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TMI Blog2022 (1) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... OR @2% u/s. 194C - HELD THAT:- As the CAM charges are completely independent 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-I. On the basis of the facts that had emerged in the course of the proceedings, it was gathered by the Department that the owners of the malls in addition to the rent had been collecting CAM charges from the lessees on which TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw, the impugned order passed by the Commissioner of Income Tax (Appeals) ['CIT(A)'] is erroneous inasmuch as the same has been passed without correct appreciation of facts and is liable to be quashed. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that the assessment order dated 29.03.2018 passed under section 201(1)/ 201(1A) for assessment year 2011-12 is void ab initio, invalid and bad in law on account of being time barred in view of period of limitation prescribed under section 201(3) of the Act. 4. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding that tax on Common Area Maintenance Charges ('CAM charges'), paid by the appellant to the lessor, was liable to be deducted under section 194I as against tax deducted under section 194C of the Act by the appellant. 4.1. That the CIT(A) erred on facts and in law in treating the CAM charges paid by the appellant as part of rent without appreciating that the same were paid by the appellant for various common service/ facilities which are not at disposal of appellant and not for use of any land/ building/ space or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2%. Backed by the aforesaid information gathered in the course of the survey proceedings, it was observed by the A.O. that the assessee company which had taken spaces on lease in the malls owned by the Ambience Group (supra) for carrying out its business activities had deducted tax at source on the amount of the CAM charges u/s. 194C i.e. @2% instead of u/s. 194-I i.e. @10%. In the backdrop of his aforesaid observations, the A.O. called upon the assessee to explain that as to why it may not be treated as an assessee-in-default u/s. 201(1) of the Act for having short deducted the amount of tax at source on the CAM charges. As the reply filed by the assessee did not find favour with the AO, therefore, he held the assessee as an assessee-in-default for the alleged short deduction of tax at source on the CAM charges of ₹ 4,26,15,083/-, which therein resulted to a consequential demand of tax/interest u/ss. 201(1)/201(1A) amounting to ₹ 64,70,346/-, viz, (i) demand towards short deduction of tax at source u/s. 201(1) of the Act: ₹ 34,09,207/-; and (ii) demand towards interest u/s. 201(1A): ₹ 30,61,140/. 4. Aggrieved, the assessee assailed the aforesaid order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 226 (SC) it could not be treated as an assessee-in-default, thus, directed the AO to verify the factual position, and in case if the deductees were found to have paid the tax on CAM charges by filing their respective returns of income u/s. 139 of the Act, then, the assessee company be not treated as an assessee-in-default. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 6. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR to drive home his respective contentions. Before us the assessee has assailed the sustaining of the order passed by the A.O. u/ss. 201(1)/201(1A) by the CIT(A), on two fold grounds, viz, (i) that the order passed by the AO u/ss. 201(1)/201(1A) of the Act is barred by limitation; and (ii) that both the lower authorities had erred in concluding that the assessee was obligated to deduct tax at source on the CAM charges u/s. 194-I and not u/s. 194C of the Act. 7. We shall first advert to the challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09, w.e.f. 01.04.2010, as claimed by the assessee, or the same is regulated by the extended time period of 7 years as had been made available on the statute vide the Finance Act, 2014, w.e.f., 01.10.2014, as is claimed by the revenue. Before adverting any further, it would be relevant to cull out the respective dates on which the statements referred to in Section 200 of the Act had been filed by the assessee company, as under: Type of Form Acknowledgment No. Date of filing 26Q1 074020100030273 15.07.2010 26Q2 074020200084423 15.10.2010 26Q2 074020100036993 14.01.2011 26Q4 060660200370840 14.05.2011 It is the claim of ld. AR, that as per the mandate of subsection (3) to Sec. 201 as was made available on the statute vide the Finance Act, 2009 w.e.f. 01.04.2010, the time limit for passing of an order under sub-section (1) to Section 201 in the case of the assessee for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation. We are unable to persuade ourselves to subscribe to the aforesaid claim of the revenue. As observed by us hereinabove, in the case of the assessee before us the order under sub-section (1) to Section 201 i.e. deeming the assessee as an assessee-in-default for failure to deduct the whole or any part of the tax from a person resident in India could have been passed latest by 31.03.2014. On 01.10.2014, i.e., the date on which sub-section (3) to Section 201 of the Act was amended vide the Finance Act, 2014, the limitation to pass an order under sub-section (1) to Section 201 in the case of the assessee had already lapsed. As stated by the ld. AR, and rightly so, as per the settled position of law, an amendment enlarging the limitation cannot revive the limitation which had already expired prior to the date of such amendment, and as and where the legislature had intended to amend the enacted law with retrospective effect, it had expressly provided for a retrospective operation of the same. In sum and substance, the proceedings which due to bar of limitation had attained finality under the existing law cannot be revived by referring to the enlarged period of limitation made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statute vide the Finance Act, 2014 w.e.f. 01.10.2014. For the sake of clarity the relevant observations of the Hon'ble High Court are culled out as under: 15. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefore, as such a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No. 2 of 2014 shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its in commercial areas/malls on lease from various parties by way of lease agreements. Apart from the rent, the assessee-company had also paid CAM charges, i.e., charges which are fundamentally for availing common area maintenance services, which may either be provided by the landlord or any other agency. In so far the CAM charges that were paid by the assessee to the same party to whom rent was being paid pursuant to the lease agreements, or to an appointed or related party with whom the lease agreement had been entered into, the AO was of view that the assessee was obligated to deduct tax at source @10%, i.e., 194-I of the Act. Backed by his aforesaid conviction the A.O. had held the assessee as an assessee-in-default u/s. 201(1) of the Act, for short deduction of tax at source @2%, i.e. u/s. 194C instead of @10% u/s. 194-I of the Act. 12. Issue involved qua the aforesaid controversy lies in a narrow compass, i.e., as to whether the CAM charges paid by the assessee were liable for deduction of tax at source u/s. 194-I, i.e., @10% or u/s. 194C, i.e., @2%. Before adverting any further it would be relevant to cull out the provisions of Section 194-I of the Act, which reads as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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-I of the Act. 13. In the backdrop of our aforesaid deliberations, we concur with the claim of the ld. 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. vs. ACIT in ITA No. 889/Del/2020. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se held that the assessee company could not be held as an assessee-in-default u/s. 201(1) of the Act, therefore, the contention of the assessee that the AO be directed to delete the interest charged u/s. 201(1A) of the Act having been rendered as infructuous is therein dismissed. The Ground of appeal no. 5 is dismissed. 16. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. ITA No. 993/Del/2020 (Assessment Year 2012-13) 17. We shall now take up the assessee's appeal for AY 2012-13 wherein the impugned order passed by the CIT(A) has been assailed before us on the following grounds: 1. That on the facts and circumstances of the case and in law, the order dated 28.03.2019 passed by the assessing officer under section 201(1)/ 201(1 A) of the Income Tax Act, 1961 ('the Act') is without jurisdiction, illegal, bad in law and liable to be quashed. 2. That on the facts and circumstances of the case and in law, the impugned order passed by the Commissioner of Income Tax (Appeals) ['CIT(A)'] is erroneous inasmuch as the same has been passed without correct appreciation of facts and is liable to be quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est charged under section 201/201(1 A) of the Act. 18. At the very outset of the hearing of the appeal, it was submitted by the ld. AR that he would confine his contentions in so far the present appeal is concerned only qua the sustainability of the view taken by the AO/CIT(A) on merits i.e. the deeming of the assessee company as an assessee-in-default u/s. 201(1) of the Act for having short deducted the tax at source u/s. 194C i.e. @2% instead of u/s. 194-I i.e. @10%. 19. Ld. Authorized Representatives for both the parties admitted that the issue in question, i.e., as to whether the assessee company was obligated to deduct tax at source u/s. 194C or u/s. 194-I of the Act remained the same as was there in the appeal of the assessee for the immediately preceding year, i.e., AY 2011-12 in ITA no. 1984/Del/2020. In the backdrop of the aforesaid factual position, now when the facts and the issue involved in the present appeal remains the same as were there in the appeal of the assessee for the immediately preceding year i.e. A.Y 2011-12 in ITA No. 1984/Del/2020, therefore, our order therein passed, qua the said limited issue, while disposing off the Grounds of appeal No. 4 to 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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