The Tax Publishers2021 TaxPub(DT) 0215 (Del-Trib)


Section 194C read with Section 194-I

Where there was tri-partite agreement among assessee, mall owner and service provided in terms of which assessee paid rent directly to owner and maintenance charges to service provider then assessee was right in deducting tax on maintenance charges paid to service provider under section 194C because such charges never formed part of rent.

Tax deduction at source - Under section 194C or section 194-I - Common area maintenance charges paid - Whether amounts to rent

There was tri-parte agreement between assessee company (tenant), owner and, operation/maintenance services providers agency. That assessee company had paid rent to owner after deduction of TDS under section 194-I of the Act and, to operation /maintenance services providers directly after deduction of TDS under section 194C of the Act. The only dispute that arose by revenue that assessee company should deduct TDS on payment made directly to operation/maintenance services providers under section 194I of the Act instead of section 194C of the Act. The AO observed that the payments in the nature of common area maintenance (CAM) which was essentially part of rental activity are covered under section 194-I and thus calculated the short deductions at Rs. 1,68,499 and treated the assessee in default within the meaning of section 201(1) of the Income Tax Act for failing to appropriately deduct tax as required by the provisions of the Act. The AO also imposed interest for short deduction of TDS at 1% for every month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Held: In the present assessee company's case, the common area maintenance charges was not forming the part of the actual rent paid to the owner by the assessee company. There is a separate agreement between the Owner, Tenant and service provider for common area maintenance which is distinguishing fact and thus, the decision of the Hon'ble Punjab and Harayana High Court will not be applicable in the present case. Therefore, the CIT(A) was not right in confirming the order of the AO.

Distinguished on facts :Sunil Kumar Gupta v. ACIT (2016) 389 ITR 38 (P&H) : 2016 TaxPub(DT) 4297 (P&H-HC).


FAVOUR : In assessee's favour

A.Y. : 2011-12



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