S. 194I : Deduction at source-Rent-Alternative accommodation-Transit rent -Developer or Builder-Development agreement-Hardship Allowance / Rehabilitation Allowance / Displacement Allowance-Not revenue receipt-Not liable to tax-Not liable to deduct tax at source. [S. 4, Art. 226]
On a writ the issue before the Court was as to whether there should be deduction of TDS on the amount payable to Petitioner as “Transit Rent”, by the developer / builder?. The Honourable Court held that the ordinary meaning of Rent would be an amount which the Tenant / Licensee pays to the Landlord / Licensor. In the present proceedings the term used is “Transit Rent”, which is commonly referred as Hardship Allowance / Rehabilitation Allowance / Displacement Allowance, which is paid by the Developer / Landlord the tenant who suffers hardship due to dispossession hence the ‘Transit Rent’ is not to be considered as revenue receipt and is not liable to be tax, as a result there will be no question of deduction of TDS. from the amount payable by the Developer to the tenant. Referred the Judgements of the Tribunal in Delilah Raj Mansukhani (Smt.) ITA No. 3526/MUM/2017 dt. 29-1-2021 (AY. 2010-2011), Ajay Parasmal Kothari in ITA No. 2823/MUM/dt. 3-4-2023 (AY 2013-2014) (2024) 159 taxmann.com 570 (SMC) (Mum)(Trib.) (WP No. 2054 of 2024 dt. 15-4-2024)
Sarfaraz S. Furniturewalla v. Afshan Sharfali Ashok Kumar & Ors. (Bom)(HC) www.itatonline.org
Editorial : Refer, Narayan Devarajan Iyengar v. ITO [ (2023) 201 ITD 503 (Mum)( Trib)]
(Coram : Hon’ble Shri Justice Rajesh S. Patil)