TaxTMI 
TaxTMI 
2023 (6) TMI 208
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....ed out at 2 Malls namely Ambience, Gurgaon and Ambience, Vasant Kunj and it revealed that the Mall owners have collected/recovered expenses in the form of CAM charges on which TDS was made at 2% u/s 194C by the payers including the assessee. On the basis of findings of survey a notice was issued to the assessee and in response to which requisite details were furnished regarding CAM charges. As per the AO tax should have been deducted 10% on CAM charges u/s 194I instead of 2% u/s 194C and, accordingly, a show cause notice was issued to the assessee. The assessee filed a detailed reply stating that separate invoice for lease expenses and CAM charges have been raised and the area for which CAM charges are paid has not been in sole or exclusive use for possession of the assessee. Not convinced with the submissions of the assessee, the AO treated the assessee as the assessee in default u/s 201(1) for short deduction of TDS u/s 194I of the Act. On appeal the Ld.CIT(Appeals) sustained the action of the AO in treating the assessee as an assessee in default for short deduction of TDS u/s 194I of the Act. 3. Before us, the Ld. Counsel for the assessee submits that the issue as to whether ....
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....ted with the management of the shopping mall. Therefore, CAM charges paid by the assessee or not for land used or area allotted simplicitor. These are the charges for various common services provided to various lessees. 7. We observe that the identical issue came up before the coordinate bench in the case of Connaught Plaza Restaurant Vs. DCIT (supra) and the Tribunal held as under: - "11. We shall now advert to the claim of the 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 "Me. Donalds", 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, whi....
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.... 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; .......... .............." (emphasis supplied) On a perusal of the definition of the terminology "rent" as had been provided in the aforesaid statutory provision, viz. Sec. 194-1 of the Act, we find that the same includes payment for the use of land, building, land appurtenant to a building, machinery, plant, equipment, furniture 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 ....
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....T(A) who had approved the order passed by the AO treating the assessee company as an assessee-in-default u/s. 201(l) of the Act. The Grounds of appeal no.4 to 4.5 are allowed in terms of our aforesaid observation." 8. Similar view has been taken by the coordinate bench in the case of Aero Club Vs. DCIT (200 ITD 318), wherein the Tribunal following the various decisions of the Tribunals held that CAM charges are liable for TDS u/s 194C of the Act at 2% observing as under: - "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 Restaurants P. Ltd. Vs. DCIT in ITA No. 993 & 1984/Del/2020 order dated 31.12.2021, Lifestyle International Pvt. Ltd. [TS-352-ITAT- 2022 (Bang)] and Lifestyle International Pvt. Ltd. Vs. ACIT in ITA No. 400- 405/Bang/2021 order dated 26.04.2022 and also by the order of this bench in the case of Yum Restaurants India (P) Ltd. Vs ACIT in ITA No. 1115/Del/2020 order dated 03.10.2022. The operative part of the said order is as under: "6. The undisputable fact in this case is that while the lease rentals are paid based on a fixed percentage on the net reven....