ITO OSD TDS 1(2), MUMBAI V. EIH LTD, MUMBAI

ITA 5654/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78881 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 19-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Maximum Marginal Rate

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NOS. 5654 & 5655/MUM/2012 ( / ASSESSMENT YEARS: 2009-10 & 2010-11) ITO (TDS) (OSD)-1(2), ROOM NO. 812, K. G. MITTAL HOSPITAL BLDG., CHARNI ROAD, MUMBAI-400 002 / VS. EIH LIMITED THE TRIDENT HILTON, PLOT C-56, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 019 ' ./# ./PAN/GIR NO. AAACE 6898 B ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) & %& / CROSS OBJECTION NOS. 238 & 239/MUM/2013 (ARISING OUT OF ITA NOS. 5654 & 5655/MUM/2012) ( / ASSESSMENT YEARS: 2009-10 & 2010-11) EIH LIMITED THE TRIDENT HILTON, PLOT C-56, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 019 / VS. ITO (TDS) (OSD)-1(2), ROOM NO. 812, K. G. MITTAL HOSPITAL BLDG., CHARNI ROAD, MUMBAI-400 002 ' ./# ./PAN/GIR NO. AAACE 6898 B ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI MAURYA PRATAP %&'$ ' ( / RESPONDENT BY : SHRI DHANESH BAFNA & SHRI ARPIT AGARWAL )* + ' , / DATE OF HEARING : 22.05.2014 -./ ' , / DATE OF PRONOUNCEMENT : 22.05.2014 2 ITA NOS. 5654 & 5655/M/12 & CO NOS. 238 & 239/M/13 (A.YS. 2009-10 & 2010-11) EIH LIMITED / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO APPEALS BY THE REVENUE AND COR RESPONDING CROSS OBJECTIONS (COS) BY THE ASSESSEE IN RESPECT OF TWO CONSECUTIVE ASSESSMENT YEARS (A.YS.), BEING 2009-10 AND 2010-11. THE ISSUE ARISING FOR BOTH THE YEARS BEING COMMON, THE SAME WERE TAKEN UP TOGETHER FOR HEARING, AND ARE BEING DISPOS ED OF VIDE A COMMON, CONSOLIDATED ORDER. 2. THE ONLY ISSUE ARISING IN THE PRESENT SET OF CAS ES IS THE APPLICABILITY OR OTHERWISE IN LAW OF SECTION 194-I OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) TO THE SUMS PAID BY THE ASSESSEE TO MUMBAI METROPOLITAN REGIONAL DEV ELOPMENT AUTHORITY (MMRDA HEREINAFTER) UNDER A LEASE AGREEMENT. THE REVENUE C LAIMS IT TO BE IN THE NATURE OF LEASE RENTAL AND AT BEST ADVANCE RENT, COVERED U/S.194-I, WHICH PROVISION IN FACT DOES NOT DRAW ANY DISTINCTION BETWEEN PAYMENTS ON REVENUE OR CAPI TAL ACCOUNT. AS SUCH, THE SAME IS EXIGIBLE TO DEDUCTION OF TAX AT SOURCE THERE-UNDER, WHICH HAS NOT BEEN DEDUCTED. THE ASSESSEE, ON THE OTHER HAND, CLAIMS IT TO BE IN THE NATURE OF LEASE PREMIUM, I.E., TOWARD ACQUIRING LEASE-HOLD RIGHTS, SO THAT THE SAID PROVI SION IS NOT APPLICABLE. THE ASSESSEE HAVING FOUND FAVOUR WITH THE LD. CIT(A) ON ACCEPTAN CE OF ITS CLAIM/S, THE REVENUE IS IN APPEAL. 3. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), ITS COUNSEL, T HAT THE ISSUE UNDER REFERENCE STANDS COVERED BY A SERIES OF DECISIONS BY THE TRIBUNAL, P LACING A COMPILATION OF SUCH DECISIONS ON RECORD. ON BEING POINTED OUT THAT, AS OBSERVED B Y THE TRIBUNAL IN THE CASE OF ITO VS. DHIRENDRA RAMJI VORA (IN ITA NO. 3179/MUM/2002 DATED 09.04.2014), ONE OF THE DECISIONS BEING RELIED UPON BY THE ASSESSEE ITSELF, THE ISSUE IS PRIMARILY FACTUAL, TO BE DETERMINED IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, I.E., IF THE WHOLE OR ANY PART OF THE PAYMENT, IRRESPECTIVE OF ITS NOMENCLATURE IN THE LE ASE AGREEMENT, IS A PRICE FOR THE 3 ITA NOS. 5654 & 5655/M/12 & CO NOS. 238 & 239/M/13 (A.YS. 2009-10 & 2010-11) EIH LIMITED TRANSFER OF THE LEASE-HOLD RIGHTS OR IS IN THE NATU RE OF RENT, I.E., TOWARD THE USE OF LAND, IT WAS POINTED OUT BY THE LD. AR THAT THE PAYMENTS ARE TO MMRDA, THE SAME LESSOR AS IN THE CASE OF ITO VS. WADHWA & ASSOCIATES REALTORS PVT. LTD. (IN ITA NO.695/MUM(G)/2012 DATED 03.07.2013/COPY ON RECORD) . THE TRIBUNAL HAS, HE WOULD CONTINUE FURTHER, TAKING US THROUGH THE RELEVANT PA RT OF ITS ORDER, UPON AN EXAMINATION OF THE TERMS OF THE LEASE, FOUND THE PAYMENTS TO MMRDA TO BE TOWARD ADDITIONAL BUILT-UP AREA AS ALSO FOR GRANTING ADDITIONAL FSI AND, THUS, OF CAPITAL NATURE. HE WOULD THEN TAKE US TO THE RELEVANT PARTS OF THE IMPUGNED ORDER/S, IN S UPPORT OF ITS CASE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON THE OTHER HAND, WOULD RELY ON THE ORDERS BY THE ASSESSING AUTHORITY. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. PLOT OF LAND BEARING NO. G-56, BANDRA KURLA COMPLEX, WAS ALLOTTED TO THE ASSESSEE BY MMRDA ON PAYMENT OF AN INITIAL LEASE PREMIUM OF RS.121 CRORES FOR TH E CONSTRUCTION OF A HOTEL WITH CAR PARKING FACILITY VIDE LEASE DEED DATED 04.05.2001. SUBSEQUENTLY, BASED ON A CIRCULAR IN FORCE ON 27.08.2007, THE ASSESSEE WAS CHARGED BALC ONY ENCLOSURE FEE AT RS.206.60 LACS, WHICH STANDS PAID DURING THE CURRENT YEAR, NO N-DEDUCTION OF TAX AT SOURCE ON WHICH IS THE SUBJECT MATTER OF DISPUTE FOR A.Y. 2009-10. THE SAME, EVEN AS OPINED BY THE LD. CIT(A), IS CLEARLY ONLY IN THE NATURE OF ADDITIONAL LEASE PREMIUM TOWARD THE APPROVAL OF THE AMENDED BUILDING PLAN ENVISAGING UTILIZATION OF A LARGER BUILT-UP AREA. IN FACT, AS CLARIFIED, THE PAYMENT OF RS. 121 CRORES IS ADMITTE DLY IN THE NATURE OF LEASE PREMIUM, AND NOT IN DISPUTE WITH REGARD TO BEING NOT SUBJECT TO TAX DEDUCTION AT SOURCE U/S. 194I. WE, THEREFORE, HAVE NO HESITATION IN HOLDING THE SAID P AYMENT TO BE LEASE PREMIUM, I.E., TOWARD ACQUIRING LEASE-HOLD RIGHTS, A CAPITAL ASSET , NOT EXIGIBLE TO DEDUCTION OF TAX AT SOURCE U/S.194-I. WE DECIDE ACCORDINGLY. COMING TO THE FOLLOWING ASSESSMENT YEAR, THE IMPUG NED PAYMENT OF RS.263.55 LACS STOOD MADE FOR AN EXTENSION OF TIME FOR THE CO NSTRUCTION OF THE HOTEL BEYOND THE PERIOD AS ORIGINALLY SPECIFIED IN THE LEASE DEED. I N OUR VIEW, THIS DOES NOT LEAD TO 4 ITA NOS. 5654 & 5655/M/12 & CO NOS. 238 & 239/M/13 (A.YS. 2009-10 & 2010-11) EIH LIMITED ACQUISITION OF ANY LEASE-HOLD RIGHTS, OR ANY CAPITA L ASSET FOR THAT MATTER, BY THE ASSESSEE AND, THUS, WOULD NOT QUALIFY AS ADDITIONAL LEASE PR EMIUM, AS HELD IT TO BE BY THE FIRST APPELLATE AUTHORITY. SO, HOWEVER, AS ARGUED BY THE LD. AR, ON THIS VIEW BEING EXPRESSED BY US DURING HEARING, THE SAME, AT THE SAME TIME, C ANNOT ALSO BE CONSIDERED AS IN THE NATURE OF RENT, SO AS TO BE COVERED BY S.194-I AND, BESIDES, WOULD ALSO NOT STAND TO BE COVERED UNDER ANY OTHER TAX DEDUCTION PROVISION OF CHAPTER XVII-B. WE COULD NOT AGREE MORE. AS SUCH, DESPITE OUR RESERVATION WITH REGARD TO THE SAME BEING ADDITIONAL LEASE PREMIUM, THERE COULD BE NO DOUBT THAT THE IMPUGNED SUM IS NOT IN THE NATURE OF RENT AND, FURTHER, AS ALSO NOT COVERED BY ANY OTHER TAX DEDUC TION PROVISION, BEING ONLY BY WAY OF MODIFICATION IN THE TERMS OF THE ORIGINAL DEED, SO THAT IT COULD BE SAID TO BE IN THE NATURE OF A CHARGE OR FEE PAID UNDER THE LEASE AGREEMENT F OR EXTENSION OF TIME. THE LD. DR COULD NOT, ON THIS VIEW BEING EXPRESSED BY US, CONTROVERT IT IN ANY MANNER. WE, ACCORDINGLY, HAVE NO HESITATION IN HOLDING THE SAME TO BE NOT IN THE NATURE OF RENT AND, THEREFORE, NOT EXIGIBLE TO DEDUCTION OF TAX AT SOURCE U/S.194I. WE DECIDE ACCORDINGLY. 5. THE ASSESSEES COS RAISE GROUNDS SUPPORTING THE DECISION PER THE IMPUGNED ORDERS. THE SAME WOULD IN VIEW OF OUR FOREGOING DEC ISION BECOME INFRUCTUOUS, AND ARE ACCORDINGLY DISMISSED, ALBEIT FOR STATISTICAL PURPO SES. 6. IN THE RESULT, BOTH THE REVENUES APPEAL AND THE ASSESSEES CO ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 22, 2014 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 0+ MUMBAI; 1) DATED : 26.05.2014 *.)../ ROSHANI , SR. PS 5 ITA NOS. 5654 & 5655/M/12 & CO NOS. 238 & 239/M/13 (A.YS. 2009-10 & 2010-11) EIH LIMITED ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. 4*5 6 %)78 , , 78/ , 0+ / DR, ITAT, MUMBAI 6. 6 9: ; + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , 0+ / ITAT, MUMBAI