Income Tax Officer (TDS) v Navi Mumbai Sez Pvt Ltd,
TDS — Lease premium — Acquisition of leasehold rights for a period of 60 years — Applicability of Section 194-I — Assessee paid lease premium to CIDCO in order to acquire various lands lying at Navi Mumbai from CIDCO on lease basis from time to time under development agreement for a period of 60 years — Assessee was authorised to develop and market and dispose off residential and commercial spaces
subject to terms and conditions — Assessee had not deducted TDS on payment made to CIDCO towards lease premium — AO held payment made by assessee under lease agreements qualifies for rent for purpose of section 194-I as it partakes all characteristics of rent and assessee was liable to deduct TDS u/s 194-I — Demand was raised by AO u/s 201(1) /201(1A) — CIT(A) held that assessee was not required to deduct tax at source u/s 194-I and demand raised by AO by invoking provisions of sections 201(1)/201(1A) was deleted — Held, lease deed(s) and Development Agreement had assigned to assessee leasehold right which includes bundle of rights — Assessee paid lease premium for acquisition of leasehold land and not merely for use of land — There was transfer of substantive interest of lessor for leasehold land in favour of assessee — There was conferment of right on lessee by acquiring leasehold land and premium had been paid in lieu thereof and not for purpose of use of land — Lease premium paid by assessee to CIDCO for acquiring leasehold land under lease deed(s) entered into, although with restrictive covenants was capital expenditure to acquire capital asset and not for use of land — Thus lease premium paid by assessee for acquiring leasehold land with a right to develop and market, NMSEZ, cannot be said to be an advance payment of rent — Lease premium does not fall within ambit of rent u/s 194-I — Impugned order upheld.
TDS — Lease premium — Acquisition of leasehold rights for a period of 60 years — Applicability of Section 194-I — Assessee paid lease premium to CIDCO in order to acquire various lands lying at Navi Mumbai from CIDCO on lease basis from time to time under development agreement for a period of 60 years — Assessee was authorised to develop and market and dispose off residential and commercial spaces
subject to terms and conditions — Assessee had not deducted TDS on payment made to CIDCO towards lease premium — AO held payment made by assessee under lease agreements qualifies for rent for purpose of section 194-I as it partakes all characteristics of rent and assessee was liable to deduct TDS u/s 194-I — Demand was raised by AO u/s 201(1) /201(1A) — CIT(A) held that assessee was not required to deduct tax at source u/s 194-I and demand raised by AO by invoking provisions of sections 201(1)/201(1A) was deleted — Held, lease deed(s) and Development Agreement had assigned to assessee leasehold right which includes bundle of rights — Assessee paid lease premium for acquisition of leasehold land and not merely for use of land — There was transfer of substantive interest of lessor for leasehold land in favour of assessee — There was conferment of right on lessee by acquiring leasehold land and premium had been paid in lieu thereof and not for purpose of use of land — Lease premium paid by assessee to CIDCO for acquiring leasehold land under lease deed(s) entered into, although with restrictive covenants was capital expenditure to acquire capital asset and not for use of land — Thus lease premium paid by assessee for acquiring leasehold land with a right to develop and market, NMSEZ, cannot be said to be an advance payment of rent — Lease premium does not fall within ambit of rent u/s 194-I — Impugned order upheld.
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