The Tax Publishers2020 TaxPub(DT) 4670 (Mad-HC) : (2020) 429 ITR 0562 : (2021) 277 TAXMAN 0457

INCOME TAX ACT, 1961

Section 194-I

Since all the rights, easements and appurtenances in respect of land were in effect transferred to lessee for 99 years and since there was no provision in lease agreement for adjustment of lump sum lease premium or one-time upfront lease charges against periodic rent, premium paid or payable amount paid by assessee was a capital expense not requiring deduction of tax under section 194-I.

Tax deduction at source - Under section 194-I - Lump sum payment made for getting long-term lease -

Question arose for consideration was whether one-time lump sum premium paid by assessee for getting 99 years lease of land from certain Government Undertaking was a payment in the nature of rental liable for TDS under section 194-I.Held: Since all the rights, easements and appurtenances in respect of land were in effect transferred to lessee for 99 years and since there was no provision in lease agreement for adjustment of lump sum lease premium or one-time upfront lease charges against periodic rent, premium paid or payable amount paid by assessee was a capital expense not requiring deduction of tax under section 194-I.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10



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