TaxTMI 
TaxTMI 
2023 (6) TMI 208
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....or failing to deduct tax at source of Common Area Maintenance charges (CAM) at 10% u/s 194I as against 2% deducted by the assessee u/s 194C of the Act. 2. Briefly stated the facts are that the survey u/s 133A(2A) of the Act was carried out in the case of the Ambience Group by the ACIT(TDS)-73(1), New Delhi on 12.02.2018 for the purpose of verification of compliances of TDS provisions. Survey was carried 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 requisi....
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....ase of Life Style International Pvt. Ltd. Vs. ACIT (TDS) 140 taxmann.com 445. 5. The Ld. DR supported the orders of the authorities below. 6. Heard rival contentions, perused the orders of the authorities below. The only controversy in these appeals is whether the CAM charges paid by the assessee were liable for TDS at 10% u/s 194I of the Act or at 2% u/s 194C of the Act. The assessee company has deducted tax at source on rental payments to shop owners/Malls at 10% under the provisions of Section 194I of the Act. The assessee also made payments in the nature of CAM charges on which taxes have been deducted at 2% under the provision of Section 194C of the Act. We noticed that the CAM charges mainly comprises of maintenance fees for work pe....
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....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, 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 ....
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.... this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed one hundred and eighty thousand rupees: ...................... ...................... 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) p....
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.... 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 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 premises/equipment, therefore, the same would be subjected to deduction of tax at source u/s. 194C of the Act. Our aforesaid view is supported by the order of the ITAT, Delhi in the case of Kapoor Watch Company P. Ltd. vs. ACIT in ITA No.889/Del/2020. In the aforesaid case, the genesis of the controversy as in the case of the assessee before us were certain proceedings conducted by the Department in the case of Ambience Group (s....
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....e 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 t....