Common area maintenance charges are contractual service payments, not rent, and attract TDS under Section 194C.

Common area maintenance charges paid for cleanliness, utilities and upkeep of shared areas were treated as payments for maintenance services, not consideration for use of land, building or premises. On that basis, the charges fell within Section 194C as contractual payments for work and not Section 194I as rent. The existing coordinate Bench view was followed, and the addition as well as the finding of assessee-in-default under Section 201(1) could not survive. Consequently, CAM charges are subject to TDS under Section 194C rather than Section 194I, and the Revenue's challenge failed.

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Issues: Whether Common Area Maintenance charges are liable to deduction of tax at source under Section 194I of the Income-tax Act, 1961 as rent, or under Section 194C of the Income-tax Act, 1961 as contractual payments.

Analysis: The charges were held to be payments for maintenance services and shared common works such as cleanliness, utilities and upkeep of common areas, and not consideration for use of land, building or premises. Such charges are independent of rent and fall within the scope of payment for work under Section 194C of the Income-tax Act, 1961. Since the issue was already covered by a coordinate Bench view, no different conclusion was warranted. The addition and the finding of assessee-in-default under Section 201(1) of the Income-tax Act, 1961 therefore could not survive.

Conclusion: CAM charges are not rent and are liable to TDS under Section 194C of the Income-tax Act, 1961, not under Section 194I of the Income-tax Act, 1961. The Revenue's challenge failed and the assessee succeeded.

Ratio Decidendi: Charges paid for maintenance and upkeep of common areas, being contractual payments for services and not payments for use of premises, do not constitute rent and are taxable under the provision governing works contracts rather than the provision governing rent.

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