No TDS for long-term property lease premium, rules Mumbai’s Income-tax Appellate Tribunal

home-tax-thinkstockBoI paid MMRDA the lease premium and additional premium for FSI (floor space index) along with interest and fee for delay in the construction of the corporate building.

The I-T Department had claimed that such lump-sum one-time payments can be considered as rent under Section 194-I of the I-T Act, and that TDS was applicable. Tax officials claimed TDS at the rate of 20 per cent from BoI for the payment of ‘lease premium’ to MMRDA.

The ITAT has, however, ruled that such payments cannot be equated to rent, and therefore would not attract TDS.

Section 194-I provides for TDS from payment of any income by way of rent. I-T officials often took refuge in the definition of ‘rent’ under the Act that covers a wide range of payments, despite there being circulars from the Central Board of Direct Taxes to the contrary.

A large number of corporates in BKC — including Reliance Industries — have taken long-term leases from MMRDA.

The recent ITAT ruling is likely to aid several of them, experts say.





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