TMI Blog2023 (6) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-13 in upholding the action of the AO in treating assessee in default within the meaning of the provisions of Section 201(1) of the Act for 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Maintenance of escalators, elevators, other equipments and the utilities in common areas; 5. Cleaning and upkeep of common areas (including surrounding areas and landscape areas); 6. Maintenance of fire fighting facilities; 7. HVAC operating and maintenance charges; 8. Common publicity and advertisement charges; 9. Air conditioning charges; 10. Insurance and AMC for common capital equipment; 11. Salaries and other cost of direct staff/employees associated 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayee, 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. 194-1 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(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 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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