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2022 (4) TMI 1278 - AT - Income TaxTDS u/s 194C or 194I - default u/s. 201(1) - short deduction of TDS - Payment of common area maintenance charges (CAM charges) - whether the rent and maintenance which are paid as part of single agreement is liable to be deducted tax at source at the same rate of 10% u/s. 194I? - HELD THAT:- As per clause 9 of the lease agreement (pages 62 of paper book) makes it clear that the maintenance charges paid are not paid for use of land/building to fall within the ambit of the definition of rent u/s. 194I. The CAM charges are in the nature of contractual payments towards electricity, water supply, security, lift maintenance etc., falling within the meaning of section 194C whereby these charges are paid for carrying out the work for maintenance of the common area that are available along with the lease premises. The fact that these two payments are agreed and paid under the same agreement does not change the character / nature of such payments warranting single rate of tax deduction at source. The law has provided for different rates of tax deduction at source based on the nature of payment and it is imperative that the correct rate of tax is applied depending on the nature of payments. We are of the considered view that the payments made towards CAM charges are in the nature of contractual is payments that are made for availing maintenance services and they are not paid for use of any premises/equipment. Therefore the cam charges would be subjected to deduction of tax at source u/s. 194C of the Act at 2%. The assessee has applied the right rate of tax for deduction at source at 2% on CAM charges and therefore the assessee cannot be held to be an assessee in default u/s. 201(1) of the Act. We therefore allow the appeal in favour of the assessee
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