TaxTMI 
TaxTMI 
2022 (12) TMI 690
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...., the Ld. CIT(A) has erred in not quashing the order dated March 29, 2018 passed under section 201(1) / 201(1A) of the Act, in pursuance to notice dated March 5, 2018, especially, when the above stated notice was barred by limitation and was void ab-initio. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in affirming the action of the Ld. TDS Officer in holding the Appellant as an 'assessee-in-default' and allegedly raising a tax demand of INR 469,207 for short deduction of taxes from the payments made for Common Area Maintenance ("CAM") charges to the lessors. 3.1 That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in arbitrarily upholding the action of the Ld. TDS Officer directing to withhold taxes at the rate of 10% under section 194-I of the Act, in relation to CAM charges paid by the Appellant as against the deduction correctly made under section 194C of the Act, by the Appellant 4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in affirming the action of the Ld. TDS Officer in imposing interest amounting to INR 417,380 under section 201(1A....
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....tanding or without prejudice to the above grounds, that the Ld. CIT(A) has erred in not holding that the Appellant could not have been treated as an 'assessee-in-default' in view of first proviso to section 201 (1) of the Act. 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not deleting- the interest charged under section 201(1 A) of the Act by not appreciating that the deductees have paid taxes on such CAM charges received from the Appellant. The Ld. CIT(A) further erred in not following the decision of the Apex Court in the case of Hindustan Coca Cola Beverages vs CIT (2007) 203 ITR 226 (SC). Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant prays for leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before, or at, the time of hearing of the appeal." 3. The ld. Assessee's Representative (for short, 'ld. AR') submitted copy of agreement for taking possession of rented premises dated 20.04.2010 and submitted that the agreement clearly shows that there was a separate clause of 'paym....
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....assessee that both the lower authorities had erred in law and the facts of the case in concluding that the CAM charges paid by the assessee to Ambience Group (supra) were liable for deduction of tax at source @10%, i.e., u/s 194-1 and not @2%, i.e., U/S.194C of the Act, as claimed by the assessee. Succinctly stated, the assessee company which is engaged, inter alia, in the business of running of fast food restaurants in North and East India under the brand name "McDonalds", had taken shop/spaces/units in commercial areas/malls on lease from various parties by way of lease agreements. Apart from the rent, the assessee-company had also paid CAM charges, i.e., charges which are fundamentally for availing common area maintenance services, which may either be provided by the landlord or any other agency. In so far the CAM charges that were paid by the assessee to the same party to whom rent was being paid pursuant to the lease agreements, or to an appointed or related party with whom the lease agreement had been entered into, the AO was of view that the assessee was obligated to deduct tax at source @10%, i.e., 194-1 of the Act. Backed by his aforesaid conviction the A.O had held the as....
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....e or fittings. In sum and substance, only the payments for use of premises/equipment is covered by Section 194-1 of the Act. In our considered view, as the CAM charges are completely independent and separate from rental payments, and are fundamentally for availing common area maintenance services which may be provided by the landlord or any other agency, therefore, the same cannot be brought within the scope and gamut of the definition of terminology "rent". On the other hand, we are of the considered view, that as the CAM charges are in the nature of a contractual payment made to a person for carrying out the work in lieu of a contract, therefore, the same would clearly fall within the meaning of "work" as defined in Section 194C of the Act. In our considered view, as the CAM charges are not paid for use of land/building but are paid for carrying out the work for maintenance of the common area/facilities that are available along with the lease premises, therefore, the same could not be characterized and/or brought within the meaning of "rent" as defined in Section 194-1 of the Act. 13. In the backdrop of our aforesaid deliberations, we concur with the claim of the Id. AR ....
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.... would be subject to deduction of tax at source u/s 194C of the Act and not u/s 194I of the Act. This view has also been taken by the Tribunal in the case of Kapoor Watch Company Pvt. Ltd. (supra). As the facts involved in the present case of assessee before us are quite identical and similar to the facts of the case involved in the cases of Connaught Plaza Restaurants P. Ltd. (supra); and Kapoor Watch Company Pvt. Ltd. (supra), therefore, respectfully following the same, I conclude that as claimed by the assessee the TDS on CAM charges paid by it is liable for deduction of tax at source @ 2% u/s 194C of the Act. I, thus, in terms of my above noted observation, set aside the order of the AO as well as that of learned CIT(A) treating the assessee company as an assessee in default u/s 201(1) of the Act. 8. In the result, the appeal of the assessee is allowed." 5. In the present case also the AO in the assessment order observed that the payments received by Ambience group are split into two companies of same group on single contract one for rent and the other for maintenance charges. However, the AO noted that this arrangement has been made to avoid the higher deduction of....