LEASE PREMIUM FOR LAND FROM CIDCO/MMRDA

[CA.BHUPENDRASHAH]

WHETHER LIABLE TO TDS U/S 194-I AFTER THIS SECTION IS AMENDED ?

[ashutosh majumdar]

WHETHER LIABLE TO TDS U/S 194-I AFTER THIS SECTION IS AMENDED ?

S. 194-I applies to the payment of "rent". The term "rent" is defined in the Explanation to s. 194-I as follows:

“rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,—

        (a) land; or

        (b) building (including factory building); or

        (c) land appurtenant to a building (including factory building); or

        (d) machinery; or

        (e) plant; or

         (f) equipment; or

        (g) furniture; or

        (h) fittings,

whether or not any or all of the above are owned by the payee.

So the question is whether the premium paid to MMRDA is "payment for use of land & building". In my opinion, it is so. Why else are you making the payment?

[vsaiyar]

ONCE IT IS ACCEPTED THAT WHAT ONE PAID IS PREMIUM, THAT IS A CAPITAL PAYMENT FOR OBTAINING THE LEASE.  ONE MAY NOTICE THAT IN THE ASSIGNMENT OF LEASE, A SMALL SUM MAY BE MENTIONED AS ANNUAL LEASE RENT.

[vsaiyar]

Apart from what is stated by me earlier you may refer to sec.196.  Since the income of MMRDA and CIDCO etc. is not taxable under sec.10 no tax is deductible.

[probal_shome]

Apart from what is stated by me earlier you may refer to sec.196.  Since the income of MMRDA and CIDCO etc. is not taxable under sec.10 no tax is deductible.

Sir, S. 196 reads as follows:

Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations.

196. Notwithstanding anything contained in the foregoing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to—

               (i)   the Government, or

             (ii)   the Reserve Bank of India, or

            (iii)   a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, or

            (iv)   a Mutual Fund specified under clause (23D) of section 10,

where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.]

For the section to apply, the corporation should be "exempt from income-tax". Sadly, MMRDA & CIDCO are not exempt.

Regards,

Probal.

[CA.BHUPENDRASHAH]

exemption enjoyed by CIDCO was withdrawn
by the Finance Act, 2002, with effect from the assessment year
2003-04,