The Division bench of Delhi Income Tax Appellate Tribunal (ITAT) has recently held that 10 percent Tax Deduction at Source would not applicable on common area maintenance charges.
Assesee Paramount Restaurants Pvt. Ltd filed the appeal before the tribunal against the order of the first appellate authority CIT (A) against the assessment order passed under section 201(1A) of the Income Tax Act 1961.
While considering the matter no one is appeared for the assesee .
Yogesh Nayyar, counsel appeared for the revenue submitted that, the CIT (A) consider that that there was no separate agreement between the assessee, the landlord and service provider for common maintenance. Further submitted that copies of invoices submitted indicate that, charges were being paid to associate company of the landlord and the invoices show that high proportion of common maintenance charges were paid in a manner to bifurcate rental.
The tribunal of N. K. Billaiya, Accountant Member and Anubhav Sharma, Judicial Member observed that, Tax Authorities below have primarily considered the provisions of explanation (i) of section 194 of the Income Tax Act to conclude that any payment made to the landlord, other than under the head rent, falls into the category of rent.
Further the bench found that Tax Authorities below have fallen in error in holding that the assessee was required to pay TDS at 10% towards the common area maintenance charges.
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