The Income Tax Appellate Tribunal (ITAT), Delhi bench held that Common Maintenance Charges (CAM) which are contractual payments made for availing services are subject to Tax Deduction at Source (TDS) u/s 194 C of the Income Tax Act,1961.
The appellant alleged that the Assessing Officer (AO) wrongly held that the claim of CAM was in nature of rent liable for TDS @ 10% u/s 194-I of the Income Tax Act, 1961 (the Act) and held that the default committed by the assessee u/s 201(1) of the Act was liable for payment of tax and interest since there was a short deduction of TDS.
The assessee contended that the AO wrongly applied the provisions of Section 194-I read with sections 201(1) and 201(1A) of the Act, as per Section 201(1), the assessee cannot be deemed to be in default in respect of short deduction of TDS, since the same, representing common maintenance charges, has already been taken and declared as income and tax has been paid thereon by the recipients of CAM charges.
The respondent stated that CAM expenses were duly covered u/s 194I of the Act and the assessee was rightly treated as an assessee in default within the meaning of Section 201(1) of the Act for failing to appropriately deduct tax on payment as per provisions of the Act.
It was viewed that the payment towards CAM charges was like contractual payment which was made for availing services/ facilities and not for the use of any premises/ equipment, and would be subject to deduction of tax at source u/s 194C of the Act.
Shri Chandra Mohan Garg, judicial member set aside the order of the AO as well as that of CIT(A) treating the assessee company as an assessee in default u/s 201(1) of the Act and held that “as claimed by the assessee the TDS on CAM charges paid by it is liable for deduction of tax at source @ 2% u/s 194C of the Act.”
Sh. A.K. Srivastava appeared for the appellant and Sh. Om Prakash appeared for the respondent.
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