K. Raheja Corporate Services P.Ltd, ... vs Department Of Income Tax

Assessee by : Shri J.D. Mistri, A.R. Revenue by : Shri Rudolph N. D'Souza, D.R.

Date of Hearing : 01.12.2014 Date of Pronouncement : 04.02.2015

ORDER

Per Sanjay Garg, Judicial Member:

The above titled appeal preferred by the Revenue relevant to assessment year 2010-11 is directed against the order of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] dated 26.07.2012.

2. The Revenue has taken as many as 14 grounds with various sub- grounds. However, from the grounds, we find that the effective issue involved in the appeal is relating to non-deduction of TDS under section 201(1)/201(1A), on the ground that the assessee has not complied with the provisions of section 194-I. 2 ITA No.5807/M/2012 M/s. K. Raheja Corporate Services P. Ltd.

3. The brief facts of the case are that the assessee company is engaged in the business of real estate development and leasing. A survey operation under section 133A of the I.T. Act was carried out by Addl. CIT (TDS) in the case of Mumbai Metropolitan Regional Development Authority (MMRDA) on 09.02.2011 to ascertain the TDS compliance of MMRDA. During the survey it was found that the assessee had made payment amounting to Rs.3,58,39,905/- on 24.12.2009 and Rs.7,28,87,534/- on 31.12.2009- towards lease premium and fees for additional FSI to the MMRDA, in respect of the plot of land allotted to the assessee on long term lease basis for construction of building. Since, the assessee had not deducted and paid any tax under section 194-I in respect of the said payments made to MMRDA, the Assessing Officer (hereinafter referred to as the AO) issued notice u/s 201(1)/201(1A) requiring the assessee to furnish details/ explanations as to why no TDS has been deducted on such payments made to MMRDA. In response to the above show cause notice, the assessee submitted its explanation and details.

4. However, the AO was not satisfied with the reply given by the assessee, he, therefore, held that the payments made to the MMRDA were in the nature of rent and hence, the assessee was liable to deduct tax under section 194-I of the Act. Hence, orders under section 201(1)/201 (1A) of the Act had been passed by the AO, determining the liability u/s 201(1) at Rs.1,11,98,926/- and further interest thereupon u/s 201(1A) at Rs. 25,75,753/- totaling Rs.1,37,74,679/- on account of non-deduction of tax and interest on payment of lease premium and other fees made to MMRDA.

5. Aggrieved against the order of the AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after hearing the Ld. Representatives of the parties and in view of the detailed discussion made in his order, deleted the additions finally holding as under:

3 ITA No.5807/M/2012 M/s. K. Raheja Corporate Services P. Ltd.

"4.11 In the present case, the written submissions furnished by the appellant and the orders passed by the AO have been considered by me. It is seen that the facts in the case of the appellant are similar to the facts in the case of Shree Naman Developers Ltd and other cases cited in Para 4.6 above. Hence, it is evident that premium of Rs.10,87,27,439/- in respect of the leased plot, paid by the appellant for allotment of additional built up area and allotment of staircase, lift, lobbies etc. counted free of FSI is not in the nature of rent as contemplated u/s 194-I of the Act. It is thus also evident that the Appellant was not required to deduct tax at source u/s 194-I of the Income-tax Act, 1961. I hold accordingly. The demands of Rs.1,37,74,679/- raised by the AO by invoking the provisions of section 201(1)/201(1A) is deleted."

6. The Revenue has thus come in appeal before us.

7. At the outset, the Ld. A.R. of the assessee has submitted that the issue involved is squarely covered by the decision of the Tribunal in the case of "M/s. Starlight Systems Pvt. Ltd." wherein, the Tribunal has held that the lease premium paid to MMRDA, in the facts and circumstances of the case, does not fall within the ambit of rent under section 194-I and, hence, no TDS is required to be deducted. The relevant paragraph of the order dated 27.09.13 passed in ITA No.1794/M/2012 is extracted as under:

"6. Before us, the learned Departmental Representative strongly relied upon the order passed by the Assessing Officer and the learned Counsel for the assessee submitted that point in issue is squarely covered by the following decisions:-

(i) Shree Naman Hotels Pvt. & Shree Naman Developers Ltd., order dated 14.8.2013, ITA No. 688 to 691/Mum/2012.

(ii) M/s Wadhwa & Associates Realtors Pvt. Ltd, order dated 3.7.2013, ITA No. 695/Mum/2012

7. After carefully considering the rival submissions and the relevant findings of the learned Commissioner (Appeals), we find that this issue is covered by a series of decisions of the Tribunal, Mumbai Bench. Moreover, we have also decided identical issue against the Revenue following the aforesaid decisions, as relied upon by the learned Counsel in an appeal filed by the Revenue in Trent Limited, ITA no.1730/Mum./2012, vide order of even date. Consistent with the view taken by the Tribunal, we hold that such payment of premium on account of additional FSI cannot be treated as rent as stipulated under section 194-I and, hence, no TDS was required to be deducted. Consequently, interest under section 201(1)/201(1A) cannot be levied.

4 ITA No.5807/M/2012 M/s. K. Raheja Corporate Services P. Ltd.

8. In the result, Revenue's appeal is treated as dismissed."

8. From the above, we find that the Tribunal has taken the view in favour of assessee following the series of decisions of the Tribunal on this issue. The Ld. D.R. could not bring, before us, any new fact or case law which may justify departure from the view taken by the Tribunal in the above referred cases. Hence, respectfully following the decision on the issue given by the Tribunal in numerous cases, the issues under consideration is decided in favour of the assessee. The appeal of the Revenue is thus accordingly dismissed.

Order pronounced in the open court on 04.02.2015.

Sd/- Sd/- (R.C. Sharma) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 04.02.2015. * Kishore, Sr. P.S.

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [

By Order

Dy/Asstt. Registrar, ITAT, Mumbai.