The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Tax Deducted at Source ( TDS ) under Section 194 C of Income Tax 1961 was applicable on Common Area Maintenance ( CAM ) charges
The Assessing Officer ( AO ) had asserted that Tax Deducted at Source ( TDS ) should have been deducted at a rate of 10% as per the provisions of Section 194-I of the Income Tax Act 1961, this stance was based on the AO’s interpretation that Common Area Maintenance ( CAM ) charges should be considered a component of rent. Consequently, the assessee was instructed to remit Rs.53,89,724/-, in addition to being liable for interest amounting to Rs.42,34,477/-.
The counsel for the assessee Rakesh Gupta contended that, on an identical set of circumstances, this Tribunal had previously expunged a similar addition in the case of another tenant situated in the same mall. A copy of the order was provided as supporting evidence.
Counsel for the Respondent M. Dwivedi could not bring any distinguishing decision in favour of the revenue.
The two member bench of the tribunal comprising Anubhav Sharma ( Judicial member ) and N.k Billaiya ( Account member ) had ruled that payments were Common Area Maintenance ( CAM ) charges, not rent, emphasizing their independence from rental payments.
The bench had asserted CAM charges, being payments for maintenance services and not for land or building use, It had aligned with Kapoor Watch Company P. Ltd. vs. ACIT supporting 2% TDS under Section 194C of Income Tax Act 1961 for CAM charges.
Consequently, the bench had upheld a 2% tax deduction for the assessee’s CAM charges, overturning the Commissioner of Income Tax ( Appeals ) order, treating the assessee as an assessee-in-default under Section 201(1) of the Income Tax Act 1961.
In the result, the appeal of the assessee was accordingly allowed
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
