HON BLE SRI JUSTICE L. NARASIMHA REDDY AND HON BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A No. 219 OF 2003 17-09-2014 BETWEEN M/s. Ashish Silk Mills (P) Limited, 21-1-61/2, Rikabgunj, Hyderabad, represented by its Managing Director, Mr. Raj Kumar, S/o. Sri Gopichand, Aged about 50 years Appellant And Income Tax Officer (TDS), Ward 5(6), Hyderabad ..Respondent HON BLE SRI JUSTICE L. NARASIMHA REDDY AND HON BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A No. 219 OF 2003 JUDGMENT: (per Hon'ble Sri Justice L. Narasimha Reddy) This appeal is preferred by assessee against order dated 27-02-2003 passed by Hyderabad Bench of Income Tax Appellate Tribunal (for short, Tribunal ) in ITA No. 752/Hyd/1998. Briefly stated, facts are that appellant is company undertaking activity in textiles. It took premises on lease at rent of Rs.1,50,000/- per month. As provided for under lease deed, it paid advance rent for period of six months, aggregating to Rs.9,00,000/-. In returns submitted for assessment year 1997-98, no mention was made about deduction of tax at source, on amount of Rs.9,00,000/-, as provided for under Section 194-I of Income Tax Act, 1961 (for short, Act ). Therefore, proceedings under Section 201 of Act were initiated. defence pleaded by appellant was that amount of Rs.9,00,000/- was paid as deposit and since it is not towards rent, there was no occasion to effect deduction of tax at source. That plea was not accepted and through order dated 10-02-1997, assessing officer held that appellant is liable to pay tax as well as interest thereon. application filed for rectification under Section 154 of Act was rejected. Thereupon appellant filed appeal before Commissioner of Income Tax (Appeals) and that was rejected on 12-08-1998. Hence, it filed ITA No. 752/Hyd/1998, which in turn, was also dismissed. Heard Sri S. Ravi, learned Senior Counsel for appellant and Sri S.R. Ashok, learned Senior Counsel for respondent. It is matter of record that appellant took some premises on lease at rent of Rs.1,50,000/- per month. It is not in dispute that it paid sum of Rs.9,00,000/- in lumpsum to lessor. Though amount is called as deposit, it ultimately represented advance rent for period of six months. Once it has partaken character of rent, appellant was under obligation to effect deduction of tax at source. That having not been done, it has exposed itself not only to liability to pay corresponding tax but also interest. There may be some possibility for lessee to plead that advance paid at commencement of lease is refundable at conclusion and in such event, deduction of tax at source may not be effected. In instant case, that possibility does not exist on account of fact that lease itself was terminated within short time and amount of Rs.9,00,000/- was adjusted towards rent. Viewed from any angle, there is no way that appellant could have avoided its liability under Section 201 of Act. All authorities held against appellant and we do not find any basis to take different view. appeal is accordingly dismissed. There shall be no order as to costs. ____ L. NARASIMHA REDDY, J ___ CHALLA KODANDA RAM, J 17-09-2014 ks Ashish Silk Mills (P) Limited v. Income-tax Officer (TDS), Ward-5(6), Hyderabad