TDS u/s 194I not applicable to Portion of Rent paid to AC maintenance, Housekeeping, Security, and Common Area Maintenance Charges: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the TDS provisions of section 194I of the Income Tax Act, 1961 is not applicable to AC maintenance, and common area maintenance charges to the mall owner as the same would fall under section 194C of the Act.

Coming to the facts of the case, the assessee, Mr. Kamal Jafferali Wadhwania was a tenant of R. City Mall, Ghatkopar of R. Mall Developers Pvt. Ltd for the relevant assessment years. There was a survey conducted on Run wall group and it is found that assessee is one of the tenants in the premises of Run wall group. During the F.Y 2010-11 assessee paid an amount of Rs. 12,98,373/- towards AC maintenance, housekeeping and security, etc to the mall owner by deducting TDS at 2% u/s 194C. The assessee was aggrieved by the order of the AO treating the assessee as “assessee-in-default” under section 201 and 201(1A) of the Income Tax Act.

A two-Member Tribunal comprising Shri Kuldip Singh, Judicial Member and Shri Gagan Goyal, Accountant Member observed that “it is abundantly clear that sec 194I is applicable only in case of rent may be on plant and machinery (@ the rate of 2%) and for the use any land or building or land appurtenant to a building. In this case assessee is paying a rent/lease charges for the office premises which includes AC etc. and charges for the same already included in the rent. But the extra assessee is paying is for AC maintenance (not AC rent) housekeeping, security and common area maintenance charges. These payments nowhere related to sec 194I maybe the same has been fixed on a Lum sum basis pm. For these charges the relation of assessee is not of lessor and lessee but of contractor and service taker, which falls in the category of as defined in sec 194C.”The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the TDS provisions of section 194I of the Income Tax Act, 1961 is not applicable to AC maintenance, and common area maintenance charges to the mall owner as the same would fall under section 194C of the Act.

To Read the full text of the Order CLICK HERE

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