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2022 (10) TMI 256 - AT - Income TaxTDS u/s 194I OR 194C - deductibility of the tax on the entire payment as rent or to be segregated into rent and CAM - HELD 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 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 - AO is directed to re-compute the CAM charges, taking into consideration the two sections mentioned above. Period of limitations for passing an order u/s 201(1) / 201 (1A) - Treating the assessee as assessee in default - With regard to barring by limitation, we rely on the order of the Co-ordinate Bench of Tribunal in the case of ITO Vs. Sh. Rang Infrastructure (P.) Ltd. 2019 (9) TMI 307 - ITAT AHMEDABAD and dismiss the ground no. 1 of the assessee.
Issues Involved:
1. Applicability of TDS provisions under Sections 194I and 194C of the Income Tax Act. 2. Segregation of rent and Common Area Maintenance (CAM) charges for tax deduction purposes. 3. Interpretation of lease agreements for determining TDS liabilities. 4. Consideration of judgments and circulars in determining tax liabilities. 5. Application of interest on alleged short deduction of tax. 6. Acceptance of lower deduction certificates under Section 197 for tax payments. 7. Impact of amendments in Section 201(1)/201(1A) on tax liabilities. Analysis: 1. The appeal addressed the issue of the Assessing Officer (AO) passing an order under Sections 201(1)/201(1A) of the Income Tax Act, creating a demand that the Assessee argued was time-barred. The Assessee contended that the provisions of Chapter XVIIB were not applicable, and Section 194I did not apply to their case. The Tribunal analyzed the lease agreements to determine the nature of payments made and directed the AO to recompute the charges under Sections 194I and 194C accordingly. 2. The central issue revolved around whether the CAM charges should be considered part of rent liable for TDS under Section 194I or treated separately under Section 194C. The Tribunal examined the lease agreements and observed that the CAM charges were distinct from lease rentals as they involved separate operations and staff employment. It held that rent fell under Section 194I, while CAM charges were governed by Section 194C. 3. The Tribunal considered the arguments presented by the Assessee regarding the interpretation of lease agreements and the applicability of TDS provisions. It relied on legal precedents and circulars to determine that CAM charges constituted part of rent for TDS purposes under Section 194I. The Tribunal dismissed the Assessee's contentions based on the specific terms of the lease agreements and legal interpretations. 4. The judgment also addressed the issue of interest levied on the alleged short deduction of tax. It analyzed the provisions of the Act and concluded that interest on the short deduction should be cancelled based on the amendments in Section 201(1)/201(1A) and the discharge of tax liability by the payee. 5. The Tribunal considered the acceptance of lower deduction certificates under Section 197 for tax payments to certain vendors. It highlighted the importance of these certificates in determining the tax liabilities of the Assessee under Section 194C and emphasized the significance of compliance with the amended provisions of the Act. 6. In conclusion, the Tribunal allowed the appeal of the Assessee for statistical purposes, directing the AO to recompute the CAM charges and emphasizing the segregation of rent and CAM charges for TDS purposes. The judgment provided a detailed analysis of the issues raised by the Assessee and the legal interpretations applied to resolve the tax liabilities in question.
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