The ITAT Delhi reviewed the appeal filed by Reebok India Company against the JCIT (OSD) pertaining to the A.Y. 2011-12. The main issues revolved around the assessment of tax deductions under Section 194I of the Act and the applicable statute of limitations for the said deductions.
Reebok India is engaged in the distribution of footwear and apparels in India, selling its products directly to retailers under franchise agreements. The case arose from survey proceedings involving the Ambience Group, which manages the malls where Reebok’s stores are located.
The crux of the dispute was the nature of Common Area Maintenance (CAM) charges collected by mall owners. The tax authorities treated these as rent, subject to higher TDS rates under Section 194I, whereas Reebok contended that these should be considered business receipts, not rent, referencing a judgment from the Mumbai High Court supporting their stance.
The ITAT sided with Reebok, primarily on procedural grounds related to the statute of limitations. The Tribunal held that the assessment order was time-barred, having been issued after the allowable period for such actions had expired. This conclusion was based on the dates when Reebok filed its TDS statements and the subsequent legislative amendments extending the limitation period, which the Tribunal ruled could not be applied retrospectively in this case.
The decision underscores the importance of adhering to statutory timelines in tax matters and clarifies the treatment of CAM charges under tax law. It also highlights the potential conflicts between mall operators and tenants over tax responsibilities on such charges.
ITA No. 319/DEL/2021 – Reebok India Company vs JCIT (OSD), Assessment Year 2011-12
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