GLUED ENTERTAINMENT PVT. LTD.,DELHI vs. INCOME TAX OFFICER- WARD 74(3)- DELHI, DELHI

This appeal by the assessee is directed against the order dated 21.03.2025 passed by the Additional/Joint Commissioner of Income Tax (Appeals), Prayagraj, [in short ‘the CIT(A)’] for assessment year 2017–18.

Shri Somvir Singh, appearing on behalf of the assessee submits that the assessee is a private limited company engaged in the business of gaming and entertainment. It had taken space in Logix City Centre Mall, Noida from M/s Logix Buildtech Pvt. Ltd. on lease vide agreement dated 03.08.2015. Besides the monthly lease rent, the assessee was also liable to pay Common Area Maintenance (CAM) charges for upkeep and maintenance of common areas such (AY 2017-18) as parking, lifts, toilets, landscaping, and other shared facilities. During the relevant Financial Year, the assessee deducted TDS @ 10% u/s 194-I of the Act on rent and @ 2% u/s 194C on CAM charges, deposited the same to the Government exchequer, and filed quarterly TDS returns. The Assessing Officer (AO), held that CAM charges are integral to the lease and constitute part of rent, hence, liable to TDS @10% u/s.194-I of the Act. He accordingly treated the assessee as assessee in default and computed interest of Rs.95,660/- u/s 201(1A). Aggrieved, the assessee filed appeal before the CIT(A) but remained unsuccessful. Hence, the present appeal.

The ld. Authorized Representative of the assessee contended that the CAM charges were separately invoiced and were not in respect of any exclusive use of premises, but for availing common services of maintenance and housekeeping. Hence, these payments fall within the ambit of work as defined in u/s.194C of the Act and not within rent u/s.194-I of the Act. The ld. AR pointed that in subsequent assessment years i.e. AY 2018-19 and AY 2019-20 similar addition was made by the AO. The CIT(A) following the decision of Tribunal in the case of Connaught Plaza Restaurant (P) Ltd. in & 1984/Del/2020, order dated 31.12.2021 allowed the appeal of assessee. He further submitted that in any case the CAM charges paid to deductee were subject to tax, as the deductee has offered the same to tax in its Return of Income.

Per contra, Shri Manoj Kumar representing the department supported the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submitted that the lease deed itself envisaged both rent and CAM obligations as part of a single arrangement; therefore, payments were covered by the wide definition of rent u/s. 194-I of the Act.