Case Details
Court: Delhi High Court
Date of ITAT Order Appealed: 27 February 2025
Appeal Numbers: ITA No. 5062/Del/2024 & ITA No. 5063/Del/2024 (before ITAT)
Assessment Years: AY 2011–12 & AY 2015–16
Type of Appeal: Revenue’s appeal under Section 260A of the Income Tax Act, 1961, against ITAT’s decision
Facts of the Case
The Assessee had taken premises on lease and also paid Common Area Maintenance (CAM) charges to the landlord/mall management.
The Assessee deducted TDS at 2% under Section 194C (payments under a contract) on CAM charges.
The Assessing Officer (AO) treated CAM charges as part of rent, attracting TDS at 10% under Section 194I (rent) and declared the Assessee as assessee-in-default under Section 201(1) for short deduction of TDS.
The CIT(A) upheld the AO’s view.
On appeal, the ITAT examined whether CAM charges should be taxed under Section 194I or Section 194C.
Revenue argued that CAM charges and rent were part of a composite agreement, citing Sunil Kumar Gupta (P&H HC).
The Assessee relied on earlier ITAT decisions (Connaught Plaza Restaurants, Kapoor Watch Company) and departmental precedents involving Ambience Group cases, where CAM charges were held to be service payments taxable under 194C.
ITAT’s Findings / Holding
Nature of CAM Charges: These are contractual payments for services/facilities such as cleanliness, maintenance, utilities etc., and not for the use of premises or equipment.
Separation from Rent: CAM charges are separate from rental payments and cannot be construed as “rent” under Section 194I.
Applicable TDS Provision: CAM charges fall under the scope of “work” under Section 194C and are subject to 2% TDS.
Precedents Relied On: Kapoor Watch Company Pvt. Ltd. v. ACIT and similar tribunal rulings where CAM charges were distinguished from rent.
Outcome: Orders of AO and CIT(A) set aside; appeals allowed in favour of Assessee; Assessee not in default u/s 201(1).
High Court’s Decision
Key Reference: CIT (TDS)-1, Delhi v. Liberty Retail Revolutions Ltd. and similar rulings of the Court, including dismissal of Revenue’s appeals in CIT-TDS-01 v. Bose Corporation India Pvt. Ltd.
Position of Law Affirmed:
CAM charges are maintenance expenses for common facilities, shared by tenants, and cannot be treated as rent.
Covered under Section 194C (contract payments), not under Section 194I (rent).
Conclusion: No substantial question of law arises; appeals of Revenue dismissed.
✅ Final Outcome: Revenue’s appeals dismissed; Assessee’s position upheld — CAM charges taxable under Section 194C @ 2% TDS, not under Section 194I @ 10%.