2023 (3) TMI 101

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....CIT(A) has grossly erred in treating the CAM charges as rent charges and confirming a total demand of Rs.29,28,215/- u/s 201(1)/201(1A) of the Income Tax Act, 1961. 2. That on the facts and circumstances of the case, the ld. CIT(A) has grossly erred in confirming demand thereon u/s 201(1) of Rs.15,43,276/- towards short deduction of TDS on CAM charges by confirming CAM charges as rent charges and enforcing to deduct TDS u/s 194I on whole amount instead of TDS u/s 194C. 3. That on the facts and circumstances of the case, the ld. CIT(A) has grossly erred in confirming of demand u/s 201(1A) of Rs.13,84,939/- towards interest on short deduction of TDS on CAM charges." 3. Brief facts of the case are that a survey u/s 133A(2A....

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....isions of section 1941 including Explanation below it, wherein rent has been defined as "Rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any (b) building or (c) land appurtenant to a building (including factory building) or (h) fittings, whether or not any or all of the above are owned by the payee. On the basis of this provision, the AO was of the view that the definition of rent is very broad. To support his case, the AO relied upon various decisions. 6. Submissions of the assessee before the revenue authorities are as under: "During the Financial Year 2011-2012 the assessee firm has paid the rent and cam ....

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.... The AO has failed to considered our reply dated 25.03.2019 and passed the order in a hurry without providing the adequate opportunity of being heard to the assessee on the same date i.e. on 25.03.2019. The AO has taken a different view for the both types of agreement for deciding the same nature of expense, and has ended up by making an addition for short deduction of TDS for the type of agreement where Rent and CAM charges are paid to same parties. As per section 194-I of the Income Tax Act, 1961 reads as under: "194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the acc....

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.... 7. The assessee relied upon the judgments of Hon'ble Supreme Court in Japan Airlines Company Ltd. Vs. CIT, (377 ITR 372), CIT Vs. Singapore Airlines Ltd. and Associated Hotels of India Ltd. Vs. R.N. Kapoor, AIR 1959 SC 1262. 8. After having considered the submissions of the assessee, the ld. CIT(A) held that undisputedly there is single lease agreement for payment of rent as well as CAM charges. The ld. AR has submitted that payment of CAM charges is nothing but reimbursement of common area maintenance expenses incurred by the lessor on general maintenance, electric, water and security services etc. Further, it has been claimed that, the common area is outside the area which is leased out to the assessee. These arguments are not accept....

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....nto 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 194-I. 9. Heard the arguments of both the parties and perused the material available on record. 10. At the outset, we find that the issue of deductibility of tax on rent and CAM was examined by the Tribunal in the case of Connaught Plaza Resta....