2022 (11) TMI 1106

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....A.Y. 2012-13. An order u/s 201 (1 )/201 (I A) of the Income Tax Act, 1961 was passed on 29.03.2019 and demand of Rs. 31,303/- of interest on short deduction of TDS was worked out to be payable by the Company as per the said order. Assessee company has paid common area maintenance charges (CAM Charges) to M/s. DLF Utilities Ltd. for the retail store taken on lease in DLF Emporio Mall, Vasant Kunj, New Delhi and to M/s. Ambience Facilities Management Pvt. Ltd. for the retail stores taken on lease in Ambience Mall, Vasant Kunj and Gurgaon and has deducted TDS @ 2% on such CAM charges u/s I94C of the Income Tax Act, 1961. However, as per the Ld. Assessing Officer, TDS should have been deducted @ 10% u/s 1941 of the Income Tax Act, 1961 on the CAM charges paid by the appellant company considering the common area maintenance charges as part of the rental activity covered under section 1941 of the Income Tax Act, 1961 and treated the appellant company as assessee in default within the meaning of section 201(1) of the Income Tax Act, 1961 for short deduction of TDS on CAM Charges. The appellant company has submitted Form 26A along with certificates from Chartered accountants of M/s. DLF Ut....

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....ACIT (2016) 389 ITR 38 (P & H), in which it is held that where the agreement provides that the owner of the premises shall pay for common facilities, then it is reasonable to presume that the same is factored into the rent payable by the lessee. However, if maintenance charges etc. are stipulated to be payable by the lessor, it must form part of rent for the purposes of computing income from house property. In the case before hand, the CAM charges are paid by the lessor and the appellant has no control on actual expenditure to be incurred by the lessor. In view of above mentioned factual and legal position, thus it is clear that the CAM charges paid by the appellant are part of rent liable for TDS u/s 1941 and accordingly other decisions and CBDT circulars relied upon by the AR are distinguishable on facts." 3. The assessee has come in appeal before this Tribunal raising following grounds :- "1. That the order of the learned CIT(A) is bad in law and on facts in confirming the order of AO in respect of following demands u/s 201(1A) of the Income Tax Act, 1961 :- TDS demand DLF Utilities Ltd. (in Rs.) Ambience Facilities Management Private Limited (in Rs.) Tot....

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....e Act and Ld. CIT(A) has also relied CBDT Circular no. 715 dated 08.08.1995. Primarily the conclusion of Ld. CIT(A) was based on the fact that there is a single lease agreement for payment of rent as well as CAM charges and because the CAM charges are paid by the lessor they are part of the rent liable for TDS u/s 194-I of the Act. It appears from the order of ld. CIT(A) that assessee claimed that as separate invoices were being raised under separate clauses of the lease agreement in respect of rent and CAM charges, the CAM charges were not part of the rent. 7. Now, when the definition of "rent' as Explanation of section 194-I is seen it is the 'payment' made for the "use' of certain immovable properties like land or building (including factory building) or land appurtenant to a building ( including factory building) or movable properties like machinery or plant or equipment or furniture or fittings, is considered to be rent. Thus, what is important is the "use' of these immovable properties or those things appurtenant or fittings with the building that is essential to make a payment fall in definition of rent for purpose of Explanation to Section 194-I of the Act. 7.1 The co....

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.... distinction between rent for the use of the property by the lessee and expenses of CAM. 10. The judgment relied by Ld. AR for the appellant in Kapoor Watch Company Pvt. Ltd. and Connaught Plaza Restaurants P. Ltd.(Supra) case also support the case of appellant wherein the Co ordinate bench observed; "We have heard both the parties and perused the material available on record. Ground Nos. 1 and 1.1 are general in nature hence not adjudicated upon. As regards to Ground Nos. 2, 2.1, 2.2 and 3, it is pertinent to note that the assessee company has paid the rent to owner after deduction of TDS u/s 194-I of the Act and the payment for operation/maintenance was made directly to the services providers after deduction of TDS u/s 194C of the Act. There is a Tri-party Agreement which was on record before the Assessing Officer as well as before the CIT(A). These facts were never disputed by the Assessing Officer as well as the CIT(A). The only dispute that arises by revenue that assessee company should deduct TDS on payment made directly to operation/maintenance services providers u/s 194-I of the Act instead of Section 194C of the Act by relying on the judgment of the Hon'ble Hig....