IT (TDS) 3(3), MUMBAI V. SKYLINE CONSTRUCTION COMPANY LTD, MUMBAI

ITA 2472/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2240 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2016
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2014
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Maximum Marginal Rate; Capital receipt; 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 RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO.2472/M/2014 (AY: 2012 - 2013 ) ITO (TDS) - 3(3), 1010, 10 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI 400002. / VS. RNA CORPORATE PARK, NEXT TO COLLECTORS OFFICE, KALANAGAR, BANDRA (E), MUMBAI 400051. ./ PAN : AACPA8301L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AKHILENDRA YADAV, DR / RESPONDENT BY : SHRI J.P. BAIRAGRA / DATE OF HEARING : 03 .11.2016 / DATE OF PRONOUNCEMENT : 03 .11.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 11.4.2014 IS AGAINST THE ORDER OF CIT (A) - 13, MUMBAI DATED 17.1.2014 FOR THE ASSESSMENT YEAR 2012 - 2013. 2. IN THIS APPEAL, ASSESSEE RAISED FIVE GROUNDS IN TOTO AND THEY REVOLVE AROUND THE SOLITARY ISSUE RELATES TO THE APPLICABILITY OF THE TDS PROVISIONS ON THE PAYMENT MADE BY THE ASSESSEE TO MMRDA IN CONNECTION WITH THE ACQUISITION OF PLOT OF LAND ON LEASE FROM MMRDA. AO INVOKED THE P ROVISIONS OF SECTION 201(1) AND 201(1A) OF THE ACT. THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE STATING THAT THE PAYMENT MADE BY THE ASSESSEE TO MMRDA CONSTITUTES CAPITAL RECEIPTS AND THEREFORE, THE SAME IS OUTSIDE THE SCOPE OF THE TDS PROVISIONS. I N THE PROCESS, CIT (A) RELIED ON THE BINDING JUDGMENT IN THE CASE OF ITO (TDS) VS. WADHWA & ASSOCIATES REALTORS (P) LTD (2013) 36 TAXMANN.COM 526 (MUMBAI); DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. NAMAN BKC CHS LTD (ITA NOS. 708 & 709/MUM/2012) AND ALSO THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF NAVI MUMBAI (SEZ) (P) LTD (2014) 147 ITD 261 (MUM). AGGRIEVED WITH THE SAME, REVENUE IS IN APPEAL BEFORE US. 2 3. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE FILED COPY OF THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2009 - 2010 VIDE ITA NO.5463/M/2013, DATED 30.10.2015. BRINGING OUR ATTENTION TO PAGES 3 - 5 OF THE SAID TRIBUNAL S ORDER (SUPRA), LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THE JUDGMENT IN THE CASE OF WADHWA & ASSOCIATE S REALTORS (P) LTD (SUPRA) IS RELEVANT FOR DECIDING THIS ISSUE. 4. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION OF THE TRIBUNAL (SUPRA), WE FIND, THE SAID ORDER OF THE TRIBUNAL IS RELEVAN T 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 PERUS AL 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 R.W.S 37(1) OF THE MAH ARASHTRA 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 PERMIS SIBLE FSI. PURSUANT TO SUCH PROVISIONS, THE ASSESSEE BECAME ENTITLED FOR ADDITIONAL FSI AND HAS FURTHER ACQUIRED / PURCHASED THE ADDITIONAL BUILT UP AREA FOR CONSTRUCTION OF ADDITIONAL FSI AND HAS FURTHER ACQUIRED / PURCHASED THE ADDITIONAL BUILT UP ARE F OR CONSTRUCTION OF ADDITIONAL AREA ON THE AFORESAID PLOT. THUS, THE ASSESSEE HAS MADE PAYMENT TO MMRDA UNDER DEVELOPMENT CONTROL FOR ACQUIRING LEASEHOLD LAND AND ADDITIONAL BUILT UP AREA. THE DECISION OF THE TRIBUNAL IN THE CASE OF NATIONAL STOCK EXCHANG E (SUPRA) AND MUKUND LTD (SUPRA) HAVE BEEN WELL DISCUSSED BY THE LD CIT (A) IN HIS ORDER. THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KHIMLINE PUMPS LTD 258 ITR 459 (BOM) SQUARELY AND DIRECTLY APPLY ON THE FACTS OF THE CASE WHEREI N 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 - A - VIS PROVISIONS OF SECTION 194 - I, DEFINITION OF RENT A S 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 TH AT LEASE PREMIUM PAID BY ASSESSEE TO CIDCO FOR ACQUIRING LEASEHOLD LAND FOR A PERIOD OF 60 YEARS IN ORDER TO DEVELOP A SPECIAL ECONOMIC ZONE (SEZ) DOES NOT FALL WITHIN THE MEANING OF RENT UNDER SECTION 194 - I AND THEREFORE, ASSESSEE IS NOT LIABLE TO DEDUC T TAX AT SOURCE WHILE MAKING SAID PAYMENT. IN OUR VIEW, THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASES REFERRED 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 3 REFERRED CA SES. FOLLOWING THE FINDINGS OF THIS TRIBUNAL ON THE IDENTICAL ISSUE, WE DISMISS THE APPEAL OF THE REVENUE. 5. CONSIDERING THE ABOVE, WE ARE OF THE OPINION, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2009 - 2010. ACCORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNC ED IN THE OPEN COURT ON 0 3 R D NOVEMBER, 2016. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 03.11.2016 . . ./ 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI