DCIT Vs Mahagun (India) Pvt Ltd (ITAT Delhi)
No Section 201 Default for Pre-2017 Lease Rent Paid to Greater NOIDA Authority: Delhi ITAT
The assessee, a real-estate developer, obtained land on lease from the Greater NOIDA Industrial Development Authority (GNOIDA). During FY 2012-13, it paid ₹1.50 crore as annual lease rent without deducting tax under section 194-I.
The AO treated the assessee as an assessee in default and raised a demand of ₹2,77,500, comprising tax of ₹1,50,000 under section 201(1) and interest of ₹1,27,500 under section 201(1A).
The assessee relied upon GNOIDA’s 2014 communication stating that lease payments to it were not liable to TDS, the subsequent exemption notification under section 10(46) and the Delhi High Court ruling in Rajesh Projects (India) Pvt. Ltd. v. CIT.
The ITAT observed that the Delhi High Court had directed GNOIDA to discharge the TDS liability and held that lease-rent payments would be subject to TDS prospectively. The Supreme Court had upheld that decision. Therefore, the ruling could not be applied retrospectively to treat the assessee as being in default for FY 2012-13.
The Tribunal also noted that the assessee had acted under a bona fide belief that no TDS was required, and an identical issue had already been decided in its favour for the preceding assessment year.
Accordingly, deletion of the tax and interest demands under sections 201(1) and 201(1A) was upheld, and the Revenue’s appeal was dismissed.
List of Cases Discussed / Relied Upon
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is directed against the impugned order dated 11.09.2025 passed in appeal No CIT(A), Delhi-26/10051/2012- 13 by the ld. Commissioner of Income Tax(Appeals), Delhi (hereinafter referred to as the “CIT(A) u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2013-14, wherein ld CIT(A) has allowed assessee’s appeal and deleted the addition made u/s 201(1) r.w.s 194I and 201(1A) r.w.s 194I(b) of the Act.
2. The brief facts of the case are that the appellant assessee, is engaged in the business of real estate and entered into a lease agreement with Greater NOIDA Industrial Development Authority (GNOIDA) on 24.11.2010 to develop and market the project on demarcated plot no. GH-04, Sec-16C, Greater NOIDA measuring 241570 sq.mtr for a total consideration of Rs. 279,27,90,770/- subject to payment of lease rent of Rs. 2,79,27,908/- of total premium in advance on year to year basis. During the year under consideration, the appellant assessee paid a sum of Rs. 1,50,00,000/- towards lease rent on 29.03.2013 to GNOIDA. However, the appellant did not deduct TDS, which led the assessing officer to work out a tax liability of Rs. 2,77,500/- (1,50,000/- for default in deducting TDS u/s 201(1) and Rs. 1,27,500/- as interest u/s 201(1A) of the Act), vide assessment order dated 19.03.2020 passed u/s 201(1) and 201(1A) of the Act.
3. Aggrieved, assessee preferred an appeal before ld CIT(A), with the submission that NOIDA Authority, vide letter dated 24.07.2014, addressed to the assessee duly explained that lease payments made to the authority were not subject to TDS. This apart, appellant also relied on a CBDT notification no. 33/2020 dated 23.06.2020, which exempted the income of Greater NOIDA u/s 10(46) of the Act. The appellant referred the order dated 04.09.2024 passed by the ‘E’ bench of ITAT Delhi in ITA NO. 1899/Del/2022 for A.Y. 2012-13 passed in appellant’s own case, wherein, the tribunal decided the identical issue in assessee’s favour. Ld CIT(A) after considering assessee’s evidence/submissions on record, held that the appellant cannot be treated as an assessee in default in terms of ratio laid down in Rajesh Projects (India) (P) Ltd. v. CIT(2017) (2) TMI 1109 decided by the Division Bench of the Hon’ble Delhi High Court and allowed assessee’s appeal and deleted the aforesaid additions.
4. Aggrieved, revenue has preferred this second appeal on the following grounds:.
“1) Whether on the given facts and circumstances of the case, the Ld. CIT(A) erred in deleting the demand, even after agreeing to the fact that TDS was liable to be deducted and deposited, without establishing any infirmity with the order.
2) Whether on the given facts and circumstances of the case, the Ld. CIT(A) erred in appreciating that Hon’ble Delhi High Court in the case of Rajesh Projects (India) Pvt. Ltd. vs CIT (TDS II) & Ors has clearly specified that payment towards lease rent was to be treated as ‘rent’ and thus was liable to attract provisions of section 194I and therefore did not invalidate the liability raised under Section 201 for the F.Y. 2012-13, but only directed the income tax authorities to not pursue any coercive proceedings.
3) Whether on the given facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that without sufficient documentary evidence that GNOIDA has paid the TDS liability arising out of the non-deduction of TDS on payments of lease rent under section 194I, the demands created vide order under section 201 dated 19.03.2020 cannot be automatically deleted.
4) The Appellant herein craves its right to alter, amend, add/or withdraw any grounds of appeal and/or to take any additional grounds of appeal.”
5. Perused the records. Heard ld Sr DR for the appellant revenue. None responded for the respondent assessee.
6. The main point for determination under appeal is as to whether the respondent assessee would still be treated as assessee in default for non deduction of TDS on lease rent of Rs. 1,50,00,000/- paid to the Greater NOIDA Authorities, despite the fact that GNOIDA authority made such payments of TDS in compliance of Delhi High Court order dated 04.09.2024 passed in Rajesh Projects India (Pvt) Ltd (supra)?
7. In an identical fact situation, the Delhi ‘E’ bench of ITAT Delhi, vide order dated 04.09.2024 passed in ITA No. 1899/Del/2022(A.Y. 2012-13) held as under:
“9. On appraisal of the factual matrix and the position of law, we find considerable force in the plea raised on behalf of the Assessee. The assessee has successfully demonstrated the existence of bona fide belief. This demonstration on standalone basis enables us to exonerate the assessee from the clutches of Section 201(1) and 201(1A) of the Act. We however further find that the operation of the judgment in Rajesh Projects (supra) have been made prospective as mentioned in paragraph 20 of the judgment. The cause of action under Section 201(1)/201(1A) in pursuance of the judgment of the Hon’ble Delhi High Court is thus not available to the Revenue for A.Y. 2012-13 in question. We also find that in the identical factual matrix, the Co-ordinate Bench in ITA No.997/Del/2020 order dated 15.12.2023 has granted relief similar to what is claimed in the present case. Thus, we have no hesitation to set aside the first appellate order and quash the impugned order dated 29.03.2019 passed under Section 201(1) and 201(1A) of the Act under challenge.”
8. We notice that Hon’ble Delhi High Court in Rajesh Projects (supra) in para 20 of its order dated 16.02.2017 directed GNOIDA authority to make payments of said TDS and directed that henceforth (prospective) such payments (lease rent) shall be subject to TDS. Hon’ble Supreme Court, vide order dated 02.07.2018 passed in M/s New Okhla Industrial Development Authority v. CIT, reported in AIR onLine 2018 SC 1159 has upheld the Delhi High Court order dated 16.02.2017 passed in Rajesh Projects India (Pvt) Ltd (supra). The coordinate ‘E” bench of ITAT Delhi in assessee’s own case has granted relief similar to what has been claimed in case in hand. Ld CIT(A) has also followed Delhi High Court decision in Rajesh Projects(supra) and has passed the impugned order in accordance with the ratio laid down therein, thus, rightly deleted the basic tax of Rs. 1,50,000/- u/s 201(1) and interest liability of Rs. 1,27,500/- u/s 201(1A) of the Act. The impugned order is accordingly sustainable. The aforesaid point is accordingly decided in negative against the revenue and in favour of the assessee.
9. In the result, the revenue’s appeal is dismissed.
Order pronounced in the Open Court on- 18.08.2026
