Case Law Details
PVR Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that determination of the rent or CAM are separate and the CAM arrangements are not essential and an integral part for use of the premises. Hence, provisions for rent are governed by Section 194I and CAM charges by Section 194C of the Act.
Facts- Assessee mainly contests that CIT(A) has erred in holding that Common Area Maintenance (CAM) charges paid by appellant are in the nature of rent are liable to TDS under section 194-I of the Income Tax Act.
Thus, the issue before ITAT narrows down to deductibility of the tax on the entire payment as rent or to be segregated into rent and CAM.
Conclusion- The undisputable fact in this case is that while the lease rentals are paid based on a fixed percentage on the net revenue, the CAM charges are based on the per sq. ft. area. The observation of the ld. CIT(A) is that the rent by any name, lease, sub-lease, tenancy or the reliance on the judgment wherein the services are in trapolated into the rent stand on a different pedestal. In the instant case, 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.
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