TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1278
X X X X Extracts X X X X
X X X X Extracts X X X X
....s raised by the assessee for the assessment year 2013-14 are reproduced below. "I. The order passed by the Learned assessing officer ["AO"] is barred u/s. 201(3) of the Income-tax Act, 1961 ["the Act"] 1. The order passed by the learned assessing officer ["AO"] u/s. 201 of the Income tax Act, 1961 ["the Act"] dated 18 February 2020 (as upheld by the Learned Commissioner of Income-tax (Appeals) ["CIT(A)"]) was barred by time as per the erstwhile provisions of section 201(3) of the Act as it stood prior to Finance Act 2014. 2. The Learned CIT(A) and Learned AO failed to appreciate that the amendment vide Finance Act 2014, which extended the time limit to pass order u/s. 201 of the Act, is effective from 1 October 2014. 3. The Learned CIT(A) and Learned AD have erred in not relying on various judicial pronouncements which have held that the amendment brought vide Finance Act 2014 has to be applied prospectively. 4. The Learned CIT(A) and the Learned AD have erred in not taking into consideration the favourable order passed by the Hon'ble Income tax Appellate Tribunal ["ITAT"] in Appellant's own case for AY 2011-12. II. Characterisation of common area maintenance ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....retailing in ready-made garments, leather products, furniture, toys, baby basics, footwear and other household accessories. The survey u/s. 133A(2A) of the Act was conducted on the registered address of the assessee on 08.03.2018 for the purpose of verifying whether appropriate taxes have been deducted at source on the expenses incurred/payments made by the assessee. During the survey the AO observed that the assessee has taken many properties on lease and the assessee has been deducting TDS on rent payments u/s. 194I of the Act. The AO also noticed that the common area maintenance charges (CAM charges) paid on these leased properties is treated as contractual payments and tax is deducted u/s. 194C at the rate of 2%. The AO stated that the CAM charges are directly relatable to and are part of the rental activity hence prime facie these payments fall under the purview of 194I and not of 194C calling for a deduction at 10% instead of 2%. The AO therefore treated the assessee as an assessee in-default and passed an order u/s. 201(1) of the Act on 18.02.2020 stating that there is short deduction of tax at source on the CAM charges. The AO also computed interest u/s. 201(1A) on the tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....b-section (3) to Section 201 of the Act, as was made available on the statute vide the Finance Act, 2009 w.e.f. 01.04.2010, reads as under: "(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of - (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed; (ii) four years from the end of the financial year in which payment is made or credit is given, in any other case" (emphasis supplied)" 9. In so far the time limit for passing of an order u/s. 201(1) of the Act in a case where statement of tax deducted at source u/s. 200 of the Act was not filed by the deductor, the same was thereafter extended vide the Finance Act, 2012 from 4 years as was earlier provided in clause (ii) to Section 201 (3) of the Act to a period of 6 years with retrospective effect from 01.04.2010, i.e., from AY 2010-11 onwards. However, the time limit for deeming a person to be an assessee-in-default for failure to deduct the whole or any part of the tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssed by the AO u/s.201(1)/201(1A), dated 18.02.2020 as barred by limitation. 12. We will consider now the issue on merits whereby it is contented that the lower authorities have erred in law and the facts of the case in concluding that the CAM charges paid by the assessee were liable for deduction of tax at source at 10% u/s. 194I and not @ 2% u/s. 194C. 13. The learned AR submitted that the assessee has entered into a common agreement with the owner of the property for rent as well common area maintenance. The learned AR drew our attention to the relevant clauses of the agreement relating to payment of CAM charges. The learned AR stated that as per the provisions of section 194I rent means any payment made towards use of land, building, machinery, plant etc. The learned AR also submitted that in the assessee's case the CAM charges are paid towards common maintenance such as electricity, water, lift maintenance etc. and therefore will not fall within the ambit of 194I of the Act. The Learned AR also placed reliance on the decision of Delhi Bench of the Tribunal in the case of Connaught Plaza Restaurants P. Ltd. Vs DCIT (I.T.A. No.993 & 1984/DEL/2020) where the same issue is consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Explanation.-For the purposes of this section,- (i) "rent" means any payment, by whatever name called, under any lease, sublease, tenancy or any other agreement or arrangement for the use of (either separately or together) any, - (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee"; 15. From the definition, the term "rent" would include payments for the use of land building land pertinent to building, machinery, plant, equipment, furniture, fitting. In short the payments for use of premises/equipment are covered by section 194I of the Act. We notice that a similar issue is considered by the honourable Delhi Tribunal in the case of Connaught Plaza Restaurants P. Ltd (supra) where to held that 13. In the backdrop of our aforesaid deliberations, we concur with the claim of the ld. AR that as the payments towards CAM charges are in the nature of contractual payments that are made for availing certain services/facilities, and not for use of any prem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t these two payments are agreed and paid under the same agreement does not change the character / nature of such payments warranting single rate of tax deduction at source. The law has provided for different rates of tax deduction at source based on the nature of payment and it is imperative that the correct rate of tax is applied depending on the nature of payments. 17. In view of the aforesaid discussions we are of the considered view that the payments made towards CAM charges are in the nature of contractual is payments that are made for availing maintenance services and they are not paid for use of any premises/equipment. Therefore the cam charges would be subjected to deduction of tax at source u/s. 194C of the Act at 2%. The assessee has applied the right rate of tax for deduction at source at 2% on CAM charges and therefore the assessee cannot be held to be an assessee in default u/s. 201(1) of the Act. We therefore allow the appeal in favour of the assessee on merits also 18. Since we have quashed the order passed by the AO u/ss.201(1)/201(1A) of the Act both on legal ground that the order is barred by limitation and also otherwise on merits stating that the assessee coul....