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TMI Blog2022 (11) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... t becomes payable for getting exclusive interest of user of aforesaid properties. The word use here would mean use exclusively by the lessee. The rent as such is consideration for contract of tenancy or lease, where lessee gets beneficial interest of user of demised property to the exclusion of others, including the Landlord/lessor. The common areas have access to and can be used not only by co-tenants but the landlord/lessor too or even other visitors without any right of exclusion by the assessee. Any payment for it s maintenance cannot be said to be consideration for any beneficial interest to exclusion of others. Merely because a single agreement is executed between lessor and lessee creating liability on lessee for both rent and CAM charges does not discard the distinguishing nature of the two payments. As for the Rent and Eviction Laws the two may have no difference but under the Act , they are different head of expenditures of the lessee. The rent is on account of use of the property given into a exclusive possession of the lessee for the running of business but the CAM charges are for maintenance of the common areas, used or not used by the lessee. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company has paid common area maintenance charges (CAM Charges) to M/s. DLF Utilities Ltd. for the retail store taken on lease in DLF Emporio Mall, Vasant Kunj, New Delhi and to M/s. Ambience Facilities Management Pvt. Ltd. for the retail stores taken on lease in Ambience Mall, Vasant Kunj and Gurgaon and has deducted TDS @ 2% on such CAM charges u/s I94C of the Income Tax Act, 1961. However, as per the Ld. Assessing Officer, TDS should have been deducted @ 10% u/s 1941 of the Income Tax Act, 1961 on the CAM charges paid by the appellant company considering the common area maintenance charges as part of the rental activity covered under section 1941 of the Income Tax Act, 1961 and treated the appellant company as assessee in default within the meaning of section 201(1) of the Income Tax Act, 1961 for short deduction of TDS on CAM Charges. The appellant company has submitted Form 26A along with certificates from Chartered accountants of M/s. DLF Utilities Ltd. and M/s. Ambience Facilities Management (P) Ltd. certifying the accountability of such CAM charges in the computation of total taxable income for the A.Y. 2012-13 and payment of tax thereon. However, interest u/s 201(1 A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. However, if maintenance charges etc. are stipulated to be payable by the lessor, it must form part of rent for the purposes of computing income from house property. In the case before hand, the CAM charges are paid by the lessor and the appellant has no control on actual expenditure to be incurred by the lessor. In view of above mentioned factual and legal position, thus it is clear that the CAM charges paid by the appellant are part of rent liable for TDS u/s 1941 and accordingly other decisions and CBDT circulars relied upon by the AR are distinguishable on facts. 3. The assessee has come in appeal before this Tribunal raising following grounds :- 1. That the order of the learned CIT(A) is bad in law and on facts in confirming the order of AO in respect of following demands u/s 201(1A) of the Income Tax Act, 1961 :- TDS demand DLF Utilities Ltd. (in Rs.) Ambience Facilities Management Private Limited (in Rs.) Total (in Rs.) Interest on short deduction of TDS 15,814/- 15,489/- 31,303/- 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) was based on the fact that there is a single lease agreement for payment of rent as well as CAM charges and because the CAM charges are paid by the lessor they are part of the rent liable for TDS u/s 194-I of the Act. It appears from the order of ld. CIT(A) that assessee claimed that as separate invoices were being raised under separate clauses of the lease agreement in respect of rent and CAM charges, the CAM charges were not part of the rent. 7. Now, when the definition of rent as Explanation of section 194-I is seen it is the payment made for the use of certain immovable properties like land or building (including factory building) or land appurtenant to a building ( including factory building) or movable properties like machinery or plant or equipment or furniture or fittings, is considered to be rent. Thus, what is important is the use of these immovable properties or those things appurtenant or fittings with the building that is essential to make a payment fall in definition of rent for purpose of Explanation to Section 194-I of the Act. 7.1 The common area maintenance for which the CAM charges are paid are not for the use of immovable or immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent relied by Ld. AR for the appellant in Kapoor Watch Company Pvt. Ltd. and Connaught Plaza Restaurants P. Ltd.(Supra) case also support the case of appellant wherein the Co ordinate bench observed; We have heard both the parties and perused the material available on record. Ground Nos. 1 and 1.1 are general in nature hence not adjudicated upon. As regards to Ground Nos. 2, 2.1, 2.2 and 3, it is pertinent to note that the assessee company has paid the rent to owner after deduction of TDS u/s 194-I of the Act and the payment for operation/maintenance was made directly to the services providers after deduction of TDS u/s 194C of the Act. There is a Tri-party Agreement which was on record before the Assessing Officer as well as before the CIT(A). These facts were never disputed by the Assessing Officer as well as the CIT(A). The only dispute that arises by revenue that assessee company should deduct TDS on payment made directly to operation/maintenance services providers u/s 194-I of the Act instead of Section 194C of the Act by relying on the judgment of the Hon ble High Court of Punjab Haryana in case of Sunil Kumar Gupta vs. ACIT 389 ITR 38 wherein the Hon ble Court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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