ITO (TDS) V. NAVI MUMBAI SEZ (P.) LTD (2013) 38 taxmann 218 (Mumbai - Trib.) FACT: - The assessee entered into lease agreements for a period of 60 years with CIDCO for acquisition of leasehold rights in the land to develop and operate a SEZ and make the payment to CIDCO. The assessing officer held that lease premium fall under rent with meaning of 194-I. Since assessee did not deduct Tax at source while making the said payment so assessee shall be treated as default. Considering the following:- When the interest of the lessor is parted with for a price, the price paid is called lease premium or salami. But the periodical payments made for the continuous enjoyment of the benefit under the lease are in the nature of rent; In the above case, there was transfer of substantive interest of lessor for the leasehold land in favour of the assessee. Here it is confirmed that the assessee acquiring leasehold land and the premium has been paid in lieu thereof and not for the purpose of use of land; Therefore the premium paid by the assessee for acquiring leasehold land does not fall within the ambit of rent under section 194-I. Thus, the CIT (A) had rightly held that the provisions of section 194-I were not attracted in respect of lease premium paid by the assessee. Thus, tribunal held in the favour of assessee.
Posted on: Wed, 20 Nov 2013 15:15:36 +0000
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