MILLENIUM CORPORATION, NAVI MUMBAI V. ITO TDS 2(3), MUMBAI

ITA 4496/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3698 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANDHIR GUPTA
• Keywords: Maximum Marginal Rate; Non-deduction of tax; Capital receipt
• Section: 133A; 201(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.C. SHARMA(AM) AND SHRI SANDEEP GOSAIN (JM) ITA NO. 4496/MUM/2014 ASSESSMENT YEAR: 2011-12 MILLENIUM CORPORATION VS. ITO TDS 2(3) PS 41 PLOT NO. 18/27 MUMBAI CRYSTAL PLAZA SECTOR-7, KHARGHAR MUMBAI- 401210 PAN NO. AARFM9302L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. NITESH JOSHI RESPONDENT BY : SHRI. RANDHIR GUPTA DATE OF HEARING : 26/07/201 6 DATE OF PRONOUNCEMENT : 12/08/2016 O R D ER PER SANDEEP GOSAIN, JM : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-14, MUMBAI, ON THE GROUNDS MENTIONED HEREIN BELOW: 1. 20,41,419/- TAX FOR NON DEDUCTION OF TAX ON PREMIU M PAID TO CIDCO 1.1 THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN CO NSIDERING THE PAYMENT OF PREMIUM PAID BY THE APPELLANT TO THE CIDCO AS RENT AND INVO KED THE PROVISIONS OF SECTION 194 I OF THE INCOME TAX ACT, 1961 WHICH WAS UPHELD BY C IT APPEAL N TECHNICAL GROUND. 1.2 THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN C ONSIDERING THE LEAS PREMIUM AS ADVANCE RENT AND INCLUDED IN THE DEFINITION OF RENT AS DEFINED IN THE EXPLANATION (I) TO SECTION 194 I OF THE INCOME TAX ACT, 1961. 2 1.3 THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN CO NSIDERING TEH SAID CIDCO AUTHORITIES AS INDEPENDENT ENTITY AND CONSIDERED TH AT CIDCO IS NEITHER GOVERNMENT NOR A CORPORATION INCORPORATED UNDER THE CENTRAL AC T, AND ALSO DISQUALIFY FOR EXCLUSION FROM TDS OF CHAPTER XVIIB AS PROVIDED UND ER SECTION 196 OF THE INCOME TAX ACT. 1.4 THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN A SSESSMENT OF THE APPELLANT THAT APPELLANT IS LIABLE TO DEDUCT TDS ON THE AMOUNT OF PREMIUM PAID BY THE APPELLANT TO CIDCO FOR THE ALLOTMENT OF IMMOVABLE PROPERTY. 1.5 THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN CO NSIDERING THE SAID LEASE PREMIUM PAID BY THE APPELLANT TO CIDCO ARE MERELY BEING USED AS LAND AND THE RIGHTS RELATED TOT HE USE OF THE LAND WITHOUT HAVING ANY RIGHT ON THE LAND BY THE APPELLANT. THE LEARNED ASSESSING OFFICER (TDS) HAS FAILED TO APPREC IATE THE NATURE OF THE TRANSACTION BEING CARRIED OUT BY THE APPELLANT WITH CIDCO AND SU BSEQUENT ACT OF THE APPELLANT FROM TIME TO TIME. 1.6 THE LEARNED ASSESSING OFFICER (TDS) HAS FAILED TO A PPRECIATE AND CONSIDER THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2.1 THE LEARNED CIT APPEAL HAS ERRED IN DISMISSING APPEAL UNDER RULE 45 OF INCOME TAX RULES, 1962 AND CONSIDERED THE APPEAL FILED BY APPE LLANT IS DEFECTIVE. 2.2 THE APPELLANT HAS NOT RECEIVED DEMAND NOTICE FR OM ASSESSING OFFICER WHICH WAS RECEIVED SUBSEQUENTLY AND SUBMITTED THE SAME BEFORE CIT APPEAL. 3. THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN CHARGING 4,08,284/- INTEREST UNDER SECTION 201(1A) OF THE INCOME TAX ACT, 1961. 4. THE LEARNED ASSESSING OFFICER (TDS) HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271-C OF THE INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT SURVEY UNDER SE CTION 133A WAS CARRIED OUT IN THE CASE OF M/S CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD. (CIDCO) ON 04/02/2011. IN THE COURSE OF SURVEY PROCEEDING, IT WAS NOTICED THAT THE ASSESSEE WAS ALLOTTED A PLOT NO. 50 & 51 A T KHARGHAR, PANVEL ON PAYMENT OF LEASE PREMIUM OF RS. 10,05,19,599/- AND RS. 1,98,19,599/- IN FY 2009- 10 & 2010-11 RESPECTIVELY. THE SAID PAYMENTS WERE C ONSIDERED TO BE IN THE NATURE OF LEASE RENT AND SINCE THE ASSESSEE DID NOT DEDUCT THE TAX AT SOURCE ON 3 THE PAYMENT THEREFORE THE REVENUE AUTHORITY TOOK IT AS A CONTRAVENTION OF THE PROVISION OF SECTION 194-I OF THE ACT. IN THIS RESP ECT ITO (TDS) ISSUED NOTICE TO THE ASSESSEE AND AFTER SEEKING REPLY HAS HELD THE ASSES SEE DEEMED TO BE IN DEFAULT FOR FAILURE TO DEDUCT TAX AT SOURCE FROM THE AGGREG ATE PAYMENT OF RS. 12,03,39,198/-. AND THEREFORE PASSED ORDER UNDER SE CTION 201(1) / 201(1A) OF THE INCOME TAX ACT, 1961 VIDE ORDER DT. 29/11/2011. 3. AGGRIEVED BY THE ORDER OF ITO(TDS), ASSESSEE PRE FERRED THE APPEAL BEFORE LD. CIT(A) BUT THE CIT(A) DISMISSED THE APPEAL VIDE ORDER DT. 24/03/2014. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE PREFERRE D THE PRESENT APPEAL BEFORE US ON THE GROUND MENTIONED HEREIN ABOVE. 4. AT THE VERY OUTSET LD. AR APPEARING ON BEHALF OF THE ASSESSEE HAD DRAWN OUR ATTENTION TO THE APPLICATION MOVED BY THE ASSES SEE FOR CONDONATION OF DELAY. AS PER THE CONTENTS OF THE SAID APPLICATION THERE IS DELAY OF FOUR DAYS IN FILING APPEAL THEREFORE AFTER HEARING THE ARGUMENTS OF BOTH THE PARTIES AND KEEPING IN VIEW THE CONTENTS OF THE APPLICATION FOR SEEKING CONDONATION OF DELAY, WE CONDONE THE DELAY AND ADMIT THE APPEAL FO R DECIDING ON MERITS. SINCE ALL THE GROUNDS RAISED BY THE ASSESSEE IN APP EAL ARE INTERCONNECTED AND INTERRELATED THEREFORE WE HAVE DECIDED TO DISPOSE O F THE SAME THROUGH THIS CONSOLIDATED ORDER. 4 5. LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMI TTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS REGARDING FAILURE TO DEDUCT TAX AT SOURCE FROM THE AGGREGATE PAYMENT MADE TO CIDCO FOR ACQUIRING L EASE HOLD RIGHTS. LD. AR FURTHER SUBMITTED THAT ON IDENTICAL FACTS IN ASSESS EES OWN CASE FOR ASSESSMENT YEAR 2010-11 THE MATTER HAS BEEN SETTLED BY HONBLE ITAT, MUMBAI BENCH WHERE IN THE HONBLE ITAT HAS DISMISSED THE APPEAL FILED BY THE REVENUE AND HELD THAT THE LEASE PREMIUM PAID TO CIDCO FOR ACQUIRE LEASE H OLD RIGHTS WAS HELD TO BE CAPITAL IN NATURE. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL PLACED ON RECORD BEFORE US. 7. WE FIND THAT THE IDENTICAL ISSUE INVOLVED IN THE PRESENT APPEAL WAS ALSO THE SUBJECT MATTER OF ITA NO. 3172 & 3173/MUM/2014, IN ASSESSES OWN CASE THE OPERATIVE PARA OF WHICH IS REPRODUCED BELOW: 2.2. THE FACTS, IN BRIEF, ARE THAT SURVEY PROCEEDIN GS U/S 133A WERE CARRIED OUT IN THE CASE OF M/S CITY AND INDUSTRIAL DEVELOPMENT COR PORATION OF MAHARASHTRA LTD. (CIDCO) ON 04/02/2011, WHEREIN, IT WAS NOTICED THAT THE ASSESSEES WERE ALLOTTED PLOTS ON PAYMENT OF LEASE PREMIUM OF RS.19,46,02,09 8/- AND RS.3,45,02,097/- IN F.Y. 2009-10 AND 2010-11 RESPECTIVELY. AS PER THE ASSESS ING OFFICER, THESE PAYMENTS WERE IN THE NATURE OF LEASE RENT, THEREFORE, THE AS SESSEE WAS TO DEDUCT AT SOURCE ON THESE PAYMENTS AND THEREFORE IN THE ABSENCE OF S UCH DEDUCTION, THERE IS CONTRAVENTION OF THE PROVISIONS OF SECTION 194-I OF THE INCOME TAX ACT, 1961. THE ASSESSEES WERE TREATED IN DEFAULTS U/S 201(1) AND 2 01(1A) OF THE ACT FOR NON- DEDUCTION OF TDS ON THE AMOUNT OF LEASE RENT. THE A SSESSEE PREFERRED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , WHEREIN, FOLLOWING THE DECISION OF THE TRIBUNAL AND ALSO FROM THE HONBLE APEX COURT, THE ASSESSEES WERE HELD TO BE NOT IN DEFAULT. THE REVENUE IS AGGR IEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. WITHOUT GOING INTO MUCH DELIBERATION , THE MATERIAL AVAILABLE ON RECORD AND THE ASSERTIONS MADE BY THE LD. DR, WE FI ND THAT THE TRIBUNAL, FOLLOWING THE DECISION FROM HONBLE APEX COURT IN MADHAVRAO S INDHIA VS UNION OF INDIA AIR 1971 SC 530 (AT PAGE 533), AND IN PANWARI TEA COMPA NY LTD. 57 ITR 422 (SC) HELD 5 THAT LEASE PREMIUM PAID IS A CAPITAL RECEIPT AND NO T OF REVENUE IN NATURE, THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). EVEN OTHERWISE, THE CASE OF THE ASSE SSES FIND SUPPORT FROM THE DECISION IN THE CASE OF WADHWA & ASSOCIATES REALTOR S PVT. LTD. (ITA NO.695/MUM/2012) WHEREIN, LEASE PREMIUM PAID TO MMRD A, FOR ACQUIRING LEASE HOLD RIGHTS, IN A LAND AT BKC WAS HELD TO BE CAPITA L EXPENDITURE. IDENTICALLY, IN ITO VS NAMAN DEVELOPERS (ITA NO.686 & 687/MUM/2012) FOL LOWING THE DECISION OF THE WADHWA & ASSOCIATES REALTORS PVT. LTD. DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN ITO VS SHAH GROUP BUILDERS (ITA NO.452 3/MUM/2012) THE LEASE PREMIUM PAID TO CIDCO FOR ACQUIRING LEASE HOLD RIGH T WAS HELD TO BE CAPITAL IN NATURE, THUS, IT CAN BE CONCLUDED THAT NO DEFAULT W AS COMMITTED BY THE ASSESSES U/S 201, 201(1A) OF THE ACT. BOTH THE APPEALS OF TH E REVENUE, BEING ON IDENTICAL FACTS, ARE THEREFORE, DISMISSED. FINALLY, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. AFTER ANALYZING THE ABOVE ORDER WE FIND THAT THE ID ENTICAL QUESTION INVOLVED IN THE PRESENT CASE HAS ALREADY BEEN DECIDED BY THE CO ORDINATE BENCH OF I.T.A.T. MUMBAI IN ASSESSES OWN CASE. THEREFORE, RESPECTFUL LY FOLLOWING THE DECISION OF THE COORDINATE BENCH AND IN ORDER TO MAINTAIN JUDIC IAL CONSISTENCY WHICH IS APPLICABLE MUTATIS MUTANDIS IN THE CASE OF THE ASSE SSEE WE HOLD THAT LEASE PREMIUM PAID BY THE ASSESSEE TO CIDCO FOR ACQUIRING LEASE HOLD RIGHTS ARE CAPITAL IN NATURE THUS IT CAN BE CONCLUDED THAT NO DEFAULT WAS COMMITTED BY THE ASSESSEE UNDER SECTION 201(1) OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2016. SD/- SD/- (R.C. SHARMA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 12/08/2016 / COPY OF THE ORDER FORWARDED TO : 6 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. ! , !' , / DR, ITAT, MUMBAI 6. #$ % / GUARD FILE. & & & & / BY ORDER, & //TRUE COPY// ' '' ' / &( &( &( &( ) ) ) ) (DY./ASSTT. REGISTRAR) !' !' !' !' , / ITAT, MUMBAI AG (ON TOUR) 7 DICTATION PAD ATTACHED DATE INITIAL 1. DRAFT DICTATED ON 09/08/2016 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11/08/2016 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT 12/08/2016 SR.PS 7. FILE SENT TO THE BENCH CLERK 22/08/2016 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER