| Question And Answer | |
|---|---|
| Subject: | Applicable of section 194i on lease property |
| Category: | Income-Tax |
| Querist: | AMIYA KUMAR Sahoo |
| Answered by: | Law Intern |
| Tags: | Circular No. 35/2016, Section 194-I |
| Date: | October 13, 2025 |
I have taken a land from Cuttack development authority for 99 years lease now the income tax department asking why 194 i will not be applied. kindly justify the same
It can be argued that the one-time lease premium paid for the 99 years lease is not “rent” as it is a payment for acquiring the property and is not for “use” of the property.
In Foxconn India Developer (P) Ltd. v. ITO, the Madras High Court held that a one-time, non-refundable upfront payment (premium or salami) for the acquisition of long-term leasehold rights (99 years) over a property is not “rent” under Section 194-I and does not require deduction of TDS.
The CBDT has vide Circular No. 35/2016 accepted the Madras High Court’s ruling.
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