Income Tax Appellate Tribunal - Delhi
Bose Corporation India Private ... vs Assistant Commissioner Of Income Tax, ... on 5 December, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. M. Balaganesh, Accountant Member
ITA No. 2003/Del/2024 : Asstt. Year : 2013-14
ITA No. 2004/Del/2024 : Asstt. Year : 2016-17
Bose Corporation India Pvt. Ltd., Vs ACIT,
1st Floor, Tower-A, Building No. 10, Circle-73(1),
DLF Cyber City, DLF Phase-II, New Delhi-110092
Gurugram, Haryana-122002
(APPELLANT) (RESPONDENT)
PAN No. AAACB3260A
Assessee by : Dr. Sashwat Bajpai, Adv.
Revenue by : Sh. Poojan Rana, Sr. DR
Date of Hearing: 19.11.2024 Date of Pronouncement: 05.12.2024
ORDER
Per Satbeer Singh Godara, Judicial Member:
These assessee' s instant two appeals ITA Nos. 2003 & 2004/Del/2024, for Assessment Years 2013-14 & 2016-17, arise against the CIT( A)/NFAC, Bengaluru's common orders dated 29.02.2024 in DIN & Order No . ITBA/APL/S/250/2023- 24/1061748591(1) and in D IN & Order No. ITBA/APL/ S/250/2023-24/1061768679(1), in proceedings u/s 201(1A) and 201 of the Income Tax Act, 1961 (in short "The Act").
2. Heard both the p arties at length. Case file perused.
3. The assessee's lead appeal ITA No. 2003/Del/2024 for A.Y. 2013-14 raises the following grounds:
2 ITA Nos. 2003 & 2004/Del/2024Bose Corporation India Pvt. Ltd.
Common Ar ea Ma intenance (CAM) C harges "1 . That on the fa cts a nd c ircumstances of t he ca s e and in law, t he Ld. C IT (A )/AO has er red i n holdi ng t hat Common Area Maintenance ('CA M') charges paid by the Appellant ar e i n the nature of re nt a nd are liable t o TDS u/s 1941 of the Ac t.
2. That on the facts a nd circumstances of the c as e and in law, the Ld . C IT (A)/AO ha s failed to a ppreciate t hat the CAM charges paid ar e towa rds servi ces in r elati on to common area whic h is not i n the poss ess ion of the Appellant a nd comprise ser vices like cl eani ng, mai ntenanc e, upkeep, sec urity, air c onditioni ng, landscapi ng, si gnages, water , el ec tricity , c onsumabl es , lighting, sinki ng fund etc. Cha rges for the said ser vices are not i n t he nature of rent a nd are thus liable to TDS u/s 194C of the Ac t.
3. That on the facts a nd circumstances of the c as e and in law, the L d. C IT (A)/AO has err ed i n holdi ng that in the case of a single c omposite a greeme nt for Rent and CAM c harges , the char ges for C ommon Ar ea Mai ntenanc e shall fall under the c ategory of rent.
4. That on the facts a nd circumstances of the c as e and in la w, the Ld. CIT (A) /A O err ed in ignoring the rati o of the j udgments whic h have c onsistently held c harges whic h are for common s ervic es us ed by other less ees as well, and c annot be ter med a s 'us e of land" a nd does not fit i n the defi ni tion of 're nt' as giv en u/s 194-1 of the Act.
5. Tha t on the facts a nd circumstances of the c as e and in la w, t he Ld. CIT(A ) erred in i gnoring the observatio ns of t his Jurisdictional ITA T D el hi de cision i n the cas e of Yum Res taura nts India (P) Lt d. v. ACIT (TDS ), ITA No. 1115/Del/2020 wherei n it was observed that,"6 ..... t hat the provisions for rent are governed by S ec ti on 1941 and CA M char ges by S ecti on 194C of the Act . The AO is directed to r e-c omput e t he CA M cha rges, taki ng into considera tio n the t wo s ecti ons menti oned above. "
6. That on t he facts and circ umst anc es of the cas e, the Ld. CIT (A ) ha s erred i n i gnori ng the dec isi on of t his Ho n'bl e Jurisdictiona l Tribuna l in M/s. Johns on Wa tc h Company P vt. Ltd. v. AC IT Circle 75(1), New Del hi, ITA No . 1738/Del/2020 and Pa ramount Restaura nts Pvt. Ltd CIT/A), Circle-19(1), Delhi , I TA No. 1730/Del /2021 wherei n it was hel d that the 'rent ' is on ac c ount of 'us e' of the property given into a excl usive poss ess ion of the les se e for the r unni ng of busi ness at the CA M c harges 3 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
are for maintena nce o f the common areas, us ed or not us ed by the lessee a nd t hey ar e paid under different claus es of t he a greement and by s epar ate invoic es.
7. Without prej udi c e to the above, that on the fac ts and circums tanc es of t he ca se, t he Ld. CIT (A) has i gnored the pri nciple that t he Common Ar ea Maintenanc e C harges sha ll not fall under the category of rent u/s 194-1 wher e CAM char ges and rent c harges ar e bei ng paid t o differ ent ve ndors /co mpa nies, even though under the si ngl e c omposite leas e a greeme nt.
8. That on the facts a nd circumstances of the c as e and in law, the Ld. C IT (A) has er red in not appr ecia ti ng t hat the Common A rea Mai ntena nc e C ha rges are s ubject to deduc tion of tax at source u/s 194C of t he Inc ome Ta x Act a t 2% and no t at 10% u/s s ecti on 1941.
9. That on the facts a nd circumstances of the c as e and in law, the Ld. CIT (A) ha s erred i n upholding the findi ngs of Ld. AO in trea ti ng t he Appella nt as "Ass ess e e in Defa ul t" unde r sec tion 201(1)/(1A) of t he Ac t for short deducti on of tax of INR 15,16,427/- (along wi th inte rest of INR 16 ,22, 103/- there fore total TDS liability of I NR 31,38,530/-).
10. That on the facts a nd i n t he c ircums ta nc es of the case a nd in la w, the Ld. C IT (A) has err ed in i gnoring several decisions of the Co -ordi nate B ench of t his Tri bunal wherei n it was observed that the pr imary liability to pay t he ta x is on t he recipient of income and theref ore, such tax ca nnot be rec over ed fr om the Appellant.
11. That on the facts a nd i n t he c ircumst a nc es of the case a nd in law, the Ld. C IT (A) ha s vehemently i gnored the la w laid down by the H on'ble S upreme C ourt in CIT Vs Eily Lil ly & C o Pvt. Ltd. (2007) 312 ITR 225 (SC ) and reit erat ed by Hon'bl e Mumbai ITAT in ICICI S ec urities Limited, ITA No. 1511/Mum /2022 that "t he liability o f deduc ti ng tax at s ource is in the nat ure of a vica rio us liability, whic h pre -supposes existe nce of primary liability. The sa id liability is a vica ri ous lia bility a nd the pri ncipal liabili ty i s of the pers on who is taxable .... .... .."
12. T hat on facts and in ci rcumsta nces of the cas e, the Ld. C IT (A) has ev idently i gnore d the decis i on of the Co- ordi na te Benc h of this Tribunal in Ramkris hna Ved anta Math vs . ITO. (2012) 24 taxmann.c om 29 (ITAT Kol kata ) wherei n it wa s observe d t hat the ques tion of ma king good the l os s of rev enue a rises onl y whe n there is indeed a l oss of r eve nue and t he l oss of revenue ca n be 4 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
there only when recipie nt of i nc ome ha s not p aid ta x, whic h the L d. AO a nd/or C IT(A ) fai led to enquir e and confirm.
13. T hat on facts and in ci rcumsta nces of the cas e, the Ld. CIT (A) has i gnored the fact tha t in the abs enc e of the statutory pow ers to r equisiti on any i nforma ti on from the recipi ent of income, the ass esse e i s i ndeed not a bl e to obtai n t he s ame, a nd t hus the onus was o n the L d. AO/ C IT(A ) t o enquire as t o the pay ment by the person on whom the pri ncipal liability to pay the tax res ted upon.
14. T hat on facts and in ci rcumsta nces of the cas e, the Ld. C IT (A) erred in not appreci ati ng the submiss ions , replies a nd r esponses filed before the L d. AO /Ld. C IT (A) and wrongl y treated the Appellant -Assess ee as 'As sess ee in defa ult' wi thi n the meani ng of S ecti on 201(1) of the Act despite the s ettled principles of law i n favo ur of the Appellant - Ass esse e."
4. Bo th the le arned representatives next invite our attention to the Addl./JC IT's imp ugned lower appellate discussion affirming the Assessing Officer's findings holding that as the assessee in default; for not having deducted TDS o n common area maintenance charges, as under:
3. The brie f of the case is t hat B ose India is a co mpa ny inc orporated on June 21, 1995. The A ppel lant is mai nl y enga ged i n the busi ness of tr adi ng/sal e of a udio equi pment & ac cessories for pers onal a nd profess i onal us e. The Appellant ha s entered int o l eas e a gre ements with ce rtai n Lessors. In this rega rd, the Appella nt has paid prope rty rental and Common Area Ma i ntenance ('CAM') c harges whic h ar e sepa ra tely defined i n the agre ements . The prop erty along wi th the c ommon area is o wned by the L ess or for which a spe cified amount o f rent al was c har ged from the Appella nt on the bas is of area ta ken on lease. Whereas, the CAM charges were to wards t he expens es incurred t o mai nte nance of the common area. Gi ven the sa me, the A ppellant has deduc ted ta x at t he ra te of 10% under the pr ovisions of sec tion 1941 of the Act for payment made towa rds use of la nd / area (i.e. re nt) to the Lessor a nd deduc ted tax at the rat e of 2% /1%, a s the case ma y be, under the prov isions of sec ti on 194C of the Act for the C AM charges.5 ITA Nos. 2003 & 2004/Del/2024
Bose Corporation India Pvt. Ltd.
A Survey ac tion u/s . 133A(2A) o f t he Ac t was c onduc ted in t he cas e of Ambience Group by AC IT (TDS )73(1), Del hi on 12.02.2018 wi th the purpos e to verify complianc e to the provisions of C hapter XVII B of the Act. As a res ult to Surv ey action, the Ld. AO found t hat bot h the rent and common ar ea mai nt ena nc e (CAM) charges a re paid to group compani es of si ngl e vendor. The ass es s ee ma de TDS a t 10% for Yent a nd TDS a t 1 % for CA M cha rges . The L d. A O passed the order that the rat e of TDS for CAM char ges should be a t 10% inst ead of 1% since, CAM charges ta ke part of the rent which is liable to T DS at the ra te of 10% u/s . 1941 thus , levying TDS on CAM char ges am ounti ng to R s.15,16,427/- as short deduc tion and interest on the abov e s hort deduc tion amo unti ng Rs . 16,22,103/-u/s .201(1A), The a pp ellant a ggrieved by the order of the AO, preferr ed t he instant appeal.
4. It is obs erv ed tha t the a ppellant filed 3 grounds of appeal.
4.1 Gr ound no.1: That on the facts a nd circ ums ta nces of the c as e and i n l aw, the Lea r ned Assistant C ommis sioner of Inc ome Tax (TDS) Circ le 73(1), N ew Del hi (Ld . AO) has erred i n treati ng the a ppellant as Ass esse e in Defaul t under s ection 201(1)(1A) o f the Ac t for s hort deduc tion of t ax of INR 15,16,427/- by holdi ng that the pay ment for c ommon area mai nt ena nce (CAM) c har ges is in the nature of rent a nd t hereby subjec t t o under sec tion 1941 of the Act. C onsequently the L d. AO, has als o erred i n levying i nt erest of INR 16,22,103 under sec tion 201(1A) of the Act on suc h s hort deduc ti on of ta x.
It is obse rved that rent a nd common a rea mai ntena nce charges a re paid towa rds the sa me c ompa ny (or compani es p ertaini ng to a par ticula r vendor), but different rates of TDS has been applied by the appellant. Common a rea maint enance c harges a nd rent tho ugh the nomencla t ur e appea rs different comm on a rea mai ntenanc e c harges com es withi n the ambi t of rent henc e the ass ess ing of ficer is right in holdi ng t hat the appella nt was required to deduc t TDS on c ommon area mai ntenanc e c harges at the ra te of 10% a nd the pay ments made for common a rea mai ntena nc e fal ls under the purvi ew of 1941 a nd not 194C.
Relia nc e is placed on the decision of Hon'bl e Hi gh C ourt in t he cas e of S unil Kumar Gupta R . Asst. CIT [2016] 73 ta xmann.com 374/243 Ta xman 65/389 ITR 38/[2017] 298 CTR 106 (Punj, & Ha r.), wherei n I is held tha t the 6 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
ambit of the t erm "rent" is wide and it includes a ny amo unt which is paid in co nsideration of the property bei ng let. The mai nt ena nce char ges must for m a part of the re nt.
Common a rea a nd ot her s ervic es provide d by the less or are also enjoyed by t he appella nt along wi t h the specified area, henc e the appellant is re quired t o pay lease rent as well as CAM charges . It is als o notic ed t hat there is no dis ti nction between CA M c harges a nd lease rent payments except, for ra isi ng separa te i nvoi ces . Ther efore co mmon area mai nte na nc e parta kes the character of r ent only.
Further ex pla nation under section 194 I stat es t hat "R ent" t akes i nto its ambit any payment, by whatever name c alled, under any lease, s ub-l ea se, tena nc y or a ny ot her a gr eement or ar rangeme nt for the us e of (either separately or together ) a ny (b) buildi ng or (c ) l and appur tenant , to a building (incl uding factory building) or
(h) fitti ngs, whet her or not any or a ll of the abov e ar e owned by t he payee and henc e it is clear tha t a ny pay ment ev en for use of a ny buildi ng and l and appur tenant , the re to i ncl udi ng fur niture/fittings is part of rent. C BDT v ide circul ar No. 715 dated 8 -8-1 995 (Questi on N o. 24) has al so clarified t ha t ther e is is for ta ki ng pr em I NC OME TAX composite arra ngement for use of premis es a nd provision o f ma npower, s uc h a greement in ess enc e t aki ng pr emises on rent a nd henc e provisio ns of s ec tion 1941 a re-applicabl e.
4.2 Gr ounds no 2 and 3 That on the fac ts a nd i n the circ umsta nces of t he c as e and i n la w, the Ld. AO has erred i n holdi ng the Appellant as an 'Ass essee i n Default ' for s hort deducti on of ta x on pay ment of CAM c harges by i gnori ng the fact tha t the prima ry liabili ty to pay the ta x is on the recipient of inc ome a nd therefor e, suc h ta x canno t be r ec eived f rom the Appella nt.
Witho ut pr ej udic e to the a bove grounds, o n t he fa cts and i n the circums tances of the ca se and i n la w, t he L d. AO has not considere d t he fact tha t there is no l oss o f rev enue to t he Gov ernment if the recipi ents ha ve filed their r eturn of inc ome a nd paid ta xes thereon and theref ore, any further rec ove ry of tax from the Appellant woul d lea d t o unjus t enric hment which is a gai ns t the basic pri nc iple of nat ural justice.
Appellant's s ubmission is that the r ecipient of the inc ome s houl d be taxed, a nd not the appella nt a nd t hat 7 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
the appellant shoul d not held as asses s ee in default Ho wever provis o to s ecti on 201 re ads as follows
201. Cons equences of failure t o de duct or pay.
(1 ) Where any person, includi ng t he pri ncipa l offi c er of a company ,
(a) who is requi red to deduc t a ny sum i n a cc ordanc e with the pr ovi sions of this Act, o r
(b) refer red to i n sub-secti on (1A) of section 192, being an empl oy er, does not deduct, or does not pa y, or a ft er s o deduc ting fail s t o pay , the whole or any part of the tax, as required by or under t his Act, then, such perso n, s hall, without prejudic e to a ny other consequences whic h he may i nc ur , be deemed to be an assess ee i n defa ult i n res pect of s uch ta x:
Pro vided that any person, i ncluding t he pri ncipal offi c er of a compa ny , who fails to deduct the whol e or a ny part of the ta x in acc orda nc e wit h the prov isions of t his C hapter on the s um pai d to a payee) or on the s um credited t o t he acc ount of a [payee] shall not be deemed to be an assesse e i n defa ult i n respect of s uc h ta x if such pa ye e)-
(i) has furnished his return of i ncome under s ec ti on 139,
(ii) has tak en i nto account such sum for c omputing inc ome i n s uc h re turn of i ncome: and (iii ) has paid the tax due on t he i nc ome declared by him in suc h r etur n of income, and the person fur nishes a c ertifica te t o t his effect from an a cc ountant i n suc h form as may be prescribed i n rul e 31 ACB a nd form 26A In Rul e-31ACB, Inc ome-ta x Rul es, 1962 [Form for furnis hing certificat e of accountant under the first provis o to s ub-section (1 ) of s ection 201.
31ACB. (1 ) The ce rti ficate from a n a ccounta nt under the first proviso to s ub-section (1 ) of s ecti on 201 sha ll be furnished in Form 26A to the Di rector General of Inc ome-t ax (Syst ems) or the perso n a ut horized by the Direct or Gener al of Income-t ax (S ys tems) i n a cc ordanc e with the pr ocedures, forma ts a nd standa rds s pecified 8 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
under s ub-rul e (2 ), a nd veri fi ed i n accordanc e wi th the proc edur es, formats a nd sta ndards speci fied under s ub- rule (2).
(2 ) The Di rect or Genera l of Inc ome-t ax (Sys t ems ) s hall specify t he pr oc edur es, formats and sta ndards for the pur poses of fur nis hi ng a nd verifica tion of the For m 2 6A and be respons ibl e for the da y-to-day admi nist ra tion in rela tion to furnishi ng a nd ver ifi cati on of the For m 26A in the ma nner s o specified.] 4.3 Hence the onus is on the appellant t o pr ov e t hat the rec ipi ent o f the i ncome pa id by the appella nt is offered to t ax. H oweve r no certi ficat es or other evidenc es as ma ndated i n the above proviso a r e submitted by the as sess ee."
5. It is in this factual backdrop that the assessee's learned counsel takes us to the tribunal's recent order dated 27.04.2023 in M/s Chadha Sugars and Industr ies Pvt. Ltd. Vs. AC IT, ITA No. 1312/Del/2022 for A.Y. 2014-15 holding TD S as not deductible u/s 194I on such co mmon area maintenance charges a s under:
"6 . On careful considera tion of t he rival submiss ions , first of all , we are of the c onsidered opi ni on that the details of CAM, the details of rent a nd CAM cha rges paid by the ass ess ee, c opy of agree ment, copy of a gre ements bet ween M/s. Ambience Dev elopers & Infr astructur e Pvt . Ltd and M/s . C hadha Sugars Pvt. L td date d 15.07.2013 rev eals t hat the Ambienc e Facilities Management Pvt. Ltd s ec ured the rent ed premises and under fra nchis e agre ement giv en the sa me to t he pres ent ass ess ee and the fra nc hisee was under obli ga tion t o pa y rent a nd CAM charges on beha lf o f ori gi nal tena nt to the owner as w ell as CAM ser vice pr oviders. I t has no t been c ontrov erted by t he ld. S r. DR t ha t t he assess ee has paid rent to different property owners a nd CAM char ges to s epar ate servic e provide rs.
7. Now, we tur n t o the findi ngs given b y the ITAT, Del hi 'B ' B enc h i n the case of C onna ught Plaza Res ta ur ants P. Ltd. (supra ), wher ei n the Be nch has also c onsi dered the earlier judgement of ITAT 'B ' B enc h in t he c ase of Kapoor Wa tc h Compa ny Pvt. Ltd. (s upra ) a nd held a s under:-9 ITA Nos. 2003 & 2004/Del/2024
Bose Corporation India Pvt. Ltd.
"11. We shal l now advert to the clai m of the assess ee tha t both the l ower authorities had err ed in la w a nd the facts of t he case i n concl udi ng that the CAM charges paid by the as sess ee t o Ambience Group (s upra) wer e liable for deduc tio n of t ax a t sourc e @10%, i. e., u/s.1 94-I a nd not @2%, i. e., u/s .194C of the Act , as claimed by t he assess ee. S ucci nctly stat ed, the ass essee c ompa ny whi c h is enga ged, i nter alia, i n the business of runni ng of fas t f ood res ta urants in North and East I ndia under the bra nd name "Mc . Donalds", had taken s hop/spac es /units i n commercial areas/malls on leas e from va rious parties by wa y of lease agreements . Apa rt from the r ent, the as sessee-c ompa ny ha d als o pai d CAM charge s, i.e., charges whic h are funda menta lly for availing c ommon area mai ntenance s ervices, whic h may either be prov ided by the l a ndl ord or a ny othe r a gency. In so far the CAM char ges t hat were paid by the assess ee to the s ame party to whom rent was bei ng paid purs uant to t he l ea se a gr eem ents, or to a n a ppoi nted or r elated party w ith whom the leas e a greem ent had bee n e nter ed into, t he AO wa s of vi ew tha t the as sessee was obligate d to deduct tax at s ourc e @10%, i .e. , 194-I of the Act. Backed by his a fores aid conviction the A .O had hel d the assess ee as a n as sessee-in-d efault u/s.201(1 ) of the Act, for s hort deduction of tax a t so ur ce @2%, i.e. u/s.194C inst ea d of @10% u/s 194-I o f the Act .
12. Iss ue i nv olv ed qua the afor esa id controvers y lies in a narrow c ompas s, i.e., as to whet her the CAM charges paid by the a ss essee were l iable for deduction of tax at s ourc e u/s.194-I, i.e., @10% or u/s 194C, i.e. @2 %. Before a dverting a ny further it woul d be releva nt to c ull out t he provisions of S ecti on 194-I of the Act, whic h reads a s under:
"194-1 . Rent. A ny person, not being an individual or a Hindu undivided family, who is r esponsibl e for pa ying to a resident any i nc ome by wa y of rent, s hall, at the ti me of credit of such i ncome t o t he ac c ount of the pay ee or a t t he time ofpayment ther eof in c as h or by the issue of a c heque o r draft or by any other mode, whic hever is ear lier, deduc t i ncome-ta x t hereon at the ra te of--
(a) two per c ent for the us e o f a ny mac hi nery or pla nt or equi pment; a nd
(b) ten per cent for the us e of a ny la nd or buildi ng (i nc l udi ng factory building) or la nd appurt enant to a 10 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
bui lding (i ncludi ng factory buildi ng) or fur nitur e or fitti ngs:
Pro vided that no ded uction s hall be made under this section where the amo unt of s uc h inc ome or, a s the case ma y be , the a ggrega te of the amounts of s uc h income c redited or paid or lik ely to be cr edit ed or paid duri ng the fi nancial y ea r by the afor es aid per son to t he account of, or to, the pa yee, does not exc eed one hundred a nd eighty thousand rupees :
............ .......... ......... ...... ..........
Expla nati on.-For the purposes of thi s sec ti on,-
(i) "re nt" means any payment , by whatever name called, under any lease, sublease, tenanc y or any ot her a gre ement or arra ngeme nt for the us e of (eit her separately or t ogether ) a ny,-
(a) la nd; or
(b)building (i ncl uding factory buildi ng); or (c ) land appurtena nt to a buildi ng (i ncl udi ng fac t ory bui lding); or
(d) mac hi nery ; or
(e) plant; or
(f) equipment; or
(g) fur nit ure; or
(h) fit ti ngs , whether or not any or all of the ab ove a re owned by the p ayee; ......... ... ...................." (emphasis supplied) On a perusal of the defi nition of the termi nology "r ent " as had be en pro vided i n the afor esaid s tatut ory prov ision, viz. Sec. 194-I of t he Act, we fi nd that the same i nc l udes pay ment for t he use of la nd, buildi ng, land appurtenant t o a building, mac hi nery, pla nt, equi pment, furni ture or fitti ngs . In s um a nd subst anc e, onl y the pay ments for us e of premises/equipment is cove red by Section 194-I of the Ac t. I n o ur considered vi ew, a s the CAM c harges are completely independent and separate from r ental pay ments, and are funda menta lly for av ailing c ommon 11 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
area mai nte nanc e servic es which ma y be provided by the la ndlord or any other a gency, therefore, the sa me ca nnot b e brought wi thi n t he scope a nd gamut of the defi nition of term inology "r ent". On t he other ha nd , we a re of t he c onside red view , that as the CAM charges ar e i n the nature of a contra ct ual pa yment made to a pers on for ca rryi ng o ut the wor k i n lie u of a contr act , t herefore, the same woul d c learly fall withi n t he mea ni ng of "work" as defi ned i n S ec tion 194C of the Act. In our c onsidered view, as the CAM charges ar e not paid for use of la nd/building but are paid for carryi ng out the work for mai ntenanc e of the common area/f acil ities that ar e ava ilable alo ng with the l eas e premises, t herefore, the same could not be character ized and/or brought withi n t he meaning of "r ent " as defined i n S ecti on 194-I of the Act .
13. In the backdrop of our afor esa id deliberati ons, we concur with the claim of the ld. AR tha t as the pay ments t owards CAM c ha rges ar e in the nat ure of contract ual paym ents that are made for availing certa i n s erv ices/facilities, a nd not for use of any premises/equipment, therefore, the same would be subjected t o deduc tio n of tax at sourc e u/s.194C of the Act. Our afo resaid vi ew is s upport ed by the order of t he ITA T, Delhi in the cas e o f Kapoor Watc h Company P. Ltd. v s. AC IT in ITA No.889/Del /2020. In the afor esaid ca se, the genesis of the controvers y as in the cas e of the ass ess ee bef ore us were cer tai n proc eedi ngs conducte d by t he D epar tment i n the cas e of Ambi ence Group (s upra ) to verify the complianc e of the prov isions of C hapt er XV II-B o f the Ac t. On the basis of the f acts t hat had emer ged in the c ours e of the proceedi ngs, i t wa s ga ther ed by the D epartment tha t t he o wners of the malls in ad dition to the r ent had be en c ollecti ng CAM c harges from the l ess ees on whic h T DS was deducted @2% i.e u/s .194C of the Act. Observ i ng, that pa ym ent of CAM char ges were es sentially a par t of t he re nt, the AO trea ted the as sessee as an as sess eein-defa ul t f or s hort deducti on of tax a t so urce u/ss . 201(1)/201(1A) of the Act. O n appeal, it was obs erved by the Tribunal t hat t he CAM charges paid by the a ss esse e did not form part of the ac tual rent that was paid to the owne r by the as sessee c ompa ny. As the fac ts involv ed i n t he cas e of the assess ee before us remai ns the same as were therei n i nv olv ed in the a foresaid c ase, therefore, i n the bac kdrop of o ur af oresaid deliberatio ns , a nd res pectfully followi ng the a foresaid order of the Tri buna l, we herein c onclude, tha t a s claimed by the as sessee, a nd ri ghtl y so, the CAM char ges paid by it were liable for deducti on of tax a t so urc e @2%, i.e., 12 ITA Nos. 2003 & 2004/Del/2024 Bose Corporation India Pvt. Ltd.
u/s .194C of the Act. We, thus , in ter ms of our af ores aid observations s et-a side the order o f the CIT(A) who ha d appr ov ed t he order pas s ed by the AO tr eati ng the ass essee c ompa ny a s an as sess ee-i n defaul t u/s .201(1) o f the Ac t. The Grounds of appeal no.4 to 4.5 ar e a llowed in terms of our a fores aid observ ati ons."
8. In vi ew of the abov e, we ha ve no hesitati on to hold tha t t he CA M charges pa id by the as ses see did form part of t he act ual rent pa yment which was paid to the prop erty owner by the ass essee compa ny. In the pres ent c as e, the facts a nd circumstanc es o f the pay ment of CAM charge s ar e quite simi lar to the fa cts and circ umsta nc es o f the above tw o c ases i.e. , Kapoor Watch Company Pvt. Ltd. (s upra ) a nd C onna ught Pla za Res ta urants P. Ltd. (supra). Therefore, I am i nclined to hold t hat CAM cha rges paid by the ass ess ee were lia bl e for deducti on at source @ 2% i .e., u/s 194C of t he A ct. Ther efore, i n terms of the prop ositi on render ed by ITAT Del hi i n the abo ve referred orders a nd observatio ns made by me i n the ea rlier part of this order, I s et as ide the order of ass ess ment as well as first a ppellate order and di rect t he AO to delet e the entire addition made in the hands of the as sessee ."
6. Learned departmental representative hardly dispute that the a ssessee herein had infact made payment not to the landlord entity but its group company only which could attract the corresponding TDS @ 10% u/ s 194 I of the Act.
7. Faced with this situation, we adopt the learned co- ordinate bench detailed discussion mutatis mutandis to allow the assessee' s instant sole substantive ground challeng ing sec tion 201(1) and 201(1A) TDS and interest liab ility; respectively in very terms. This lead appeal IT A No. 2003/Del/2024 succeeds therefor e.
8. Same order to follow in the assessee's latter ap peal ITA No. 2004/Del/2024 since raising identical so le subs tantive ground of TDS deduction on common area maintenance charges.
13 ITA Nos. 2003 & 2004/Del/2024Bose Corporation India Pvt. Ltd.
8.1 No o ther ground or arguments has been pressed before us.
9. These assessee 's twin appeal ITA Nos. 2003 & 2004/Del/2024 are allowed in above terms. A copy of this common order be placed in respective case files.
Order Pronounced in the Open Court o n 05/12/2024.
Sd/- Sd/-
(M. Balaganesh) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 05/12/2024
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR