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.
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