IN THE HIGH COURT OF DELHI AT NEW DELHI 
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   ITA 324/2013  
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 COMMISSIONER OF INCOME TAX: DELHI-V 
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 ..... Appellant 
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 Through:  Mr.Abhishek Maratha, Adv. 
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 versus 
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 RESULT SERVICES PVT. LTD.   ..... Respondent 
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 Through:  Mr.C.S.Chauhan, Advocate 
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 CORAM: 
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 HON'BLE MR. JUSTICE SANJIV KHANNA 
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 HON'BLE MR. JUSTICE SANJEEV SACHDEVA 
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 O R D E R 
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     02.08.2013 
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 1. This appeal by the revenue which relates to the assessment year 2008- 
 09 challenges the finding recorded by the Tribunal in their order dated 
 28.6.2012.  The Tribunal in the impugned order has held that Section 194I 
 of the Income Tax Act was not applicable to the facts of the present 
 case, as the payment was not rent. 
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 2. Learned counsel for the appellant submits that rent would mean and 
 include any payment by whatever name called be it under a lease, sub- 
 lease, tenancy or any other agreement or arrangement for the use of land, 
 building etc.  whether or not the land, building etc. owned by the payee. 
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 3. It is an undisputed and accepted position that the respondent-assessee 
 is 100% subsidiary to M/s McCann?Erickson (India) Pvt. Ltd.  The premises 
 on rent were taken on lease by M/s McCann?Erickson (India) Pvt. Ltd. The 
 Tribunal has referred to various clauses of the lease deed under which 
 M/s McCann?Erickson (India) Pvt. Ltd. was barred from subletting, give on 
 lease or licence, the premises or any portion thereof to any other party. 
 No third party was allowed to use and occupy the said licenced premises 
 except subsidiaries, affiliates, group entities, associates, etc. 
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 Tribunal has recorded that M/s McCann?Erickson (India) Pvt. Ltd. was deducting tax at source on payment made to the landlord. This position is 
 accepted and undisputed. 
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 4. Payment of money by the respondent-assessee to M/s McCann?Erickson 
 (India) Pvt. Ltd. is an internal understanding between them to share the 
 burden of rent.  The amount once collected or reimbursed was for payment 
 to the landlord by M/s. McCann-Erickson (India) Pvt. Ltd. M/s 
 McCann?Erickson (India) Pvt. Ltd. had deducted tax at source when payment 
 was made to the landlord.  The inter se relationship between M/s 
 McCann?Erickson (India) Pvt. Ltd. and the respondent-assessee is not that 
 of a landlord and tenant and the payment received, adjusted or 
 contributed inter se, despite the vide definition of the term rent cannot 
 be treated as ?rent? as defined in the Explanation (1).  The intent and 
 purpose was to ensure that the money was collected or reimbursed and the 
 tenant i.e. M/s McCann?Erickson (India) Pvt. Ltd. makes a payment of rent 
 to the landlord but without being burdened and with the subsidiary 
 bearing its share.  Reimbursement or payment made by the respondent 
 assessee was towards their share or proportion.  This was to ensure that 
 M/s McCann?Erickson (India) Pvt. Ltd. paid ?rent? to the landlord. 
 Intention, nature and purpose of the ?transaction? between the respondent 
 assessee and its holding company has to be understood and given due 
 credence.   We have to take a pragmatic and practical approach and not be 
 pedantic.  The purpose behind the wide definition of term ?rent? is to 
 prevent ?subterfuge? to avoid deduction of tax at source. 
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 5. The assessing officer had invoked Section 40(a)(ia) of the Act and had 
 disallowed the entire payment made by the respondent-assessee of 
 Rs.56,23,456/- as expenditure.  Such payments have been made since 1994, 
 and no objection or question of deduction of tax was raised earlier at 
 any point of time. 
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 6. We do not think, therefore, the order of the Tribunal requires any 
 interference.  The appeal is, accordingly, dismissed. There will be no 
 orders as to costs. 
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 SANJIV KHANNA, J. 
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 SANJEEV SACHDEVA, J. 
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 AUGUST 02, 2013 
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 sv 
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 $ 2 
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