ITO (TDS) 3(1), MUMBAI V. RAMESHWAR DEELOPERS, NAVI MUMBAI

ITA 2798/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79543 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HITESH M SHAHAR

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH , MUMBAI BEFORE SHRI B.R. BASKARAN, AM AND SHRI SANJAY GARG, JM ./ I.T.A. NO.2798/MUM/2013 ( / ASSESSMENT YEAR 2008-09) ITO (TDS) 3(1) 10 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BLDG. CHARNI RD. (W) MUMBAI-400002 / VS. M/S. RAMESHWAR DEVELOPERS, SHOP NO.8, PLOT NO.8/9, SHIVAJI MARKET, NAVI MUMBAI-400705 ./ PAN :AAJFR8563J (APPELLANT ) .. RESPONDENT) APPELLANT BY : SHRI SANJEEV JAIN (DR) RESPONDENT BY : SHRI HITESH M. SHAH(AR) ! / DATE OF HEARING : 16.07.2014 ! /DATE OF PRONOUNCEMENT : 31.07.2014 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] DATED15.01.2014 RELEVANT TO ASSESSMENT YEAR 2008-09 . 2. IT MAY BE OBSERVED THAT THE DEPARTMENT HAS TAKEN SO MANY GROUNDS OF APPEAL BUT THE ONLY ISSUE WHICH EMERGES OUT IS AS T O WHETHER THE LEASE PREMIUM OF RS.3,60,00,000/- PAID BY ASSESSEE TO THE CITY AN D INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD. (CIDCO) FOR ACQUIRI NG DEVELOPMENT AND LEASE-HOLD RIGHTS FOR A PERIOD OF 80 YEARS UNDER TH E LEASE DEED(S) IS RENT WITHIN ITA NO. 2798.M.2013 2 THE MEANING OF SECTION 194-I OF THE INCOME TAX ACT, 1961 (THE ACT) AND HENCE LIABLE FOR DEDUCTION OF TAX AT SOURCE OR NOT. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE ENTER ED INTO A LEASE AGREEMENT FOR A PERIOD OF 80 YEARS WITH CIDCO FOR ACQUISITION OF LEASEHOLD RIGHTS IN THE LAND TO DEVELOP AND OPERATE A SEZ AT LEASE RENT OF RS.80 00/- AND PAID A LEASE PREMIUM OF RS.3,60,00,000/- TO CIDCO IN LIEU OF TH E SAID ACQUISITION OF RIGHTS. THE ASSESSING OFFICER HELD THAT LEASE PREMIUM AMOUN TED TO PAYMENT OF RENT WITHIN MEANING OF SECTION 194-I AND, SINCE, ASSESSE E DID NOT DEDUCT TAX AT SOURCE WHILE MAKING SAID PAYMENT, IT WAS TO BE TREATED AS ASSESSEE IN DEFAULT. ON APPEAL, THE CIT (A) SET ASIDE THE ORDER OF AO. AGGR IEVED, THE REVENUE IS WITH THE INSTANT APPEAL BEFORE US. 4. AT THE OUTSET, THE LD. AR OF THE ASSESSEE HAS S UBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO(TDS) V. N AVI MUMBAI SEZ (P.) LTD (2013) 38 TAXMANN.COM 218 (MUMBAI - TRIB.), TH E FACTS AND ISSUES INVOLVED BEING IDENTICAL IN NATURE. 5. WE HAVE PERUSED THE SAID DECISION OF THE CO-ORDI NATE BENCH OF THE TRIBUNAL. WHEN FACED WITH IDENTICAL FACTS AND CIRCU MSTANCES, THE TRIBUNAL HAS HELD THAT WHEN THE INTEREST OF THE LESSOR IS PARTED WITH FOR A PRICE, THE PRICE PAID IS CALLED LEASE PREMIUM OR SALAMI. BUT THE PERIODIC AL PAYMENTS MADE FOR THE CONTINUOUS ENJOYMENT OF THE BENEFIT UNDER THE LEASE ARE IN THE NATURE OF RENT. IN VIEW OF THE FACTS OF THE CASE, THERE WAS A TRANS FER OF SUBSTANTIVE INTEREST OF LESSOR FOR THE LEASEHOLD LAND IN FAVOUR OF THE ASSE SSEE. THERE WAS A CONFERMENT OF RIGHT ON THE LESSEE BY ACQUIRING LEASEHOLD LAND AND THE PREMIUM HAD BEEN PAID IN LIEU THEREOF AND NOT FOR THE PURPOSE OF USE OF LAND. THEREFORE, THE LEASE ITA NO. 2798.M.2013 3 PREMIUM PAID BY THE ASSESSEE FOR ACQUIRING LEASEHOL D LAND WITH A RIGHT TO DEVELOP A SEZ THEREON COULDNT DEEMED AS ADVANCE PA YMENT OF RENT AND DID NOT FALL WITHIN THE AMBIT OF RENT UNDER SECTION 194 -I AND NO TDS WAS DEDUCTIBLE BY THE ASSESSEE. 6. THE LD. DR HAS BEEN FAIR TO ADMIT THAT THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE ABOVE MENTIONED CASE OF ITO(TDS) V. NAVI MUMBAI SEZ (P.) LTD(SUPRA). HE COULD NOT BRING ANY NEW FACT O R CONTENTION BEFORE US WHICH MAY JUSTIFY DEPARTURE FROM THE ABOVE FINDINGS GIVEN BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL GIVEN ON IDENTICAL FACTS AND CIRCUMSTANCES. HENCE RESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO- ORDINATE BENCH, IT IS HELD THAT THE PROVISIONS OF SECTION 194-I WERE NOT ATTRACTED IN RESPECT OF LEASE PREMIUM PAID BY THE ASSESSEE. THE ISSUE IS ACCORDINGLY DECI DED AGAINST THE REVENUE. THE APPEAL OF THE REVENUE IS THUS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS THUS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.20 14. & 31.07.2014 SD/- SD/- (B.R.BASKARAN) ( SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; & DATED .31 -07 -14 . ./ A.K.PATEL . PS )* +* / COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT 2. )-, / THE RESPONDENT. 3. . ( ) / THE CIT(A)- CONCERNED, ITA NO. 2798.M.2013 4 MUMBAI CONCERNED 4. . / CIT CONCERNED, MUMBAI CONCERNED 5. * ) , , / DR, ITAT, MUMBAI D BENCH 6. / GUARD FILE. / BY ORDER, -* ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI