CIT (TDS)-1 Vs Liberty Retail Revolutions Ltd (Delhi High Court)
Delhi High Court has delivered a definitive ruling on the classification of Common Area Maintenance (CAM) charges for the purpose of Tax Deducted at Source (TDS), affirming that these charges are subject to TDS under Section 194C of the Income Tax Act, 1961 (payments for works contracts), rather than Section 194-I (rent). This decision came in an appeal filed by the Commissioner of Income Tax (TDS)-1 against Liberty Retail Revolutions Ltd, concerning the Assessment Year 2011-12. The High Court’s verdict reinforces the position previously taken by the Income Tax Appellate Tribunal (ITAT), dismissing the Revenue’s challenge.
Read SC Judgment: CAM Charges Not Rent, TDS Under 194C Upheld by SC Due to Nature of Payment
The crux of the dispute revolved around the appropriate section for deducting TDS on payments made by tenants for the maintenance of common areas within a commercial complex. Liberty Retail Revolutions Ltd, a company engaged in the fashion products business, including leather accessories, watches, and artificial jewellery, operates from premises within Ambience Mall in Vasant Kunj, New Delhi. This mall, along with Ambience Mall, Gurgaon, is managed by the Ambience Group. Units within these malls are either sold or licensed out, and the Ambience Group levies CAM charges from the various occupants.
