Rent is subjected to TDS u/s 194I, whereas, CAM is subjected to TDS u/s 194C

Aero Club Vs DCIT (ITAT Delhi)

ITAT Delhi held that rent is subjected to TDS @ 10% under section 194-I of the Income Tax Act, whereas, Common Area Maintenance (CAM) charges are subjected to TDS @ 2% under section 194C of the Income Tax Act.

Facts- A survey u/s 133A(2A) of the Income Tax Act, 1961 was carried out in the case of Ambience group by the ACIT(TDS)-73(1), New Delhi on 12.02.2018 for the purposes of verification of compliance of TDS provisions. A survey action was carried out at two malls namely Ambience Gurgaon and Vasant Kunj revealed that, the Mall owners have collected/recovered expenses in the form of Common Area Maintenance Charges (CAM) on which TDS was made at 2% u/s 194-C by the payers. On the basis of findings of survey, notice was issued, in response to which requisite details were furnished regarding CAM Charges. As per AO, tax should have been deducted at 10% on CAM charges u/s 194-I instead of 2% u/s 194C and accordingly a show cause notice was issued.

Conclusion- This bench in the case of Yum Restaurants India (P) Ltd vs. ACIT has held that 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 of the Act.

Held that rent is subjected to TDS @ 10% u/s 194-I and CAM charges u/s 194-C @ 2%. Hence, the appeal of the assessee is hereby allowed.

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