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Facts
The Revenue appealed against the CIT(A)'s order concerning the taxability of common area maintenance (CAM) charges paid by the Assessee. The core issue was whether these charges were contractual payments subject to TDS under Section 194C of the Income Tax Act, 1961.
Held
The Tribunal, relying on its own previous decisions for the Assessee's own case, held that CAM charges are governed by Section 194C of the Act, while rent is governed by Section 194I. The Assessing Officer was directed to recompute the CAM charges accordingly.
Key Issues
Whether common area maintenance charges are contractual payments subject to TDS under Section 194C, distinct from rent governed by Section 194I.
Sections Cited
194C, 194I
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
PER YOGESH KUMAR, U.S. JM:
1. The present appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-23, Delhi [‘Ld. CIT(A) ’ for short] dated 07/03/2025 pertaining to Assessment Year 2016-17.
The solitary issue involved in the present Appeal as to whether the Ld. CIT(A) was justified in holding that common area maintenance charges paid by the Assessee are in the nature of contractual payment and are liable to be deducted TDS u/s 194C of the Income Tax Act, 1961 ('Act' for short) or not?.
The Ld. Counsel for the Assessee submitted that the above issue is no more res-integra and is squarely covered in Assessee’s own case for Assessment Year 2011-12 and 2012-13 in vide order dated 09/02/2023, thus sought for allowing the Appeal.
Per contra, the Ld. Department's Representative relying on the orders of the Lower Authorities sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. The Co-ordinate Bench of the Tribunal in Assessee’s own case for Assessment Year 2011-12 and 2012-13, while deciding the similar issue held that provisions for rent are governed u/s 194I and common area maintenance charges are governed u/s 194C of the Act, accordingly, directed the A.O. to recomputed common area maintenance charges by taking into consideration of those two Sections. The relevant portion of the order of the Tribunal in and ITA 202/Del/2020 (supra) is as under:-
“6. The undisputable fact in this case is that while the lease rentals are paid based on a fixed percentage on the net revenue, the CAM charges are based on the per sq.ft. area. The observation of the ld .CIT(A) is that the rent by any name , lease , sub-lease , tenancy or the reliance on the judgment wherein the services are intrapolated into the rent stand on a different pedestal. In the instant case, the determination of the rent or CAM are separate and the CAM arrangements are not essential and an integral part for use of the premises. While there are no expenses incurred against the rent except for general building maintenance and municipal charges, the CAM involves employment of separate staff and separate operations involved on day to day basis. Hence, we hold that the provisions for rent are governed by Section 194I and CAM charges by Section 194C of the Act. The AO is directed to re-compute the CAM charges, taking into consideration the two sections mentioned above.”
As the facts and circumstances being identical and in the absence
of any contrary ratio brought to the notice of the Bench, by respectfully following order of the Tribunal in Assessee’s own case for Assessment Year 2011-12 and 2012-13 (supra), we hold that the provisions for rent are governed by Section 194I and CAM charges by Section 194C of the Act. The AO is directed to re-compute the CAM charges, taking into consideration the two sections mentioned above.
In the result, Appeal of the Revenue is partly allowed for statistical purpose.