TaxTMI 
TaxTMI 
2025 (5) TMI 1848
X X X X Extracts X X X X
X X X X Extracts X X X X
....39;CAM') charges paid by the Appellant are in the nature of rent and are liable to TDS u/s 194-I of the Act. 2. That on the facts and circumstances of the case and in law, the Ld. CIT (A)/AO has failed to appreciate that the CAM charges paid are towards services in relation to common area which is not in the possession of the Appellant and comprise services like cleaning, maintenance, upkeep, security, air conditioning, landscaping, signages, water, electricity, consumables, lighting, sinking fund etc. Charges for the said services are not in the nature of rent and are thus liable to TDS u/s 194C of the Act. 3. That on the facts and circumstances of the case and in law, the Ld. CIT (A)/AO has erred in holding that in the case of a single composite agreement for Rent and CAM charges, the charges for Common Area Maintenance shall fall under the category of rent. 4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) /AO erred in ignoring the ratio of the judgments which have consistently held charges which are for common services used by other lessees as well, and cannot be termed as 'use of land" and does not fit in the definition of 'rent....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to pay the tax is on the recipient of income and therefore, such tax cannot be recovered from the Appellant. 11. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has vehemently ignored the law laid down by the Hon'ble Supreme Court in CIT Vs Eily Lilly & Co Pvt. Ltd. (2007) 312 ITR 225 (SC) and reiterated by Hon'ble Mumbai ITAT in ICICI Securities Limited, ITA No. 1511/Mum/2022 that "the liability of deducting tax at source is in the nature of a vicarious liability, which pre-supposes existence of primary liability. The said liability is a vicarious liability and the principal liability is of the person who is taxable.........." 12. That on facts and in circumstances of the case, the Ld. CIT (A) has evidently ignored the decision of the Coordinate Bench of this Tribunal in Ramkrishna Vedanta Math vs. ITO. (2012) 24 taxmann.com 29 (ITAT Kolkata) wherein it was observed that the question of making good the loss of revenue arises only when there is indeed a loss of revenue and the loss of revenue can be there only when recipient of income has not paid tax, which the Ld. AO and/or CIT(A) failed to enquire and confirm. 13. That on facts a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingle vendor. The assessee made TDS at 10% for Yent and TDS at 1% for CAM charges. The Ld. AO passed the order that the rate of TDS for CAM charges should be at 10% instead of 1% since, CAM charges take part of the rent which is liable to TDS at the rate of 10% u/s. 194-I thus, levying TDS on CAM charges amounting to Rs.15,16,427/- as short deduction and interest on the above short deduction amounting Rs. 16,22,103/-u/s.201(1A), The appellant aggrieved by the order of the AO, preferred the instant appeal. 4. It is observed that the appellant filed 3 grounds of appeal. 4.1 Ground no.1: That on the facts and circumstances of the case and in law, the Learned Assistant Commissioner of Income Tax (TDS) Circle 73(1), New Delhi (Ld. AO) has erred in treating the appellant as Assessee in Default under section 201(1)(1A) of the Act for short deduction of tax of INR 15,16,427/- by holding that the payment for common area maintenance (CAM) charges is in the nature of rent and thereby subject to under section 194-I of the Act. Consequently the Ld. AO, has also erred in levying interest of INR 16,22,103 under section 201(1A) of the Act on such short deduction of tax. It is observed that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t deduction of tax on payment of CAM charges by ignoring the fact that the primary liability to pay the tax is on the recipient of income and therefore, such tax cannot be received from the Appellant. Without prejudice to the above grounds, on the facts and in the circumstances of the case and in law, the Ld. AO has not considered the fact that there is no loss of revenue to the Government if the recipients have filed their return of income and paid taxes thereon and therefore, any further recovery of tax from the Appellant would lead to unjust enrichment which is against the basic principle of natural justice. Appellant's submission is that the recipient of the income should be taxed, and not the appellant and that the appellant should not held as assessee in default However proviso to section 201 reads as follows 201. Consequences of failure to deduct or pay. (1) Where any person, including the principal officer of a company, (a) who is required to deduct any sum in accordance with the provisions of this Act, or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the rival submissions, first of all, we are of the considered opinion that the details of CAM, the details of rent and CAM charges paid by the assessee, copy of agreement, copy of agreements between M/s. Ambience Developers & Infrastructure Pvt. Ltd and M/s. Chadha Sugars Pvt. Ltd dated 15.07.2013 reveals that the Ambience Facilities Management Pvt. Ltd secured the rented premises and under franchise agreement given the same to the present assessee and the franchisee was under obligation to pay rent and CAM charges on behalf of original tenant to the owner as well as CAM service providers. It has not been controverted by the ld. Sr. DR that the assessee has paid rent to different property owners and CAM charges to separate service providers. 7. Now, we turn to the findings given by the ITAT, Delhi 'B' Bench in the case of Connaught Plaza Restaurants P. Ltd. (supra), wherein the Bench has also considered the earlier judgement of ITAT 'B' Bench in the case of Kapoor Watch Company Pvt. Ltd. (supra) and 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 charg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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) 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-I 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 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the facts involved in the case of the assessee before us remains the same as were therein involved in the aforesaid case, therefore, in the backdrop of our aforesaid deliberations, and respectfully following the aforesaid order of the Tribunal, we herein conclude, that as claimed by the assessee, and rightly so, the CAM charges paid by it were liable for deduction of tax at source @2%, i.e., u/s.194C of the Act. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(A) who had approved the order passed by the AO treating the assessee company as an assessee-in default u/s.201(1) of the Act. The Grounds of appeal no.4 to 4.5 are allowed in terms of our aforesaid observations." 8. In view of the above, we have no hesitation to hold that the CAM charges paid by the assessee did form part of the actual rent payment which was paid to the property owner by the assessee company. In the present case, the facts and circumstances of the payment of CAM charges are quite similar to the facts and circumstances of the above two cases i.e., Kapoor Watch Company Pvt. Ltd. (supra) and Connaught Plaza Restaurants P. Ltd. (supra). Therefore, I am inclined to hold that CAM ch....