DCIT Vs Air France (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income-tax (Appeals) [CIT(A)], holding that Common Area Maintenance (CAM) charges are subject to tax deduction at source (TDS) under Section 194C of the Income-tax Act, 1961, and not under Section 194-I applicable to rent. The case arose from proceedings under Sections 201 and 201(1A) for Assessment Year 2017-18.
The assessee, a branch office of a foreign airline operating in India with RBI approval, was engaged in the business of operating aircraft in international traffic. During verification proceedings relating to TDS compliance under Chapter XVII-B of the Income-tax Act, the Assessing Officer (AO) examined payments made by the assessee towards rent and CAM charges.
The AO observed that the assessee had deducted TDS at the rate of 2% under Section 194C on CAM charges. According to the AO, these charges were directly related to rental activity and formed part of the same contractual arrangement governing the tenancy. Therefore, the AO concluded that CAM charges fell within the ambit of “rent” under Section 194-I and should have attracted TDS at 10%. Treating the assessee as an assessee in default under Sections 201 and 201(1A), the AO raised a demand of ₹4,87,705.
