ITO (TDS) 2(5), MUMBAI V. PROGRESSIVE CIVIL ENGINEERS P.LTD, NAVI MUMBAI

ITA 2930/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3079 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RA JEEV WAGLAY
• Assessee Lawyers: C W ANGOLKAR
• Keywords: Capital asset; Maximum Marginal Rate; Capital expenditure
• Section: 37(1); 201(1); 27; 11

Judgement Text

, , C , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , J UDICIAL M EMBER, A ND SHRI RAMIT KOCHAR , A CCOUNTANT M EMBER I TA NO S . 29 3 0 /MUM/2014 A SSESSMENT Y EAR S : 2010 - 11 INCOME TAX OFFICER(TDS) 2(5) , ROOM NO. 703,SMT. K.G.MITTAL HOSPITAL BUILDING, CHARNI ROAD(WEST) ,MUMBAI - 400 703 V. M/S PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED, DEVRATA , PIRAMAL TOWERS,2 ND FLOOR, PLOT NO. 83, SECT 17, VASHI, NAVI MUMBAI 400 703 PAN AACPP0298C TAN MUMP11572B ( APPELLANT) ( RESPONDENT) / REVENUE BY : SHRI C.W.ANGOLKAR / APPELLANT BY : SH. RAJEEV WAGLAY DATE OF HEARING : 21 .10.2015 DATE OF PRONOUNCEMENT : 23.10 . 2015 O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 7 TH FEBRUARY 2014 PASSED BY THE C OMMISSIONER OF I NCOME T AX (APPEALS) - 14 , MUMBAI, (HEREINAFTER CALLED THE CIT (A) ) FOR THE ASSESSMENT YEAR 2010 - 11 . 2. THE EFFECTIVE GROUND S OF APPEAL RAISED IN THIS APPEAL BY THE REVENUE IN MEMO OF APPEAL FILED ARE WITH RESPECT TO NON - DEDUCTION OF TDS U/S 194I OF INCOME PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 2 TAX ACT,1961 (HEREINAFTER CALLED THE ACT) BY THE ASSESSEE COMPANY ON THE AMOUNT PAID TO THE LESSOR M/S CITY INDUSTRIAL DEVELOPMENT CORPORATION (HEREINAFTER CALLED THE CIDCO) AS HELD BY THE ASSESSING OFFICER AND THE HOLDING BY CIT(A) THAT THE SAID AMOUNT PAID WAS NOT IN NATURE OF RENT COVERED U/S 194I O F THE ACT AND NOT CONFIRMING THE ASSESSEE COMPANY AS AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT FOR FAILURE TO DEDUCT AND PAY TDS AND FOR LEVYING INTEREST U/S 201(1A) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY U/S 133 A OF THE ACT ON 04.02.2011 IN THE CASE OF THE CIDCO ,IT WAS FOUND BY REVENUE THAT THE CIDCO HAD GIVEN PLOTS TO THE ASSESSEE COMPANY ON LEASE THROUGH TENDER AGAINST WHICH THE ASSESSEE COMPANY HAS MADE PAYMENT BY WAY OF LEASE RENT AND OTHER SUMS TERMED AS PR EMIUM OF RS.1,38,12,158/ - DURING THE ASSESSMENT YEAR 2010 - 11 AGAINST WHICH THE ASSESSEE COMPANY HAS NOT DEDUCTED TDS ON SUCH LEASE PREMIUM AND GROUND RENT PAID TO THE CIDCO. 4. THE ASSESSING OFFICER (HEREINAFTER CALLED THE AO) ISSUED NOTICES U/S 201(1) AND 201(1A) OF THE ACT TO THE ASSESSEE COMPANY ASKING IT TO EXPLAIN WHY SUMS PAID TERMED AS PREMIUM/OTHER SUMS SHOULD NOT BE TREATED AS LEASE RENT FALLING UNDER THE PROVISIONS OF SECTION 194I OF THE ACT AND WHY THE ASSESSEE SHOULD NOT BE TREATED AS AN ASSE SSEE IN DEFAULT AS PER PROVISIONS OF SECTION 201(1) AND 201(1A) OF THE ACT. 5. THE ASSESSEE COMPANY SUBMITTED BEFORE AO THAT IT HAS BEEN ALLOTTED PLOT NO 166 IN SECTOR 27 OF BELAPURON ON 5.5.2009 WHICH IS LEASED TO THE ASSESSEE COMPANY UNDER THE PROVISIONS OF SECTION 118 OF MAHARASHTRA REGIONAL AND TOWN PLANNING ACT,1966 BY A DEVELOPMENT AUTHORITY CONSTITUTED BY STATE GOVERNMENT NAMELY THE PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 3 CIDCO WHICH IS FULLY OWNED BY MAHARASHTRA GOVERNMENT FOR THE PURPOSE OF DEVELOPMENT OF NEW AREAS IN THE STATE OF MAHARASHTRA . THE ASSESSEE COMPANY SUBMITTED THAT THESE PAYMENTS TOWARDS LEASE PREMIUM ARE TO CIDCO WHICH IS AN AGENT OF STATE GOVERNMENT AND NO TDS IS APPLICABLE. THE ASSESSEE HAS MADE ADVANCE PAYMENT TO CIDCO DURING THE ASSESSMENT YEAR AND FORMAL AGREEME NT IS ENTERED IN MAY 2010 WITH CIDCO AND TILL THEN THESE PAYMENTS ARE IN THE NATURE OF SECURITY DEPOSIT AND THE ASSESSEE COMPANY IS NOT LIABLE TO DEDUCT TDS AS PER PROVISIONS OF THE ACT . THE ASSESSEE COMPANY, WITHOUT PREJUDICE, SUBMITTED THAT TILL THE ERE CTION OF BUILDING FOR RESIDENTIAL PURPOSES WITHIN A PERIOD OF 4 YEARS FROM THE DATE OF AGREEMENT, THE LEASE CAN NOT BE EXECUTED AND TILL THAT TIME THE ASSESSEE COMPANY SHALL BE MERELY LICENSEE ONLY LIABLE TO PAY RENT AND SERVICE CHARGES TO CIDCO AS IF THE LEASE HAS BEEN EXECUTED AND THE MANAGING DIRECTOR HAS POWER TO REVOKE THE LICENSE AND RE - ENTER THE LAND EVEN IF TOWN PLANNING OFFICER APPROVE THE PLANS FOR CONSTRUCTION. THE ASSESSEE COMPANY SUBMITTED THAT T HE PAYEE , CIDCO HAS ALREADY PAID TAXES ON THE AM OUNTS RECEIVED BY CIDCO FROM THE ASSESSEE COMPANY AND NO PREJUDICE HAS BEEN CAUSED TO REVENUE , SUCH FACT CAN BE VERIFIED BY REVENUE FROM CIDCO AND HENCE THE ASSESSEE COMPANY CANNOT BE DECLARED AS ASSESSEE IN DEFAULT VIDE CBDT CIRCULAR NO. 275/201/95 - IT(B) DATED 29.1.2015 AND ALSO BY SAID PROPOSITION ACCEPTED BY HONBLE APEX COURT IN HINDUSTAN COCA - COLA V. CIT 293 ITR 226 (SC) . 6. THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE COMPANY BY RELYING ON SECTION 194I OF THE ACT AND HELD THAT THE SAID SECTION 194 I OF THE ACT IS OF WIDEST AMPLITUDE AND SHALL COVER RENT AND LEASE IN RELATION TO ANY KIND OF PROPERTY TRANSACTIONS BE IT PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 4 LEASE, SUB - LEASE, TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR USE OF LAND, BUILDING, LAND APPURTENANT TO A BUILDING ,MACHINERY, PLANT, EQUIPMENT , FURNITURE , FITTINGS WHETHER OR NOT ANY OR ALL OF THESE ARE OWNED BY THE PAYEE . THE AO HELD THAT IN THE INSTANT CASE , THE CIDCO HAS GIVEN PLOT OF LAND ON LEASE BASIS FOR A PERIOD OF 60 YEARS TO THE ASSESSEE COMPANY AND THE ASSESSEE COM PANY HAS PAID LEASE PREMIUM AS PER AGREEMENT WITH CIDCO. THUS, AO HELD THAT IT IS NOT THE CASE THAT THE ASSESSEE COMPANY HAS ACQUIRED THE LAND OR ACQUIRED THE RIGHTS IN PROPERTY RATHER IT IS A CLEAR CUT CASE OF LEASE ARRANGEMENT WHEREBY THE LESSEE IS PAYIN G TO THE LESSOR PRESPECIFIED LEASE PREMIUM FOR A LEASE WHICH IS FOR A SUBSTANTI ALLY LONG PERIOD RUNNING INTO 60 YEARS WHICH CANNOT CHANGE THE INHERENT NATURE OF THE TRANSACTION WHICH IS GIVING LAND ON LEASE BASIS BY THE CIDCO AND HENCE TDS IS DEDUCTIBLE ON THE SAID PAYMENTS . THE AGREEMENT WITH CIDCO CONTAINS SEVERAL CLAUSES RESTRICTING USAGE OF LAND THAT EVEN SIGN BOARD AND ADVERTISEMENTS CANNOT BE PUT BY THE ASSESSEE COMPANY . OTHER RESTRICTIVE CLAUSES IN THE AGREEMENT RELATE TO NOT TO EXCAVATE, NOT TO ERE CT BEYOND THE BUILDING LINE, S ANITATION, ALTERATION, TO REPAIR , TO ENTER AND INSPECT, NOT TO CREATE NUISANCE, NOT TO ASSIGN , TRANSFER OR OTHERWISE DISPOSE OFF THE LAND WITHOUT THE PRIOR APPROVAL OF THE METROPOLITAN COMMISSIONER , RESTRICTION ON CHANGE IN THE STATUS OF LESSEE , TO USE THE PREMISES FOR PURPOSE OF COMMERCIAL/OFFICE ONLY. THESE RESTRICTIVE CLAUSES INDICATE THAT THE ASSESEE COMPANY HAS NOT ACQUIRED ANY RIGHT OF OWNERSHIP IN THE PLOT BUT MERELY RIGHT TO USE THE LAND ALT HOUGH THE PERIOD IS SUBST ANTIALLY LONG ON WHICH THE ASSESSEE COMPANY WAS LIABLE TO DEDUCT TDS U/S 194I OF THE ACT . THUS, THE AO HELD THAT THE ASSESSEE COMPANY HAS PAID RS.1,38,12,158/ - TOWARDS LEASE PREMIUM OR COST OF PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 5 ADDITIONAL FSI AS CONSIDERATION FOR USE OF LAND UNDER THE LEASE , THE ASSESSEE HAS COMMITTED DEFAULT WITH IN THE MEANING OF SECTION 201(1) OF THE ACT BY NOT DEDUCTING TDS U/S 194I OF THE ACT AND ALSO THE ASSESSEE COMPANY IS ALSO LIABLE TO PAY INTEREST U/S 201(1A) OF THE ACT. 7. AGGRIEVED BY THE ORDERS OF THE AO, TH E ASSESSEE COMPANY FILED FIRST APPEAL WITH THE CIT(A) AND REITERATED ITS SUBMISSIONS AS MADE BEFORE THE AO. THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE COMPANY EXECUTED LEASE AGREEMENTS WITH CIDCO, WHO ALSO ISSUED THE LETTER OF ALLOTMENT WHICH OUTLINE S THE RIGHTS AND OBLIGATIONS OF THE LESSEE WITH REGARDS TO FSI , TERMS OF LEASE FOR 60 YEARS , WATER AND POWER CONNECTION , FINAL DEMARCATION PLAN, LAND USE AND PREDOMINANT OBJECTIVE FOR PAYMENT OF LEASE PREMIUM IS ACQUISITION OF LONG TERM HOLDING RIGHTS I N THE PLOT OF LAND FOR CONSTRUCTING RESIDENTIAL UNITS WITH A RIGHT TO SELL THE CONSTRUCTED AREA ON OWNERSHIP BASIS WHICH IS TOWARDS BRINGING CAPITAL ASSETS AND HENCE THERE IS NO QUESTION OF DEDUCTION OF TDS. 8. THE CIT(A) HELD THAT THE PREMIUM IS PAID TO CIDCO FOR GRANTING ALLOTMENT OF PLOT. THE AMOUNT PAID IS AS PER RATES PREVALENT AS PER STAMP DUTY READY RECKONER AND PAYMENT FOR ACQUISITION OF LAND RIGHTS AND NOT MERELY A PAYMENT OF RENT FOR USE OF LAND. THE CIT(A) HELD THAT THE MUMBAI TRIBUNAL IN SHAH G ROUP BUILDERS LIMITED IN ITA NO. 4523/MUM/2012 DATED 14.08.2013 FOR ASSESSMENT YEAR 2008 - 09 HAS HELD THAT LEASE PREMIUM PAID TO CIDCO NOT BEING IN THE NATURE OF RENT AS CONTEMPLATED U/S 194I OF THE ACT , THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS FROM SAID P AYMENTS AND HENCE THE ASSESSEE COULD NOT BE TREATED AS ASSESSEE IN DEFAULT. TAKING SIMILAR VIEW AS TAKEN BY MUMBAI TRIBUNAL IN ABOVE CASE AND THE FACTS OF THE CASE , THE PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 6 CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITIONS OF RS.35,85,083/ - M ADE BY THE AO ON ACCOUNTS OF DEFAULTS U/S 201(1) AND 201(1A) OF THE ACT. 9. AGGRIEVED BY THE ORDERS OF CIT(A) , THE REVENUE IS IN APPEAL BEFORE US. 10. THE LD. DR RELIED UPON THE ORDERS OF THE AO AND CONTENDED THAT THE PAYMENT OF RS.1,38,12,158/ - HAS BEEN MADE BY THE ASSESSEE COMPANY TO CIDCO TOWARDS LEASE PREMIUM FOR LEASE OF PLOT FOR 60 YEARS ENTERED INTO BY THE ASSESSEE COMPANY WITH CIDCO AND NO TDS IS DEDUCTED WHILE THE SAID PAYMENT IS DULY COVERED UNDER THE PROVISIONS OF SECTION 194I OF THE ACT AND SINCE ASSESSEE HAS NOT DEDUCTED TDS U/S 194I OF THE ACT ON PAYMENT OF RS.1,38,12,158/ - TO CIDCO TOWARDS LEASE PREMIUM, THE AO HAS RIGHTLY DECLARED THE ASSESSEE AS ASSESSEE IN DEFAULT U/ S 201(1) AND 201(1A) OF THE ACT AND RAISED THE DEMAND AGAI NST THE ASSESSEE COMPANY. 11. THE ASSESSEE COMPANY AT THE OUTSET SUBMITTED THAT THE PAYMENT OF RS.1,38,12,158/ - TOWARDS LEASE PREMIUM IS MADE TO CIDCO FOR ACQUIRING THE PLOT OF LAND WHICH IS FOR ACQUISITION OF CAPITAL ASSET BEING LONG TERM HOLDING RIGHTS IN T HE PLOT. THE ASSESSEE COMPANY REITERATED ITS SUBMISSIONS AS MADE BEFORE AUTHORITIES BELOW. THE ASSESSEE COMPANY RELIED UPON THE ORDERS OF CIT(A) AND SUBMITTED THAT ONE TIME PAYMENT OF RS . 1.38 CRORES HAS BEEN MADE FOR ACQUIRING LONG LEASE OF PLOT OF LAND FOR 60 YEARS. THE ASSESSEE COMPANY RELIED UPON THE DECISION OF MUMBAI TRIBUNAL IN DCIT V. PARADISE INFRA - CON PRIVATE LIMITED IN ITA NO. 4592/MUM/2012 (2014) 40 CCH 0567 ( MUM - TRIB. ) , WHEREBY MUMBAI TRIBUNAL HAS HEL D THAT THE LEASE PREMIUM IS CAPITAL EXPENDITURE TO ACQUIRE LAND WITH SUBSTANTIAL RIGHT TO CONSTRUCT PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 7 AND COULD NOT BE CONSIDERED AS RENT TO BE COVERED U/S 194I OF THE ACT AND HENCE NO TDS IS TO BE DEDUCTED ON THE SAME. THE SAID JUDGMENT OF PARADISE INFRA - CO N PRIVATE LIMITED(SUPRA) IS REPRODUCED HEREUNDER: 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL IS THAT, WHETHER THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AMOUNT PAID BY THE ASSESSEE TO CIDCO (CITY AND INDUSTRIAL DEV ELOPMENT CORPORATION), TOWARDS PREMIUM FOR ACQUIRING LEASE HOLD RIGHTS IS IN THE NATURE OF RENT OR NOT AS DEFINED IN SECTION 194 I OF THE ACT, AND ACCORDINGLY, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE UNDER SECTION 194 I. 3. BEFORE US, TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED BY A SERIES OF DECISIONS GIVEN BY THE TRIBUNAL, MUMBAI BENCH, IN VARIOUS CASES, WHEREIN IT HAS BEEN CONSISTENTLY BEEN HELD THAT THE AMOUNT OF PREMIUM IN SUCH CASES TO THE GOVERNMENT AU THORITIES REPRESENTS TRANSFER PRICE OF THE LAND ON LEASE HOLD BASIS AND NO PART THEREOF FALLS WITHIN THE MEANING OF RENT AS CONTEMPLATED UNDER SECTION 194 I AND, THEREFORE, NO TDS IS REQUIRED TO BE DEDUCTED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, AGREED THAT THIS ISSUE HAS COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN VARIOUS CASES AND THE SAME HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. HOWEVER, ON MERITS, HE STRONGLY RELIED UPON THE REASONING GIVE IN THE ORDER OF THE ASSESSING OFFICER. 5. AFTER CAREFULLY CONSIDERING THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AS WELL AS VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE IN ITO (TDS) V/S WADHWA & ASSOCIATES REALTORS PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 8 PVT. LTD., [2004] 146 ITR 694, AND TRO V/S SHELTON INFRASTRUCTURES PVT. LTD., ITA NO.5678/MUM./2012, ORDER DATED 19TH MAY 2014, WE FIND THAT THE ISSUE INVOLVED HEREIN BEFORE US IS SQUARELY COVERED BY THE DECISIONS OF THE TRIBUNAL. IN THIS CASE, THE ASSESSEE HAS MADE PAYMENT AMOUNTI NG TO RS. 6,60,71,665, IN THE FINANCIAL YEAR 2007 08 TOWARDS LEASE PREMIUM IN RESPECT OF THE PLOT OF LAND AT NEW PANVEL, NAVI MUMBAI, TO CIDCO. SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE AMOUNT OF PAYMENT PAID TO THE CIDCO, THE ASSESSING OFFI CER HELD THAT THE ASSESSEE IS AT DEFAULT UNDER SECTION 201(1) AND IS ALSO LIABLE TO PAY INTEREST UNDER SECTION 201(1A). THE ASSESSING OFFICER HELD THAT THE PAYMENT MADE TOWARDS LEASE PREMIUM WAS WITHIN THE DEFINITION OF RENT AS STIPULATED UNDER SECTION 194 I OF THE ACT. 6. THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE DETAIL SUBMISSIONS OF THE ASSESSEE AND ANALYZING VARIOUS DECISIONS AND ALSO THE LEASE DEED BETWEEN THE ASSESSEE AND CIDCO, CAME TO THE CONCLUSION THAT SUCH A PAYMENT CANNOT BE TRE ATED AS IN THE NATURE OF RENT WITHIN THE MEANING OF SECTION 194 I. THE TRIBUNAL IN SHELTON INFRASTRUCTURES PVT. LTD. (SUPRA), AFTER NOTING SERIES OF DECISIONS OF THE TRIBUNAL, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AFTER OBSERV ING AND HOLDING AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSED THE VARIOUS DECISIONS OF THE TRIBUNAL RELIED UPON BY THE ASSESSEE. WE FIND THAT THE TRIBUNAL, MUMBAI BENCH, OF THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW THAT SUCH A PAYMENT OF LEASE PREMIUM DO NOT FALL WITHIN THE REALM OF RENT AS CONTEMPLATED IN SECTION 194 I. THEREFORE, THE ASSESSEE IS NOT LIABLE FOR DEDUCTING THE TDS ON SUCH A PAYMENT. THE MAIN REASON IS THAT THE LEASE PREMIUM IS CAPITAL EXPENDITURE TO ACQUIRE LAND WITH SUBSTANTIAL RIGHT TO PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 9 CONSTRUCT AND COVER THE BUILDING COMPLEX. FOR THE SAKE OF READY REFERENCE, WE ARE QUOTING THE RELEVANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL IN ITO V/S TRENT LTD., ITA NO.4629/MUM./2012, ORDER DATED 21ST AUGUST 2013, WHEREIN THE TR IBUNAL OBSERVED AND HELD AS UNDER: 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SIMILAR ISSUE INVOLVED IN THE CASE OF SHREE NAMAN HOTELS PVT. & SHREE NAMAN DEVELOPERS LTD. HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE AN ORDER DATED 14 - 08 - 2013 PASSED IN ITA NO. 688 TO 691/MUM/2012 BY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH RENDERED IN THE CASE OF M/S WADHWA & ASSOCIATES REALTORS PVT. LTD. VIDE ORDER DATED 3 - 7 - 2013 PASSED IN ITA NO.695/MUM/2012. IN THE CASE OF M/S WADHWA & ASSOCIATES REALTORS PVT. LTD. (SUPRA), A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN PARA 9 TO 10 OF ITS ORDER DATED 3 - 7 - 2013 (SUPRA): - 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE ORDER OF THE LOWER AUTHORITIES AND THE MATERIAL EVIDENCE BROUGHT ON RECORD IN THE FORM OF PAPER BOOK AND THE JUDICIAL DECISIONS RELIED UPON BY THE RIVAL PARTIES. THE ENTIRE GRIE VANCE REVOLVES AROUND THE PREMIUM PAID BY THE ASSESSEE TO M/S. MMRDA LTD. FOR THE LEASEHOLD RIGHTS ACQUIRED BY THE ASSESSEE THROUGH THE LEASE DEED DT. 22ND NOVEMBER, 2004. IT IS THE SAY OF THE REVENUE THAT THIS LEASE PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 10 PREMIUM WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE FAILING WHICH THE ASSESSEE IS TO BE TREATED AS ASSESSEE IN DEFAULT. IT IS THE SAY OF THE ASSESSEE THAT SUCH LEASE PREMIUM IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE THERE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE. FURTHER, THE SAID LEASE PREMIUM DOES NOT COME WITHIN THE PURVIEW OF THE DEFINITION OF RENT AS PROVIDED U/S. 194 - I OF THE ACT. 10. WE HAVE CAREFULLY PERUSED THE LEASE DEED AS EXHIBITED FROM PAGE - 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 A 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 RECO RDS FURTHER SHOW THAT THE PAYMENT TO MMRD IS ALSO FOR ADDITIONAL BUILT UP ARE AND ALSO FOR GRANTING FREE OF FSI AREA, SUCH PAYMENT CANNOT BE EQUATED TO RENT. IT IS ALSO SEEN THAT THE MMRD IN EXERCISE OF POWER U/S. 43 R.W. SEC. 37(1) OF THE MAHARASHTRA TOWN PLANNING ACT 1966, MRTP ACT AND OTHER POWERS ENABLING THE SAME HAS APPROVED THE PROPOSAL TO M/S. PARADISE INFRA CON PVT. LTD. MODIFY REGULATION 4A(II) AND THEREBY INCREASED THE FSI OF THE ENTIRE G BLOCK OF BKC. THE DEVELOPMENT CONTROL REGULATIONS FOR BK C SPECIFY THE PERMISSIBLE 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 PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 11 AREA ON THE AFORESAID PLOT. THUS THE ASSESSEE HAS MAD E PAYMENT TO MMRD UNDER DEVELOPMENT CONTROL FOR ACQUIRING LEASEHOLD LAND AND ADDITIONAL BUILT UP AREA. THE DECISIONS OF THE TRIBUNAL IN THE CASE OF M/S. NATIONAL STOCK EXCHANGE (SUPRA) AND MUKUND LTD (SUPRA) HAVE BEEN WELL DISCUSSED BY THE LD. CIT(A) IS HI S ORDER. THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KHIMLINE PUMPS LTD. (SUPRA) SQUARELY AND DIRECTLY APPLY ON THE FACTS OF THE CASE WHEREIN THE HON BLE 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 - - VIS PROVISIONS OF SEC. 194 I, DEFINITION OF RENT AS PROVIDED UNDER THE SAID PROVISION, WE DO NOT FIND ANY REASON TO TAMPER OR INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) WHICH WE CONFIRM. 8. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF WADHWA & ASSOCIATES REALTORS PVT. LTD. (SUPRA) AS WELL AS SHREE NAMAN HOTELS PVT. LTD . & SHREE NAMAN DEVELOPERS LTD. (SUPRA) DECIDED BY THE TRIBUNAL, WE RESPECTFULLY FOLLOW THE DECISIONS RENDERED IN THE SAID CASES BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) HOLDING THAT THE LEASE PREMIUM PAID B Y THE ASSESSEE TO MMRDA NOT BEING IN THE NATURE OF RENT AS CONTEMPLATED IN SECTION 194 - I OF THE ACT, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM THE SAID PAYMENT AND HENCE COULD NOT BE TREATED AS THE PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 12 ASSESSEE IN DEFAULT U/S 201(1) & 201(1A) OF THE ACT. THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 8. THUS, IN VIEW OF THE CATENA OF DECISION, WE HOLD THAT THE IMPUGNED PAYMENT ON ACCOUNT OF PREMIUM REPRESENTS TRANSFER PRICE OF THE LAND ON LEASE HOLD BASIS AND NO PART THEREOF QUALIFIE S TO FALL WITHIN THE MEANING OF RENT AS CONTEMPLATED IN SECTION 194 I AND, THEREFORE, NO DEDUCTION OF TAX AT SOURCE IS REQUIRED. WE, ACCORDINGLY, CONFIRM THE FINDINGS AND CONCLUSION OF THE LEARNED COMMISSIONER (APPEALS) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 7. THUS, CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL, WE ALSO HOLD THAT THE PAYMENT MADE BY THE ASSESSEE TO THE CIDCO REPRESENT TRANSFER PRICE OF THE LAND ON LEASE HOLD BASIS AND IT CANNOT BE CONTEMPLATED AS RENT WITHIN THE MEANING OF SEC TION 194 I. ACCORDINGLY, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS AFFIRMED ON THIS SCORE. THUS, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORDS AND THE CASE LAW RELIED UPON BY THE RIVAL PARTIES .WE HAVE OBSERVED THAT THE ASSESSEE COMPANY HAS MADE PAYMENT OF RS.1,38,12,158/ - TO CIDCO TOWARDS LEASE PREMIUM FOR PLOT NO 166 IN SECTOR 27 OF BELAPURON ON 5.5.2009 WHICH IS LEASED TO THE ASSESSEE COMPANY BY CIDCO FOR 60 YEARS , WHICH IN OUR CONSIDERED OPINION IS FOR ACQUISITION OF CAPITAL ASSET BEING LONG TERM HOLDING RIGHTS IN THE AFORE - STATED PLOT. THE MUMBAI TRIBUNAL IN DCIT V. PARADISE INFRA - CON PRIVATE LIMITED IN ITA NO. PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 13 4592/MUM/2012 (2014) 40 CCH 0567 (MUM - TRIBUNAL) ON IDENTICAL FACTS HAS HELD T HAT THE LEASE PREMIUM TO CIDCO IS CAPITAL EXPENDITURE TO ACQUIRE LAND WITH SUBSTANTIAL RIGHT TO CONSTRUCT AND COULD NOT BE CONSIDERED AS RENT TO BE COVERED U/S 194I OF THE ACT AND HENCE NO TDS IS TO BE DEDUCTED ON THE SAME WHICH WE RESPECTFULLY FOLLOW IN T HE INSTANT APPEAL AS THE FACTS ARE IDENTICAL . IN OUR CONSIDERED VIEW, THE PAYMENT OF RS.1,38,12,158/ - MADE BY THE ASSESSEE COMPANY TO CIDCO TOWARDS LEASE PREMIUM FOR PLOT NO 166 IN SECTOR 27 OF BELAPURON ON 5.5.2009 WHICH IS LEASED TO THE ASSESSEE COMPANY BY CIDCO FOR 60 YEARS IS FOR ACQUISITION OF CAPITAL ASSET BEING LONG TERM HOLDING RIGHTS WITH SUBSTANTIAL RIGHT TO CONSTRUCT IN THE AFORE - STATED PLOT AND COULD NOT BE CONSIDERED AS RENT TO BE COVERED U/S 194I OF THE ACT AND HENCE NO TDS IS TO BE DEDUCTED ON THE SAME. WE HEREBY AFFIRM THE ORDERS OF THE CIT(A) DELETING THE ADDITIONS OF RS.35,85,083/ - MADE BY THE AO ON ACCOUNTS OF DEFAULTS U/S 201(1) AND 201(1A) OF THE ACT. WE ORDER ACCORDINGLY. 1 3 . THUS, THE APPEAL OF THE REVENUE IS DISM ISS ED FOR REASONS INDICATED ABOVE. 14 . THIS ORDER IS PRONOUNCED IN THE OPEN COU RT ON THIS DAY OF 23 RD OCTOBER 201 5 . SD/ - SD/ - (SHAILENDRA KUMAR YADAV ) ( RAMIT KOCHAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 23.10. 2015 . POOJA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T PROGRESSIVE CIVIL ENGINEERS PRIVATE LIMITED ITA NOS. 2930/MUM/2014 ASSESSMENT YEARS : 2010 - 11 14 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) I NCOME T AX A PPELLATE T RIBUNAL , MUMBAI