DHABRIYA AGGOLOMERATES PVT. LTD., Jaipur V. ACIT, Jaipur

ITA 778/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5088 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VARMA CIT DHK
• Assessee Lawyers: NIKILESH KATARIA
• Keywords: Cost of acquisition
• Section: 201(1); 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.778/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 M/S DH ABRIYA AGGOLOMERATES PVT. LTD. (NAME CHANGED TO DHABRIYA POLYWOOD LTD.) B-9D(1) MALVIYA INDUSTRIAL AREA, JAIPUR CUKE VS. THE ACIT (TDS), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCD 5090 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI NIKILESH KATARIA ( CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VARMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.07.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21/07/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-III, JAIPUR DATED 31.10.2014 WHEREIN THE ASSESSEE HAS TA KEN FOLLOWING GROUNDS OF APPEAL: (1.1) THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACT OF THE PRESENT CASE IN DISMISSING THE APPEAL OF THE ASSESSEE. (1.2) THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACT OF THE PRESENT CASE IN HOLDING THE PROVISIONS OF SECTION 194-I ARE APPLICA BLE ON PAYMENT MADE TO RIICO TOWARDS PURCHASES OF LEASEHOLD LAND. (2) RS. 2,96,304/- THE LD. CIT(A) ERRED IN LAW AS W ELL AS OF THE FACTS OF THE PRESENT CASE IN SUSTAINING LEVY OF INTEREST U/S 201 (1A) OF THE ACT. ITA NO.778/JP/14 M/S DHABRIYA AGGLLOMERATES PVT. LD. VS. ACIT(TDS), JAIPUR 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING OF PLASTIC DOORS, WINDOWS, PARTITION ETC. AND ON 14.12.2012 A SURVEY WAS CARRIED OUT AT THE B USINESS PREMISES OF THE ASSESSEE FOR TDS VERIFICATION. DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE WAS ALLOTTED A PIECE OF LAND MEASURING 183 51 SQ.MTR. @ RS. 3870/- PER SQ.MTR. TOTALLING TO RS. 7,10,20,344/- AT INDU STRIAL AREA RAMCHANDRAPURA, JAIPUR BY ALLOTMENT LETTER DATED 25.08.2011. THIS AMOUNT WAS TO BE PAID BY THE ASSESSEE AS DEVELOPMENT CHARGES . TOWARDS THE SAME, THE ASSESSEE DEPOSITED RS. 2,11,64,581/- AS DEVELOPMENT CHARGES DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE OF RS. 4,98,55,763/- WAS TO BE DEPOSITED IN 19 EQUAL MONTHLY INSTALMENTS. IN CONSEQUENT OF THE AL LOTMENT, A LEASE AGREEMENT WAS EXECUTED BETWEEN THE ASSESSEE AND RIICO ON 25.0 8.2011, A COPY OF WHICH IS AVAILABLE AT PB 8-16. THE ASSESSEE WAS OF THE V IEW THAT THIS PAYMENT WAS TOWARDS PURCHASES OF THE LAND ONLY AND AS SUCH IT C APITALIZED THE AMOUNT IN THE BALANCE SHEET AND NO TDS WAS DEDUCED. IT WAS FURTHER SUBMITTED THAT RICCO ALLOTTED VACANT LAND ON 99 YEARS LEASEHOLD BA SIS WHICH IS NOTHING BUT SALE OF LAND FOR A FIXED NUMBER OF YEARS AND FOR WH ICH CONSIDERATION IS CHARGED IN THE FORM OF DEVELOPMENT CHARGES WHICH IS NOTHING BUT SALE CONSIDERATION TOWARDS THE COST OF ACQUISITION OF LAND AND COST OF INFRASTRUCTURE DEVELOPED BY RICCO. THE LD.AO WAS OF THE VIEW THAT THE LAND HAS BEEN ALLOTTED TO THE ASSESSEE ON LEASEHOLD BASIS AND THAT THE OWNERSHIP RIGHTS HAVE NOT BEEN TRANSFERRED AND AS SUCH THE PAYMENT MADE BY THE ASS ESSEE WAS ON ACCOUNT OF RENT AND THEREFORE, IT WAS LIABLE TO DEDUCT TDS U/S 194-I ON SUCH PAYMENTS. THE ASSESSEE ALSO RELIED UPON CERTAIN JUDICIAL PRON OUNCEMENT HOWEVER THE LD. AO WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE AS SESSEE AND THEREFORE HELD THAT THE ASSESSEE FAILED TO DEDUCT TDS ON PAYMENT O F RS. 2,11,64,581/- MADE TO RIICO AND CONSEQUENTLY A DEMAND WAS RAISED U/S 2 01(1) OF RS. 2116458/- ITA NO.778/JP/14 M/S DHABRIYA AGGLLOMERATES PVT. LD. VS. ACIT(TDS), JAIPUR 3 AND INTEREST LIABILITY OF RS. 692608/- U/S 201(1A) OF THE ACT. LATER ON, ON APPLICATION OF THE ASSESSEE U/S 154 CLAIMING RELIEF ON THE GROUND THAT THE DUE TAXES HAVE ALREADY BEEN PAID BY THE PAYEE, THE AO V IDE ITS ORDER DATED 5.3.2014 DELETED THE DEMAND U/S 201(1) BUT UPHELD T HE LEVY OF INTEREST U/S 201(1A) TO THE TUNE OF RS. 296304/-. IN FIRST APP EAL THE LD. CIT(A) REJECTED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE WA S LIABLE TO DEDUCT TDS ON PAYMENT SO MADE AND FOR THIS IT RELIED ON THE DECIS ION OF HONBLE CALCUTTA BENCH OF ITAT IN FOXCONN INDIA DEVELOPERS PVT. LTD. VS. ITO 53 SOT 213 (CHENNAI) AS WELL AS HONBLE KARNATAKA HIGH COURT I N CIT VS. HMT LTD. 203 ITR 820 (KAR). 2.1 THE LD DR RELIED UPON THE ORDER OF THE LOWER AU THORITIES AND ALSO REFERRED TO THE DECISION OF THE HONBLE KARNATAKA H IGH COURT IN CIT VS. HMT LTD. 203 ITR 820 (KAR). 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. SIMILAR ISSUE HAS BEEN DECIDED BY US IN THE CASE OF SHANTI EDUCATION SOCIETY, JAIPUR IN ITA NO. 18/JP/14 DATED 30.06.201 6 FOLLOWING THE EARLIER DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S . GUPTA FABTEX (P) LTD. VS. DCIT (TDS) IN ITA NO. 647 & 648/JP/2013 DATED 16-11 -2015 FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13 WHEREIN IT WAS HELD AS UND ER: EVEN IF THE AFORESAID DECISION OF ITAT CHENNAI BE NCH IN THE CASE OF FOXCONN INDIA DEVELOPERS PVT. LTD. (SUPRA) IS TA KEN TO BE AGAINST THE ASSESSEE ON THE ISSUE UNDER CONSIDERATION , WE ARE BOUND TO FOLLOW THE VIEW WHICH IS IN FAVOUR OF THE ASSESSEE AS PER THE RATIO LAID DOWN IN CIT VS VEGETABLE PRODUCTS 88 ITR 192 ( SC). ITA NO.778/JP/14 M/S DHABRIYA AGGLLOMERATES PVT. LD. VS. ACIT(TDS), JAIPUR 4 BESIDES THE ABOVE LEASE DOCUMENT HAS USED THE 'DEVE LOPMENT CHARGES' AND 'ECONOMIC RENT' TO BE PAYABLE BY THE ASSESSEE. AS THE DOCUMENT HAS USED TWO DIFFERENT PHRASES TO CONNOTE DIFFERENT OBL IGATION THEREFORE IN OUR VIEW DEVELOPMENT CHARGES CANNOT BE READ AS REN T WITHIN THE PURVIEW OF THE SECTION 194 I. FURTHER LEASE DOCUMENT HAS P ROVIDED THE CONSEQUENCES OF NON-PAYMENT OF THE DEVELOPMENT CHAR GES BY THE ASSESSEE, IF THE ASSESSEE FAILED TO PAY THE DEVELOP MENT CHARGES, AS MENTIONED IN THE AGREEMENT, THE POSSESSION WAS LIAB LE TO BE TAKEN OVER BY THE RIICO, THEREFORE THE DEVELOPMENT CHARGES CAN NOT BE CONSIDERED AS RENT. 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL ON RECORD. IT IS NOTED THAT THE DECISION OF THE COORD INATE BENCH IN CASE OF FOXCONN INDIA (SUPRA) HAS BEEN REVERSED BY THE HON BLE CHENNAI HIGH COURT 135 DTR 185. FURTHER, THE DECISION OF HONBLE KARN ATAKA HIGH COURT IN CIT VS. HMT LTD. 203 ITR 820 (KAR) WAS RENDERED IN THE CONT EXT OF WHETHER THE LEASE PREMIUM IS IN NATURE OF CAPITAL OR REVENUE EXPENDIT URE. EVEN IF THE LATTER DECISION IN CASE OF HMT IS CONSIDERED AS APPLICABLE IN THE CONTEXT OF SECTION 194-I, IN VIEW OF DECISION OF HONBLE SUPREME COURT IN CASE OF INDIAN VEGETABLE PRODUCTS, WE SHALL BE INCLINED TO FOLLOW THE VIEW O F THE HONBLE CHENNAI HIGH COURT. IN LIGHT OF ABOVE DISCUSSIONS AND GIVEN THE SIMILARITY OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE'S CASE WITH OUR EARLI ER DECISION (SUPRA), WE SEE NO REASON TO DEVIATE FROM OUR EARLIER VIEW. THE PR OVISIONS OF SECTION 194-I ARE THEREFORE HELD NOT APPLICABLE ON PAYMENT MADE TO RI ICO TOWARDS PURCHASE OF LEASEHOLD LAND. THE AO IS DIRECTED TO DELETE THE LE VY OF INTEREST OF RS. 2,96,304/- U/S 201(1A) OF THE ACT. ITA NO.778/JP/14 M/S DHABRIYA AGGLLOMERATES PVT. LD. VS. ACIT(TDS), JAIPUR 5 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 /0 7/2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 21/07 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S DHABRIYA AGGLLOMERATES PVT. LTD . 2. IZR;FKHZ@ THE RESPONDENT- ACIT(TDS), JAIPUR 3. VK;DJ VK;QDR@ CIT TDS, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-III, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.778 /JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR