I.T.O. (T.D.S)-3(4), MUMBAI V. TCG URBAN INFRASTRUCTURE HOLDING PVT. LTD., MUMBAI

ITA 4564/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70782 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR B
• Assessee Lawyers: A V SONDE SHRI A T JAIN; MAHESH O RAJORA B C
• Keywords: Maximum Marginal Rate; Capital expenditure
• Section: 37(1); 201(1)

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI .. , !'# $ $ $ $ ! %, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M !./ I.T.A. NO. 4563 /MUM/2012 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2010-11) INCOME TAX OFFICER (TDS 3(4), 10 TH FLOOR, SMT K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI 400 002. ) ) ) ) / VS. M/S TCG URBAN INFRASTRUCTURE HOLDING PVT. LTD., 5 TH FLOOR, METROPOLITAN, WEST WING, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI 51. #+ !./ PAN : AADCS 8821M ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) -.' !/C.O. NO. 145 /MUM/20 13 ARISING OUT OF ITA NO. 4563 /MUM/20 12 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEARS : 2010-11) M/S TCG URBAN INFRASTRUCTURE HOLDING PVT. LTD., 5 TH FLOOR, METROPOLITAN, WEST WING, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI 51. ) ) ) ) / VS. INCOME TAX OFFICER (TDS 3(4), 10 TH FLOOR, SMT K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI 400 002. #+ !./ PAN : AADCS 8821M CROSS OBJECTOR .. ( -.+, / RESPONDENT ) ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 2 !./ I.T.A. NO. 4564 /MUM/2012 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2011-12) INCOME TAX OFFICER (TDS 3(4), 9 TH FLOOR, SMT K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI 400 002. ) ) ) ) / VS. M/S TCG URBAN INFRASTRUCTURE HOLDING PVT. LTD., 5 TH FLOOR, METROPOLITAN, WEST WING, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI 51. #+ !./ PAN : AADCS 8821M ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) -.' !/C.O. NO. 146 /MUM/20 13 ARISING OUT OF ITA NO. 4564 /MUM/20 12 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2011-12) M/S TCG URBAN INFRASTRUCTURE HOLDING PVT. LTD., 5 TH FLOOR, METROPOLITAN, WEST WING, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI 51. ) ) ) ) / VS. INCOME TAX OFFICER (TDS 3(4), 9 TH FLOOR, SMT K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI 400 002. #+ !./ PAN : AADCS 8821M CROSS OBJECTOR .. ( -.+, / RESPONDENT ) +, B C ! / ASSESSEE BY : SHRI A.V. SONDE SHRI A.T. JAIN & SHRI MAHESH O. RAJORA -.+, B C ! / DEPARTMENT BY : SHRI JAVED AKHTAR !)$ B / // / DATE OF HEARING : 08-08-2013 DE* B / DATE OF PRONOUNCEMENT : 14-08-2013 ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 3 'F / O R D E R PER BENCH . : THESE TWO APPEALS PREFERRED BY THE REVENUE AGAINST A COMMON ORDER PASSED BY THE LD. CIT(A) -14, MUMBAI DATED 30-04-20 12 FOR ASSESSMENT YEARS 2010-11 & 2011-12 INVOLVE A COMMON ISSUE AND THE SA ME THEREFORE HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS SINGLE CONSOLIDATED ALONG WITH THE CROSS OBJECTIONS FILED BY THE ASSESS EE FOR THE SAKE OF CONVENIENCE. 2. ALTHOUGH THE REVENUE HAS RAISED AS MANY AS 12 GR OUNDS IN ALL THE TWO APPEALS, THE SOLITARY ISSUE ARISING OUT OF THE SAME IS WHETHER THE ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE FROM THE PAYMENT O F LEASE PREMIUM MADE TO MMRDA DURING THE YEARS UNDER CONSIDERATION U/S 194- 1 OF THE INCOME TAX ACT, 1961 (THE ACT). 3. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE THAT THE ASSESSEE WAS ALLOTTED CERTAIN PLOTS OF LAND IN THE BANDRA KURLA COMPLEX IN THE YEAR 2006-07 ON LEASE SUBJECT TO PAYMENT OF LEA SE PREMIUM TO MMRDA. THE ASSESSEE WAS ALSO ALLOTTED ADDITIONAL BUILT UP AREA IN RESPECT OF THE SAID PLOT OF LAND ALLOTTED TO IT BY MMRDA SUBJECT TO FUR THER PAYMENT OF PREMIUM. DURING THE YEARS UNDER CONSIDERATION, THE ASSESSEE MADE PAYMENT ON ACCOUNT OF SUCH PREMIUM TO MMRDA AMOUNTING TO RS. 5 ,27,01,015/- AND RS. 3,70,55,562/- FOR ASSESSMENT YEARS 2010-11 AND 2011 -12 RESPECTIVELY. ACCORDING TO THE A.O., THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE FROM THE PAYMENT OF LEASE PREMIUM MADE TO MMRDA AS PER T HE PROVISIONS OF SECTION 194-1 OF THE ACT AND SINCE NO SUCH TAX WAS DEDUCTED BY THE ASSESSEE FROM THE SAID PAYMENTS, HE ISSUED NOTICE TO THE ASS ESSEE REQUIRING IT TO SHOW CAUSE AS TO WHY IT SHOULD NOT BE TREATED AS THE ASS ESSEE IN DEFAULT FOR ITS FAILURE TO DEDUCT THE TAX AT SOURCE FROM THE PAYMEN T OF LEASE PREMIUM MADE ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 4 TO MMRDA THE ASSESSEE FILED ITS REPLY TO SHOW CAUS E NOTICE ISSUED BY THE A.O. EXPLAINING ITS STAND ON THE ISSUE AND AFTER CO NSIDERING AND DISCUSSING THE SAME IN DETAIL, THE A.O. HELD THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE FROM THE PAYMENT MADE TO MMRDA ON ACCOUNT OF LEASE PREMIUM AND TREATED THE ASSESSEE IN DEFAULT FOR FAILURE TO DO S O FOR THE FOLLOWING REASONS AS SUMMARIZED BY HIM IN HIS ORDERS PASSED U/S 201(1) A ND 201(1A) OF THE ACT: (I) PAYMENT ON ACCOUNT OF LEASE PREMIUM IS DEFINIT ELY RENT WITHIN THE MEANING OF SECTION 1941 BECAUSE RENT MEANS ANY PAYM ENT BY WHATEVER NAME CALLED UNDER ANY LEASE ETC. FOR THE USE OF ANY LAND ETC. (II) SINCE THE PAYMENT ON ACCOUNT OF LEASE PREMIUM IS INCLUDED IN DEFINITION OF RENT AS DEFINED IN EXPLANATION (I) TO SECTION 1941, THERE IS NO NEED TO REFER TO ANY DECISION OR CASE LAW BECAUSE AS PER DECISION OF SUPREME COURT RULES OF INTERPRETATION / CONSTRUCTION COME INTO PL AY ONLY WHERE THERE IS AMBIGUITY IN LAW AND SUCH RULES OF INTERPRETATION / CONSTRUCTION HAVE NO. PLACE WHEN THE LAW IS CLEAR AND UNAMBIGUOUS. (III) MMRDA IS NEITHER GOVERNMENT NOR A CORPORATION INCORPORATED UNDER A CENTRAL ACT. ACCORDINGLY, IT DOES NOT QUALIFY FOR E XCLUSION FROM THE TDS OF CHAPTER XVII-B AS PROVIDED FOR UNDER SECTION 196 OF THE ACT. (IV) ON GIVEN FACTS, IT IS CLEAR THAT THE ASSESSEE WAS LIABLE TO DEDUCT T.D.S. ON ANY PAYMENT BY WHATEVER NAME CALLED MADE BY IT T O MMRDA UNDER THE LEASE FOR THE USE OF LAND. SINCE, IT HAS NOT BEEN D ONE, THE T.D.S. DEFAULT HAS OCCURRED. (V) ON FACTS AND CIRCUMSTANCES IT IS CLEAR THAT ALL PAYMENTS MADE BY THE ASSESSEE TO THE MMRDA ARE FOR USING THE LAND AND RI GHTS RELATED TO USE OF LAND. THERE IS NO RIGHT TO LAND. THIS IS CONCLUSIVE LY PROVED BY RESTRICTIVE CLAUSES PUTTING ENCUMBRANCE ON THE ASSESSEE. 4. AGAINST THE ORDERS PASSED BY THE A.O. U/S 201(1) /201(1A) OF THE ACT, THE ASSESSEE FILED ITS APPEALS BEFORE THE LD. CIT(A ) AND ELABORATE SUBMISSIONS WERE MADE ON ITS BEHALF BEFORE THE LD. CIT(A) IN SU PPORT OF THE STAND THAT THE LEASE PREMIUM PAID TO MMRDA NOT BEING IN THE NATURE OF ADVANCE RENT WITHIN THE MEANING OF SECTION 194-1 OF THE ACT, THE ASSESS EE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE AND THEREFORE IT COULD NOT BE TREATED AS ASSESSEE IN DEFAULT U/S 201(1) & 201(1A) OF THE ACT. THE SAID SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE HIM WERE FORWARDED BY THE LD. CIT(A ) TO THE A.O. FOR HIS COMMENTS. IN THE REMAND REPORT SUBMITTED TO THE LD . CIT(A), THE A.O. OFFERED ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 5 HIS COMMENTS ON THE SUBMISSIONS MADE ON BEHALF OF T HE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE A SSESSEE AND THE COMMENTS OFFERED BY THE A.O. ON THE SAID SUBMISSION S IN THE REMAND REPORT AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(A) FOUND THAT A SIMILAR ISSUE INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES W AS CONSIDERED AND DECIDED BY HIM IN DETAIL VIDE HIS ORDER PASSED IN THE CASE OF SHREE NAMAN DEVELOPERS LTD. ACCORDINGLY, FOLLOWING THE DECISION IN THE CAS E OF SHREE NAMAN DEVELOPERS LTD. ON A SIMILAR ISSUE INVOLVING IDENTI CAL FACTS, THE LD. CIT(A) HELD THAT THE PREMIUM PAID BY THE ASSESSEE IN RESPECT OF LEASED PLOT OF LAND TO MMRDA DURING THE YEARS UNDER CONSIDERATION FOR ALLO TMENT OF ADDITIONAL BUILT UP AREA WAS NOT IN THE NATURE OF RENT AS CONTEMPLAT ED U/S 194-I OF THE ACT AND THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE FROM THE PAYMENT OF PREMIUM MADE TO MMRDA. THE DEMAND RAISED AGAINST THE ASSESSEE BY TREATING IT AS ASSESSEE IN DEFAULT VIDE AN ORDER PA SSED BY THE A.O. U/S 201(1) & 201(1A) OF THE ACT FOR BOTH THE YEARS UNDER CONSI DERATION, THEREFORE, WAS CANCELLED BY THE LD. CIT(A). AGGRIEVED BY THE ORDE RS OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIB UNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT A SIMILAR ISSUE INVOLVED IN THE CASE OF SHREE NAMAN HOTELS PVT. LTD . HAS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSE VIDE AN ORDER OF EVEN DATE PASSED IN ITA NO. 688 TO 691/MUM/2012 BY FOLLOWING THE ORDER OF THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL PASSED IN THE CASE OF M/S WADHWA & ASSOCIA TES 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 F OR THE FOLLOWING REASONS GIVEN IN PARA 9 TO 10 OF ITS ORDER DATED 3-7-2013 ( SUPRA):- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE ORDER OF THE LOWER AUTHORITIES AND THE MATERIAL EVIDENCE BRO UGHT ON RECORD IN ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 6 THE FORM OF PAPER BOOK AND THE JUDICIAL DECISIONS R ELIED UPON BY THE RIVAL PARTIES. THE ENTIRE GRIEVANCE REVOLVES AROUN D THE PREMIUM PAID BY THE ASSESSEE TO M/S. MMRDA LTD. FOR THE LEASEHOL D RIGHTS ACQUIRED BY THE ASSESSEE THROUGH THE LEASE DEED DT. 22 ND NOVEMBER, 2004. IT IS THE SAY OF THE REVENUE THAT THIS LEASE PREMIUM WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE FAILING WHICH THE ASSESSEE IS TO B E TREATED AS ASSESSEE IN DEFAULT. IT IS THE SAY OF THE ASSESSEE THAT SUC H LEASE PREMIUM IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE THE RE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE. FURTHER, THE SAID LEAS E PREMIUM DOES NOT COME WITHIN THE PURVIEW OF THE DEFINITION OF RENT A S PROVIDED U/S. 194-1 OF THE ACT. 10. WE HAVE CAREFULLY PERUSED THE LEASE DEED AS EXH IBITED FROM PAGE- 1 TO 42 OF THE PAPER BOOK. A CAREFUL READING OF TH E SAID LEASE DEED TRANSPIRES THAT THE PREMIUM IS NOT PAID UNDER A LEA SE BUT IS PAID AS A PRICE FOR OBTAINING THE LEASE, HENCE IT PRECEDES TH E 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 SHOW THAT THE PAYMENT TO MMRD IS ALSO FOR ADDITIONAL BUI LT 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 POWE R U/S. 43 R.W. SEC. 37(1) OF THE MAHARASHTRA TOWN PLANNING ACT 1966, M RTP ACT AND OTHER POWERS ENABLING THE SAME HAS APPROVED THE PRO POSAL TO MODIFY REGULATION 4A(II) AND THEREBY INCREASED THE FSI OF THE ENTIRE G BLOCK OF BKC. THE DEVELOPMENT CONTROL REGULATIONS FOR BKC S PECIFY THE PERMISSIBLE FSI. PURSUANT TO SUCH PROVISIONS, THE ASSESSEE BECAME ENTITLED FOR ADDITIONAL FSI AND HAS FURTHER ACQUIRE D/PURCHASED THE ADDITIONAL BUILT UP AREA FOR CONSTRUCTION OF ADDITI ONAL AREA ON THE AFORESAID PLOT. THUS THE ASSESSEE HAS MADE PAYME NT TO MMRD UNDER DEVELOPMENT CONTROL FOR ACQUIRING LEASEHOLD LAND A ND 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 HIS ORDER. THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KHIMLINE PUMPS LTD. (SUPRA) SQUARELY AND DIRECTLY APPLY ON THE FACTS OF THE CAS E WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT PAYMENT FOR ACQUIRING LEASEHOLD LAND IS A CAPITAL EXPENDITURE. CONSIDERI NG THE ENTIRE FACTS IN TOTALITY IN THE LIGHT OF THE JUDICIAL DECISIONS VIS --VIS PROVISIONS OF SEC. 194-1, DEFINITION OF RENT AS PROVIDED UNDER THE SAI D PROVISION, WE DO NOT FIND ANY REASON TO TAMPER OR INTERFERE WITH THE FIN DINGS OF THE LD. CIT(A) WHICH WE CONFIRM. 6. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WEL L 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 . (SUPRA) DECIDED BY THE TRIBUNAL, WE RESPECTFULLY FOLLOW THE DECISIONS REN DERED IN THE SAID CASES BY ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 7 THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND UPHOL TH E IMPUGNED ORDER OF THE LD. CIT(A) HOLDING THAT THE LEASE PREMIUM PAID BY T HE ASSESSEE TO MMRDA NOT BEING IN THE NATURE OF RENT AS CONTEMPLATED IN SECT ION 194-I OF THE ACT, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FRO M THE SAID PAYMENT AND HENCE COULD NOT BE TREATED AS THE ASSESSEE IN DEFAU LT U/S 201(1) & 201(1A) OF THE ACT. THE APPEALS FILED BY THE REVENUE ARE ACCO RDINGLY DISMISSED. 7. IN THE CROSS OBJECTIONS, THE ASSESSEE HAS RAISED A SOLITARY IDENTICAL GROUND WHICH READS AS UNDER:- THE COMMISSIONER OF INCOME TAX (APPEALS) -14, MUMBA I [HEREINAFTER REFERRED TO AS CIT(A)] ERRED IN NOT APPRECIATING TH E FACT THAT STATE GOVERNMENT AND LOCAL AUTHORITY HAVE AN OVERRIDING T ITLE ON PAYMENT MADE TO MMRDA AND HENCE SAME DOES NOT REQUIRE DEDUC TION OF TAX AT SOURCE. THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMS TANCES OF THE CASE OF THE APPELLANT NO TDS IS REQUIRED TO BE DEDUCTED ON PREMIUM PAID TO MMRDA. 8. AS A RESULT OF OUR DECISION RENDERED HEREINABOVE WHILE DISMISSING THE APPEALS OF THE REVENUE, THE ISSUE RAISED IN THE CRO SS OBJECTIONS FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. THE CROSS OBJECTI ONS FILED BY THE ASSESSEE ARE, THEREFORE, DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, APPEALS OF THE REVENUE AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2013. . 'F B DE* G')H 14-08-2013 E B SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; G') DATED 14-08-2013 ITA 4563 & 4564/M/12 CO NO. 145 & 146/M/13 8 $.&).!./ RK , SR. PS 'F B -&IJ KJ* 'F B -&IJ KJ* 'F B -&IJ KJ* 'F B -&IJ KJ*/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. L() / THE CIT(A)- CONCERNED, MUMBAI 4. L / CIT CONCERNED, MUMBAI 5. J$O -&&) , , / DR, ITAT, MUMBAI E BENCH 6. P% Q / GUARD FILE. 'F)! 'F)! 'F)! 'F)! / BY ORDER, !.J -& //TRUE COPY// R R R R/ // /!S !S !S !S ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI