CAM Charges Cannot Be Clubbed with Rent; TDS Deductible u/s 194C of Income Tax: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, upheld the deletion of demand raised under Sections 201 and 201(1A) of the Income Tax Act after holding that Common Area Maintenance (CAM) charges were liable for TDS under Section 194C and not under Section 194I.

The assessee, Air France, a branch office of a company incorporated in France and engaged in the business of operation of aircraft in international traffic, had deducted tax at source at 2% under Section 194C on CAM charges paid in respect of leased premises. During proceedings under Sections 201 and 201(1A), the AO held that the CAM charges formed part of rent and that tax ought to have been deducted at 10% under Section 194I. Accordingly, the assessee was treated as an assessee in default and a demand was raised.

The CIT(A) deleted the demand by holding that CAM charges constituted a separate transaction covered under Section 194C.

Aggrieved, the Revenue preferred an appeal before the Tribunal.

Before the Tribunal, the Revenue contended that CAM charges were directly relatable to rental activity and therefore formed part of rent liable for deduction of tax under Section 194I. Reliance was placed on the decision of the Delhi High Court in Apeejay Surrendra Park Hotels Ltd. v. Union of India (2025)

However, the assessee relied on the Delhi High Court's decision in CIT (TDS) v. Diamond Tree (2025) and submitted that the issue already stood concluded in its favour.

The Tribunal comprising S. Rifaur Rahman (Accountant Member) and Anubhav Sharma (Judicial Member) observed that the issue was covered in favour of the assessee by the decision rendered in its own case. It further observed that payment of CAM charges was a separately identifiable transaction and that such charges could not be clubbed with rent merely because they were paid to the same party or arose from the same agreement.

Accordingly, the Tribunal found no infirmity in the order of the CIT(A) and upheld the deletion of the demand raised under Sections 201 and 201(1A).

The Revenue's appeal was dismissed.

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