Johnson Watch Company Pvt. Ltd. files an appeal against the order of the CIT(A) for the assessment year 2011-12, challenging the tax deductions at source on common area maintenance charges.
The case addresses whether the common area maintenance (CAM) charges paid by Johnson Watch Company should be subjected to TDS under Section 194I at 10% or under Section 194C at 2%. The appeal contests the CIT(A)’s decision which upheld the Assessing Officer’s classification of CAM charges as rent, thereby requiring a higher rate of TDS.
The tribunal reviewed precedents and submissions, including those from similar cases like Kapoor Watch Company Pvt. Ltd., to conclude that CAM charges do not form part of the rent and should be taxed under Section 194C at 2%. This decision was based on the nature of the payments as contractual and for services, not for the use of property.
This decision clarifies the classification of CAM charges regarding TDS deductions, providing significant relief to businesses incurring similar expenses. It ensures a lower tax liability on these payments, aligning with the nature of the charges as service payments rather than rent.
ITA 1080/DEL/2020: Johnson Watch Company Pvt. Ltd. vs. ACIT, Circle-75(1), New Delhi
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