Nagarjuna Oil Corporation Ltd. v. Asstt. CIT [TCA Nos. 60 to 62 of 2017, dt. 16-10-2020] : 2020 TaxPub(DT) 4670 (Mad-HC)

Lump-sum payment to secure lease of land rights whether TDS obligations arise under section 194-I on the same as "rent"?

Facts:

Assessee paid lump-sum payment to SIPCOT to secure land lease for 99 years. Revenue contested that they ought to have done TDS on the same under section 194-I allegedly holding it as rent disallowed the spend and upholding them to be in default for non-deduction of TDS under section 201(1)/201(1A). On higher appeal ITAT dismissed the appeal of the assessee. Aggrieved assessee appealed to the High Court.

Held in favour of the assessee that lump-sum payment to secure long-term land lease does not tantamount to rent and thus does not warrant deduction of TDS under section 194-I.

Affirmed:

Foxconn India Developer (P.) Ltd. v. Income Tax Officer, TDS, Ward-II(3), Chennai, (2016) 68 taxmann.com 95 (Madras) : 2016 TaxPub(DT) 1877 (Mad-HC)

CBDT Circular No. 35/2016 [F.No. 275/29/2015-IT (B)], dated 13-10-2016 also confirms the same.