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November 2024

TDS — Rent — Transit rent — Payment made by developer or landlord to a tenant who suffered hardship due to dispossession — Transit rent not taxable as revenue receipt — No liability to deduct tax at source.

By Keshav Bhujle | Ritu Punjabi, Advocates
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59. Sarfaraz S. Furniturewalla vs. AfshanSharfali Ashok Kumar

[2024] 467 ITR 293(Bom):

Date of order 15th April, 2024:

S.194-Iof the ITA 1961

TDS — Rent — Transit rent — Payment made by developer or landlord to a tenant who suffered hardship due to dispossession — Transit rent not taxable as revenue receipt — No liability to deduct tax at source.

On the question of whether there should be a deduction of tax at source u/s. 194-I of the Income-tax Act, 1961 on the amount paid by the assessee as “transit rent”, by the developer or builder, the Bombay High Court held as under:

“The ordinary meaning of rent would be an amount which the tenant or licensee pays to the landlord or licensor. The “transit rent”, which was commonly referred to as hardship allowance rehabilitation allowance, or displacement allowance, which was paid by the developer or landlord to the tenan

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