17 April 2011
XYZ Co.Ltd. acquired Plot of Land in response to Tender from CIDCO Ltd., corporation established by Maharashtra State Government for Development of Surroung Area of Mumbai for which said Corporation has executed Lease Agreement at time of allotment oF Plot of Land for the period of 60 years and Our client has paid Lease premium to said corporation. Lease Rent for said lease tenure is Rs. 1 per annum.Client has not deducted TDS on said Lease premiunm. AO (TDS) issued notice saying that Client has defaulted in Section 194I for non Deduction ? Query: Any case law/Circular to support non Deduction
18 April 2011
There are two aspects- One Re. 1/- PA lease premium is below threshold limit to attract TDS u/s 194I of Income Tax Act. Secondly, Lease Rents are covered u/s 194I, not Lease Premiums. I trust you should look for NOTIFICATIONS exempting CIDCO Ltd., which is a Sate Govt undertaking from TDS provisions.
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