Case Number: ITA 1738/DEL/2020
Appellant: Johnson Watch Company Pvt Ltd, New Delhi
Respondent: ACIT Circle-75(1), New Delhi
Assessment Year: 2012-13
Case Filed On: 2020-10-21
Order Type: Final Tribunal Order
Date of Order: 2022-11-09
Pronounced On: 2022-11-09
The case involved Johnson Watch Company Pvt Ltd (the appellant), which challenged the addition of interest for short deduction of Tax Deducted at Source (TDS) on Common Area Maintenance (CAM) charges. The assessment year in question was 2012-13. The appellant had deducted TDS at 2% under Section 194C of the Income Tax Act on CAM charges paid to M/s. DLF Utilities Ltd. and M/s. Ambience Facilities Management Pvt. Ltd. However, the Assessing Officer (AO) contended that TDS should have been deducted at 10% under Section 194I, considering CAM charges as part of the rent. Consequently, a demand of Rs. 31,303 was raised on account of interest for short deduction of TDS.
The primary issue was whether CAM charges should be considered part of the rent and subject to TDS under Section 194I (at 10%) or treated separately under Section 194C (at 2%).
The AO contended that CAM charges were part of the rental activity covered under Section 194I and should be subject to TDS at 10%. The AO treated the appellant as an assessee in default for short deduction of TDS on CAM charges.
The ITAT, comprising Accountant Member Anil Chaturvedi and Judicial Member Anubhav Sharma, considered the submissions from both parties and reviewed the case record. Key findings included:
The ITAT ruled in favor of Johnson Watch Company Pvt Ltd, setting aside the demands under Section 201(1A) for short deduction of TDS on CAM charges. The tribunal held that CAM charges were not part of the rent and should be subject to TDS under Section 194C at 2%.
This case highlights the distinction between rent and maintenance charges in lease agreements and clarifies the applicable TDS provisions for each. The decision underscores the importance of understanding the nature of payments and the corresponding tax implications. The tribunal’s ruling provides clarity on the treatment of CAM charges and reinforces the need for proper classification of expenses in lease agreements.
Order pronounced in the open court on 09/11/2022 by Accountant Member Anil Chaturvedi and Judicial Member Anubhav Sharma.
Johnson Watch Company Pvt Ltd vs. ACIT Circle-75(1) – 2012-13 – TDS on CAM Charges Case
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