TMI Blog2022 (4) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - ITA No.400-405/Bang/2021 - - - Dated:- 26-4-2022 - Shri N V Vasudevan, Vice President And Ms. Padmavathy S, Accountant Member For the Assessee : Shri. T Suryanarayana, Sr. Advocate For the Revenue : Shri. Priyadarshini Mishra, Addl.CIT DR ORDER PER PADMAVATHY S, ACCOUNTANT MEMBER The assessee has filed these appeals challenging the order of the CIT(A) NFAC dated 30.06.2021 for the asst. year 2013-14 to 2017-18. As common issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roneously considered the same as rent. 8. The Learned CIT(A) and Learned AD ought to have appreciated that CAM charges constitutes payments for various services rendered to the Appellant which cannot be equated with rental payments. 9. The Learned CIT(A) and Learned AD grossly erred in treating CAM charges as rent merely because of the fact that there was a common agreement for both rental payments and CAM charges. 10. The Learned CIT(A) and Learned AO failed to consider various judicial precedents relied upon by the Appellant in its submissions, wherein it was inter-alia observed that actual nature of the transaction and the terms of the contract have to be looked upon before concluding the payment as rent. 11. The Learned CIT(A) and Learned AO erred in not complying with the circular issued by the Central Board of Direct Taxes, which clarifies that any routine maintenance charges, which is not technical in nature, will be covered u/s. 194C of the Act. 12. The Learned CIT(A) and Learned AO ought to have appreciated various judicial pronouncements which held that maintenance charges fall under preview of section 194C of the Act. 13. The Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) also dismissed the claim of the assessee that the assessment order passed by AO was barred by limitation u/s. 201(3) of the Act. 5. The assessee is in appeal before the Tribunal against the order of the CIT appeals. We will first consider the issue of AO s order u/s. 201(1) being time barred u/s. 201(3) of the Act which is raised as an issue for the assessment year 2013-14 and 2014-15 6. The learned AR submitted that as per the provisions of section 201(3) as it existed prior to amendment made by Finance (no.2) Act 2014 an order u/s. 201(1) cannot be made after the expiry of two years from the end of the financial year in which the statements u/s. 200 is filed. The learned AR submitted that the assessee has filed the statements as required to be filed u/s. 200 and the same fact has been verified and confirmed by the AO in his order (Page 8 para 13 of AO s order). Therefore the learned AR contented that the assessee s case would fall within the provisions of clause (i) of section 201(3) of the Act and assessment order passed by the AO on 18.02.2020 is way beyond the time limit described u/s. 201(3) rendering the same bad in law 7. The learned DR on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the financial year in which payment is made or credit is given. 10. Before proceeding further it would be important to examine based on facts whether the time limit for deeming the assessee as an assessee-in-default u/s. 201(1) of the Act is regulated by the time period as mentioned in clause (i) of section 201(1) as claimed by the assessee, or the extended time period of 6 years as per clause (ii) of section 201(1) as was prevalent prior to the Finance Act, 2014, i.e. prior to 01.10.2014, as claimed by the revenue. For this purpose it would be relevant to cull out the respective dates on which the statements referred to in Section 200 of the Act had been filed by the assessee company, as under:- Assessment year 2013-14 Assessment year 2014-15 Form No Quarter Date of filing Form No Quarter Date of filing 26Q Q1 13.07.2012 26Q Q1 14.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Delhi Bench of the Tribunal in the case of Connaught Plaza Restaurants P. Ltd. Vs DCIT (I.T.A. No.993 1984/DEL/2020) where the same issue is considered where the Hon ble Tribunal has held that the CAM charges paid were liable for deduction of tax at source @ 2% u/s. 194C and not 194I. 14. The learned DR submitted that the CAM charges are integral part of the lease deed and are inseparable since the payment of rent and CAM charges are done under a single agreement. The learned DR also submitted that the unique nature of the business of the assessee needs to be considered where the maintenance charges paid towards the ambience, cleanliness, and attractive looks of the business premises improves the marketability of the assessee. The learned DR therefore argued that the CAM charges paid should be treated as an integral part of the rent whereby tax is required to be deducted at source at 10% u/s. 194I of the act. 14. We have heard the rival submissions and perused the materials on record. The assessee has entered into lease agreement with AKM enterprises Private Limited whereby the assessee has taken a property on lease. As per the terms of the lease deed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. In the backdrop of our aforesaid deliberations, we concur with the claim of the ld. 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 (supra) to verify the compliance of the provisions of Chapter XVII-B of the Act. On the basis of the facts that had emerged in the course of the proceedings, it was gathered by the Department that the owners of the malls in addition to the rent had been collecting CAM charges from the lessees on which TDS was deducted @2% i.e u/s.194C of the Act. Observing, that payment of CAM charges were essentially a part of the rent, the AO treated the assessee as an assessee-in-default for short deduction of tax at sour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore allow the appeal in favour of the assessee on merits also 18. Since we have quashed the order passed by the AO u/ss.201(1)/201(1A) of the Act both on legal ground that the order is barred by limitation and also otherwise on merits stating that the assessee could not be held to be an assessee in default, the interest charged by the AO u/s.201(1A) which is consequential in nature and been rendered infructuous. The ground raised by the assessee on this count does not require separate adjudication and hence dismissed. 19. The grounds raised by the assessee for the assessment year 2014-15 are same as assessment year 2013-14 (both legal grounds and grounds on merits. We have in the aforesaid paragraphs pertaining to assessment year 2013-14 held that the order of the AO is time barred and on the basis of facts also assessee could not be treated as assessee in default. Since the facts are similar if the assessment year 2014-15 also we hold the same view for assessment year 2014-15 and allow the appeal in favour of the assessee. 20. For the assessment years 2015-16, 2016-17 and 2017-18, the learned AR confined his contentions to merits i.e. deeming the assessee as an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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