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Facts
The assessee paid Common Maintenance charges (CAM) for retail space and deducted TDS under Section 194C. The AO held that CAM charges were liable for TDS under Section 1941 and treated the assessee as being in default. The CIT(A) upheld the AO's order.
Held
The Tribunal held that CAM charges are contractual payments for maintenance services and not rent for premises. Therefore, TDS was deductible under Section 194C, not Section 1941. The Delhi High Court's decision on this matter was considered settled.
Key Issues
Whether Common Area Maintenance (CAM) charges are liable for TDS under Section 194I or Section 194C of the Income Tax Act, 1961.
Sections Cited
194C, 1941, 201(1), 201(1A)
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Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI
Before: SHRI ANUBHAV SHARMA
Revenue by Ms. Ankush Kalra, Sr. DR Assessee by Shri Tarandeep Singh, Adv. Date of Hearing 15.10.2025 Date of Pronouncement 27.10.2025 ORDER
PER AMITABH SHUKLA, AM,
This appeal has been preferred by the Revenue against order dated 21.04.2025 of Addl./JCIT(A), Nagpur, in Appeal No. NFAC/2013- 14/10015207, arising out of order u/s 201(1)/(1A) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) passed on 19.03.2021 by ACIT, Circle- 73(1), pertaining to Assessment Year 2014-15.
The Revenue has raised following grounds of appeal contesting the order of Ld. First Appellate Authority.
Grounds of appeal:-
1. Whether on the facts and in the circumstances of the case and in law, the Addl/JCTT (A)-1, Nagpur was justified in holding that Common Area Maintenance ('CAM') charges paid by the Appellant are in the nature of contractual payment and are liable 1o be deducted TDS u/s 194C of the I.T. Act.
2. Whether on the facts and in the circumstances of the case and in law, the Addl/JCIT (A)-1, Nagpur was justified in not considering the judgement of Hon'ble High Court Delhi in the case Apeejay Surrendera Park Hotels Ltd. Vs UOI in WP(C) 1924/1999, wherein the Hon'ble Court has held that the word 'rent' in section 1941 of the I.T. Act has to be interpreted widely and not confined to payments received towards a lease, sub leas OR tenancy OR transactions of such like nature.
3. That the order of the Addl./JCIT (A)-1, Nagpur being erroneous in law and on facts and needs to be vacated.”
3. Brief facts of the case are that the assessee company had paid lease rentals for acquiring retail space in Ambience Mall, Gurgaon to M/s Ambience Developers and Infrastructure Pvt. Ltd. And to M/s Ambience Commercial Developers Pvt. Ltd.. The ld. AO noted that the assessee had paid Common Maintenance charges (CAM) to the impugned landlords but had deducted TDS under section 194C of the Act. Invoking proceedings u/s 201/201A, the ld. AO held that the impugned payments comprising CAM were liable for deduction of TDS u/s 194I of the Act. Accordingly, the ld. AO held the assessee liable as assessee in default and raised tax demand u/s 201/201A of the Act for not making deduction of TDS u/s 194I of the Act. The ld. Counsel submitted that the issue of TDS on CAM charges is no more res-integra in the light of decision of Hon’ble Delhi High Court in the case of its decision in CIT vs Liberty Retail Revolution Ltd. Reported in 305 Taxman 358 (Del) and in the case of CIT vs Diamond Tree reported in (2025) 177 taxmann.com 477 (Del). The ld. Counsel for the assessee submitted that Hon’ble Delhi High Court has held that payments made under CAM are not liable for TDS u/s 194I of the Act.
Per Contra, the ld. DR placed reliance upon the order of Ld. Assessing Authority.
We have heard rival submission in the light of material available on records. The only issue seminal to the appeal of the Revenue is as to whether CAM charges constitute rental payments u/s 194I or not. We have noted that the issue is settled now with the decision of Hon’ble Delhi High Court. Thus, in its decision in the case of CIT(TDS)-1 vs Liberty Retail Revolutions Ltd. [2025] 175 taxmann.com 35 (Del.), it was held as under:-
“9. At the outset, it would be relevant to refer to the decision of the learned ITAT in ITA 504/Del/2020. The relevant extract of the same as reproduced by the learned ITAT in the impugned order, is set out below: "9. We have given a thoughtful consideration to the orders of the authorities below. We find force in the contention of the Counsel. This Tribunal in order dated 15.02.2023 had the occasion to consider an identical grievance in the case of another tenant of the same mall and decided as under:- "7. We have carefully considered the orders of the authorities below. The undisputed fact is that the impugned payment is not rent but common area maintenance charges paid by various tenants/ owners of the shop to the mall owners. On this undisputed facts the decision of the coordinate Bench (supra) clearly apply wherein the coordinate Bench has held as under "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 dependent and separate from rental payments, and are fundamentally for availing common area maintenance services which may be provided by the landlord or any other agency, therefore, the same cannot be brought within the scope and gamut of the definition of terminology "rent". On the other hand, we are of the considered view, that as the CAM charges are in the nature of a contractual payment made to a person for carrying out the work in lieu of a contract, therefore, the same would clearly fall within the meaning of "work" as defined in Section 194C of the Act. In our considered view, as the CAM charges are not paid for use of land/building but are paid for carrying out the work for maintenance of the common area/facilities that are available along with the lease premises, therefore, the same could not be characterized and/or brought within the meaning of "rent" as defined in Section 194-1 of the Act.
In the backdrop of our aforesaid deliberations, we concur with the claim of the Id 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. v. 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 pertain 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 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 source u/ss. 201(1)/201(1A) of the Act. On appeal, it was observed by the Tribunal that the CAM charges paid by the assessee did not form part of the actual rent that was paid to the owner by the assessee company. As 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., us. 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. Respectfully following the decision of the coordinate Bench (supra) we direct the AO to delete the impugned addition. The appeal of the assessee is allowed."
10. We find no infirmity with the aforesaid reasoning. CAM charges are essentially maintenance charges paid by a unit for proper maintenance of the common area. The said charges are contributed towards expenditure on cleanliness, utilities and maintenance. These charges are shared expenses for common works and utilities. The said charges cannot, by any stretch, be construed as payment of rent for occupying the premises in question. The fundamental premise that CAM charges are, by their nature, lease rentals or license charges is erroneous. Thus, the orders passed by the CIT(A) and the AO have rightly been set aside by the learned ITAT.
11. No substantial question exists for consideration in this appeal.
6. Thus, in view of the decision of Hon’ble Delhi High Court (supra), we are of the considered view that the issue of TDS deduction on CAM Charges u/s 194I of the Act is no more res-integra and is in fact a settled matter now. We have also noted that ld. CIT(A) has correctly analyzed the provisions of law as well as judicial precedents covering the matter and therefore there is no case for any intervention in the impugned appellate order at this stage. Accordingly, in respectful compliance to the decision of Hon’ble Delhi High Court in the case of Liberty Retail Revolutions Ltd (supra), we confirm the order of the ld. CIT(A) and dismiss all the grounds of appeal raised by the Revenue.