ITAT: TDS on Common Area Maintenance (CAM) Charges is Deductible u/s 194C, Not as Rent u/s 194-I
Brief Facts of the Case
The assessee, M/s Glued Entertainment Pvt. Ltd., had leased a space in a mall and was paying monthly rent along with Common Area Maintenance (CAM) charges1. For the Assessment Year 2017-18, the assessee deducted TDS at 10% on the rent under Section 194-I and at 2% on the CAM charges under Section 194C.
The Assessing Officer (AO) contended that CAM charges are an integral part of the lease agreement and should be treated as rent. Consequently, the AO held that TDS should have been deducted at 10% under Section 194-I. The AO treated the assessee as an “assessee in default” and levied interest of ₹95,660 under Section 201(1A)3. The CIT(A) upheld this decision, prompting the assessee to appeal to the ITAT.
Decision of the Tribunal
The ITAT allowed the assessee’s appeal, ruling that the TDS on CAM charges was correctly deducted under Section 194C. The Tribunal provided the following key reasons:
- Nature of Payment: CAM charges are payments for availing common services like maintenance, housekeeping, parking, lifts, and other shared facilities, not for the exclusive use of the property.
- Distinction from Rent: The Tribunal, following its own consistent view in cases like Connaught Plaza Restaurants (P) Ltd. v. DCIT, held that CAM charges are contractual payments for maintenance services and cannot be classified as ‘rent’ for the “use of land or building” under Section 194-I.
- Correct Provision: Since the payments were for services rendered, they fall within the definition of “work” under Section 194C. Therefore, the assessee was correct in deducting TDS at 2%.
The Tribunal set aside the order of the CIT(A) and ruled in favor of the assessee.
Case Citation
M/s Glued Entertainment Pvt. Ltd. vs. Income Tax Officer, Ward-74(3), Delhi
- Appeal Number: ITA No.2718/DEL/2025
- Date of Judgment: 13th October 2025
- Tribunal: Income Tax Appellate Tribunal, Delhi Bench “SMC”
Source :- Judgement