201(1A) OF THE ACT IN RESPECT OF THE LEASE PREMIUM PAID TO PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (IN SHORT PCNTDA). 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE AT THE OUTSET POINTED OUT THAT THE ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE BY THE FOLLOWING DECISIONS:- A. ITO VS. NAVI MUMBAI SEZ PVT. LTD. IN ITA NO.738 TO 741/MUM/2012, ORDER DATED 16.08.2013; B. ITO VS. M/S. WADHWA & ASSOCIATES REALTORS PVT. LTD., IN ITA NO.695/MUM/2012, ORDER DATED 03.07.2013 C. ITO VS. SHREE NAMAN DEVELOPERS IN ITA NO.686 & 687/MUM/2012, ORDER DATED 14.08.2013 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICE R AND ON THE RATIO LAID DOWN BY CHENNAI BENCH OF THE TRIBUNAL IN FOX CONN INDIA DEVELOP (P) LTD. VS. ITO (TDS) WARD-II(3), CHENNAI IN I TA NO.492/MAD/2010, ORDER DATED 30.04.2012. 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 AN D COLLEGES IN THE CITY OF PUNE. DURING THE YEAR UNDER CONSIDERATION, I N ORDER TO ESTABLISH ANOTHER SCHOOL IN PIMPRI CHINCHWAD AREA, THE ASS ESSEE IN REPLY TO AN ADVERTISEMENT BY PCNTDA, APPLIED FOR A PLOT O N LEASEHOLD BASIS. AS PER THE BID DOCUMENT, WHERE THE BID QUOTED BY A PARTY ACCEPTED, THE SAID PARTY WAS REQUIRED TO PAY THE QUOTE D AMOUNT I.E. ITA NO.2134/PN/2013 CAMP EDUCATION SOCIETY, PUNE 3 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 LEASE AGREEMENT WOULD BE ENTERED WITH THE PARTY. THE ASSESSEE ENTERED INTO A LE ASE AGREEMENT WITH PCNTDA FOR 99 YEARS AND THE LEASE RENT WAS RS.100 /- PER ANNUM FOR THE PERIOD OF 99 YEARS. THE ASSESSEE ACCORDINGLY, DE POSITED THE PREMIUM AMOUNT OF RS.2,20,24,860/-. AFTER RECEIVING THE PRE MIUM AMOUNT, THE LICENSER I.E. PCNTDA AGREED TO EXECUTE LEASE DEED TO CONVEY / TRANSFER / ASSIGN THE LEASEHOLD RIGHTS. THE LEA SE DEED AUTHORIZES THE ASSESSEE TO BUILD / CONSTRUCT ANY BUILDING ON THE SAID PLOT OF LAND. THE CASE OF THE ASSESSEE WAS THAT THE PAY MENT OF PREMIUM WAS A PRE-CONDITION FOR OBTAINING THE LEASE RIGHTS AND IT WAS ONLY AFTER PAYMENT OF THE LEASE PREMIUM, THE LEASE AGREEM ENT 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 PCNTD A. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE CHENNAI BENCH O F THE TRIBUNAL IN FOX CONN INDIA DEVELOPER (P) LTD. (SUPRA). THE AS SESSEE WAS HELD TO BE IN DEFAULT FOR NON-DEDUCTION OF TAX ON SOUR CE UNDER SECTION 194I OF THE ACT ON THE LEASE PREMIUM PAID TO PCN TDA AND DEMAND UNDER SECTION 201(1) OF THE ACT WAS RAISED AND IN TEREST UNDER SECTION 201(1A) OF THE ACT WAS CHARGED, RAISING A DEMAND OF RS.22,90,585/-. 8. THE CIT(A) VIDE PARA 8 REFERRED TO THE PRELIMINARY CLAUS ES OF THE AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND PCNTDA AND POINTED ITA NO.2134/PN/2013 CAMP EDUCATION SOCIETY, PUNE 4 OUT THAT THE LEASE PREMIUM FINDS MENTION IN THE LEASE DE ED BUT THE SAID PAYMENT OF LEASE PREMIUM WAS A PRE-CONDITION FOR ENTE RING INTO LEASE AGREEMENT. THE CIT(A) THUS, HELD THAT SAME WAS NOT UNDER THE LEASE DEED AND THE PAYMENT OF LEASE PREMIUM FALLS OUTSIDE T HE 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 F OX CONN INDIA DEVELOPER (P) LTD. (SUPRA) WAS DISTINGUISHABLE ON THE FACTS AS IN THAT CASE ISSUE IN QUESTION WAS UPFRONT PAYMENT AND NO T LEASE PREMIUM. FURTHER, UPFRONT PAYMENT WAS PART OF CONSIDERA TION FOR ACQUIRING LEASEHOLD RIGHTS UNLIKE THE PRESENT CASE WHERE P AYMENT OF LEASE PREMIUM WAS PRE-CONDITION FOR ENTERING INTO LEASE AGR EEMENT AND THEREFORE THE FACTS OF THE CASE WERE CLEARLY DISTINGU ISHABLE. FURTHER RELIANCE WAS PLACED ON THE SERIES OF DECISIONS, UN DER WHICH SUCH SIMILAR PAYMENT OF LEASE PREMIUM WAS HELD TO BE NOT S UBJECT TO DEDUCTION OF TAX AT SOURCE UNDER SECTION 194I OF THE ACT. 9. WE FIND THAT SIMILAR ISSUE OF PAYMENT OF LEASE PREMIUM ARO SE BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NA VI MUMBAI SEZ (P) LTD. IN ITA NOS.738 TO 740/MUM/2012 FOR ASSESSMEN T YEARS 2006-07 TO 2009-10, WHEREIN THE TRIBUNAL IN ITS ORDER DAT ED 12.08.2013, HELD THAT LEASE PREMIUM PAID BY THE ASSESSEE T O THE CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA L TD. (CIDCO) FOR ACQUIRING DEVELOPMENT AND LEASEHOLD RIGHTS FOR A PERIO D 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 ASSOCIATES IN ITA NO.695/MUM/2012, VIDE ORDER DATED 03.07.2013, HELD THAT T DS WAS NOT REQUIRED TO BE DEDUCTED UNDER SECTION 194I OF THE ACT IN RESPECT OF PAYMENT OF LEASE PREMIUM TO M/S. MMRD LTD. ITA NO.2134/PN/2013 CAMP EDUCATION SOCIETY, PUNE 5 10. IN VIEW OF ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE IN THE LEASE PREMIUM WAS PAID TO PCNTDA BY THE ASSESSEE AS A PRE-C ONDITION FOR ENTERING INTO A LEASE AGREEMENT, THE SAME CANNOT BE SAID TO HAVE BEEN PAID CONSEQUENT TO THE LEASE AGREEMENT EXECUTED BETWE EN THE PARTIES. FURTHER, THE CIT(A) HAS GIVEN A FINDING THAT STAMP DUTY HA D BEEN PAID ON THE MARKET VALUE OF THE PLOT REPRESENTED BY THE LEAS E PREMIUM, WHICH HAS NOT BEEN CONTROVERTED BY THE LEARNED DEPART MENTAL REPRESENTATIVE FOR THE REVENUE. RELYING UPON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THREE DIFFERENT CASES, W E 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 A CT AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN RAISING THE DEMAND UNDER SECTIO N 201(1) AND 201(1A) OF THE ACT. THE GROUNDS OF APPEAL RAISE D BY THE REVENUE ARE THUS, DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER, 2014. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH OCTOBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE