ACIT (TDS) 1(2), MUMBAI V. ESSEL INFRA PORJECTS LTD, MUMBAI

ITA 2386/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7779 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Department
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Court: TRIBUNAL
• Department Lawyers: MRS BEENA SANTOSH
• Assessee Lawyers: ADITYA R AJGAONKER
• Keywords: Maximum Marginal Rate; Capital expenditure
• Section: 37(1); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER I.T.A. NO.2386/M/2015 (AY: 2010 - 2011 ) ACIT (TDS) - 1(2), R.NO.803, KG MITTAL HOSPITAL BLDG, CARNI ROAD (W), MUMBAI 400002. / VS. ESSEL INFRA PROJECTS LTD., 135, CONTINENTAL BLDG, DR. A.B. ROAD, WORLI, MUMBAI 400018. ./ PAN : AAACP6095M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MRS. BEENA SANTOSH, DR / RESPONDENT BY : SHRI ADITYA R. AJGAONKER / DATE OF HEARING : 23.02.2017 / DATE OF PRONOUNCEMENT : 17 .03 .2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 27.4.2015 IS AGAINST THE ORDER OF THE CIT (A) - 59, MUMBAI DATED 19.2.2015 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. IN THIS APPEAL, REVENUE RAISED FIVE GROUNDS IN TOTO. THE CORE ISSUE RAISED IN THIS APPEAL RELATES TO THE APPLICABILITY OF THE TDS PROVISIONS ON THE PAYMENTS MADE BY THE ASSESSEE TO THE MUMBAI METROPOLITAN REGIONAL DEVELOPMENT AUTHORITY ( MMRDA ) IN CONNECTI ON WITH THE ACQUISITION OF PLOT OF LAND ON LEASE. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROJECT CONSULTANCY SERVICES AND DEVELOPMENT OF INFRASTRUCTURE ACTIVITIES. IT IS OBSERVED BY THE AO THAT THE ASSESSEE - COMPANY HAD PAID LEASE PREMIUM TO MMRDA ON WHICH TDS HAS NOT BEEN DEDUCTED. THEREFORE, AO HELD THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 201(1) OF THE ACT BY NOT DEDUCTING TAX U/S 194I OF THE ACT ON PAYMENT AND THE ASS ESSEE IS LIABLE TO PAY RS. 27,58,302/ - U/S 201(1) AND 201(1A) OF THE ACT. ACCORDINGLY, AO PASSED THE ORDER DATED 18.1.2012 U/S 201(1)(1A) OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 2 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DELETED THE DEMAND RAISED BY THE AO. WHILE GRANTING RELIEF, CIT (A) RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. WADHWA ASSOCIATES R EALTORS (P) LTD [2013] 36 TAXMAN 526 (MUMBAI TRIBUNAL). IN PARA 3.5 OF HIS ORDER, CIT (A) HELD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TAX U/S 194 - I ON THE AMOUNT PAID TO MMRDA FOR DEVELOPMENT CHARGES ETC. AGGRIEVED WITH THE SAID DECISION OF THE CI T (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE NARRATED THE ABOVE FACTS AND FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO (TDS) VS. M/S. SONATA REALTY PVT LTD IN ITA NO.2473 /M/2014 (AY 2012 - 13), DATED 18.11.2016 AND SUBMITTED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE TRIBUNAL AND THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE DISMISSING THE REVENUES APPEAL. IN THIS REGARD, LD AR READ OUT THE RELE VANT PARAS FROM THE SAID TRIBUNALS ORDER (SUPRA), DATED 18.11.2016. 6. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDER O F THE TRIBUNAL, WHEREIN ONE OF US (AM) IS A PARTY TO THE SAID ORDER AND ALSO THE RELEVANT MATERIAL PLACED BEFORE THE TRIBUNAL. ON PERUSAL OF THE SAID TRIBUNALS ORDER DATED 18.11.2016, WE FIND, PARA 4 OF THE SAID ORDER IS RELEVANT IN THIS REGARD. CONSIDE RING THE SIGNIFICANCE AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARA 4 OF THE TRIBUNALS ORDER (SUPRA) IS EXTRACTED AS UNDER: - 4. AFTER HEARING THE LD DR AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION O F THE TRIBUNAL (SUPRA), WE FIND, THE SAID ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. SKYLINE CONSTRUCTION CO (SUPRA) DATED 30.10.2015 IS RELEVANT IN THIS REGARD AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PARAS FROM THE SAID TRIBUNALS ORDER ARE EXTRACTED AS UNDER: - WE HAVE PERUSED THE DOCUMENTS ON RECORD IN THE LIGHT OF THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE ABOVE REFERRED ORDERS PASSED BY THE ITAT MUMBAI BENCHES. IN WADHWA & ASSOCIATES REALTORS (P) LTD (SUPRA), THIS TRIBUNAL HAS HELD AS UNDER: - WE HAVE CAREFULLY PERUSED THE LEASE DEED AS EXHIBITED FROM PAGES 1 TO 42 OF THE PAPER BOOK. A CAREFUL READING OF THE SAID LEASE DEED TRANSPIRES THAT THE PREMIUM IS NOT PAID UNDER A LEASE BUT IS PAID AS PRICE FOR OBTAINING THE LEASE, HENCE IT PRECEDES THE GRANT OF LEASE. THEREFORE, BY ANY STRETCH OF IMAGINATION, IT CANNOT BE EQUATED WITH THE RENT WHICH IS PAID PERIODICALLY. A PERUSAL OF THE RECORDS FURTHER SHOWS THAT THE PAYMENT TO MMRDA IS ALSO OR ADDITIONAL BUILT UP AREA AND ALSO FOR GRANTING FREE OF FSI AREA, SUCH PAYMENT CANNOT BE EQUATED TO RENT. IT IS ALSO SEEN THAT THE MMRDA IN EXERCISE OF POWER U/S 43 3 R.W.S 37(1) OF THE MAHARASHTRA TOWN PLANNING ACT 1966, MRTP ACT AND OTHER POWERS ENABLING THE SAME HAVE APPROVED THE PROPOSAL TO MODIFY REGULATION 4A (II) AND THEREBY INCREASED THE FSI OF THE ENTIRE G BLOCK OF BKC. THE DEVELOPMENT CONTROL REGULATIONS OR BKC SPECIFY THE PERMISSIBLE FSI. PURSUANT TO SUCH PROVISIONS, THE ASSESSEE BECAME ENTITLED FOR ADDITIONAL FSI AND HAS FURTHER ACQUIRED / PURCHASED T HE ADDITIONAL BUILT UP AREA FOR CONSTRUCTION OF ADDITIONAL FSI AND HAS FURTHER ACQUIRED / PURCHASED THE ADDITIONAL BUILT UP ARE FOR CONSTRUCTION OF ADDITIONAL AREA ON THE AFORESAID PLOT. THUS, THE ASSESSEE HAS MADE PAYMENT TO MMRDA UNDER DEVELOPMENT CONTR OL FOR ACQUIRING LEASEHOLD LAND AND ADDITIONAL BUILT UP AREA. THE DECISION OF THE TRIBUNAL IN THE CASE OF NATIONAL STOCK EXCHANGE (SUPRA) AND MUKUND LTD (SUPRA) HAVE BEEN WELL DISCUSSED BY THE LD CIT (A) IN HIS ORDER. THE DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF KHIMLINE PUMPS LTD 258 ITR 459 (BOM) 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. CONSIDERIN G THE ENTIRE FACTS IN TOTALITY IN THE LIGHT OF THE JUDICIAL DECISIONS VIS - A - VIS PROVISIONS OF SECTION 194 - I, DEFINITION OF RENT AS PROVIDED UNDER THE SAID PROVISION, WE DO NOT FIND ANY REASON TO TEMPER OR INTERFERE WITH THE FINDING OF THE CIT (A) WHICH WE CONFIRM. SIMILARLY, IN ITO (TDS) (OSD), RANGE 2 VS. NAVI MUMBAI SEZ (P) LTD (2014) 147 ITD 261 (MUM), THIS TRIBUNAL HAS HELD THAT LEASE PREMIUM PAID BY ASSESSEE TO CIDCO FOR ACQUIRING LEASEHOLD LAND FOR A PERIOD OF 60 YEARS IN ORDER TO DEVELOP A SPECIAL E CONOMIC ZONE (SEZ) DOES NOT FALL WITHIN THE MEANING OF RENT UNDER SECTION 194 - I AND THEREFORE, ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE WHILE MAKING SAID PAYMENT. IN OUR VIEW, THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASES R EFERRED BY THE LD COUNSEL FOR THE ASSESSEE. THE ORDER DATED 29.5.2013 PASSED BY THE LD CIT (A) IS IN ACCORDANCE WITH THE ORDERS PASSED BY THE TRIBUNAL IN ABOVE REFERRED CASES. FOLLOWING THE FINDINGS OF THIS TRIBUNAL ON THE IDENTICAL ISSUE, WE DISMISS THE APPEAL OF THE REVENUE. 8 . CONSIDERING THE ABOVE, WE ARE OF THE OPINION, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN THE CASE OF M/S. SONATA REALTY PVT LTD (SUPRA) . ACCORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 1 7 T H MARCH, 2016. S D / - S D / - ( PAWAN SIGH) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17.03 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 4 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI