Income Tax Appellate Tribunal – Delhi
Connaught Plaza Restaurants Pvt … vs Dcit Circle-73(1), New Delhi on 31 December, 2021 IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “B” NEW DELHI
BEFORE SHRI G.S. PANNU, PRESIDENT
AND
SHRI RAVISH SOOD, JUDICIAL MEMBER
I.T.A. No.993 & 1984/DEL/2020
Assessment Year: 2011-2012 & 2012-13
Connaught Plaza Restaurants vs. DCIT, Circle-73(1),
P. Ltd., Level 8, DLF Centre, New Delhi.
Sansad Marg,Connaught
Place, New Delhi
PAN: AAACC1201E
(Appellant) (Respondent)
Appellant by: Shri Rohit Jain, Advocate a/w
Ms. Somya Jain, CA.
Respondent by: Shri Sumit Kumar Varma, Sr.D.R.
Date of hearing: 09 12 2021
Date of pronouncement: 31 12 2021
ORDER
PER RAVISH SOOD, JM
The present appeals filed by the assessee
company are directed against the respective orders passed by
the Commissioner of Income Tax (Appeals)-38, New Delhi [for
short “CIT(A)”], dated 31.01.2020 and 10.1.2020, which in
turn arises from the orders passed by the Assistant/Deputy
Commissioner of Income Tax, Circle-73(1), Delhi u/ss.
201(1)/201(1A) of the Income Tax Act, 1961 (for short “Act”)
for AY 2011-12 & AY 2012-13, respectively. As common
issues are involved in the aforementioned appeals, therefore,
the same were heard together and are being disposed off by
way of a consolidated order. We will first take up the appeal
I.T.As. No.993 & 1984/DEL/2020 2
for AY 2011-12 wherein the impugned order passed by the
CIT(A) has been assailed before us on the following grounds :
“1. That on the facts and circumstances of the case and in law, the
order dated 29.03.2018 passed by the assessing officer under
section 201(1)/ 201(1A) of the Income Tax Act, 1961 (‘the Act’) is
without jurisdiction, illegal, bad in law and liable to be quashed.
2. That on the facts and circumstances of the case and in law, the
impugned order passed by the Commissioner of Income Tax
(Appeals) [‘CIT(A)’] is erroneous inasmuch as the same has been
passed without correct appreciation of facts and is liable to be
quashed.
3. That on the facts and circumstances of the case and in law, the
CIT(A) erred in not appreciating that the assessment order dated
29.03.2018 passed under section 201(1)/ 201(1A) for assessment
year 2011-12 is void ab initio, invalid and bad in law on account of
being time barred in view of period of limitation prescribed under
section 201(3) of the Act.
4. That on the facts and circumstances of the case and in law, the
CIT(A) erred in holding that tax on Common Area Maintenance
Charges (‘CAM charges’), paid by the appellant to the lessor, was
liable to be deducted under section 194I as against tax deducted
under section 194C of the Act by the appellant.
4.1. That the CIT(A) erred on facts and in law in treating the
CAM charges paid by the appellant as part of rent without
appreciating that the same were paid by the appellant for various
common service/ facilities which are not at disposal of appellant and
not for use of any land/ building/ space or premise to attract
provisions of section 194I of the Act.
4.2. That the CIT(A) erred in facts and in law in not appreciating
that CAM charges paid by the appellant were nothing but the
reimbursement of expenditure incurred by lessor on maintenance of
the common area, which does not fall within the ambit of section
194I of the Act
4.3. That the CIT(A) erred on facts and circumstances of the
case in not appreciating that tax on CAM charges, if at all, will fall
under the provisions of section 194C and not section 194I of the Act
as the same are being paid for work_earried out for maintenance of
common areas/ facilities available alongwith leased premise;
4.4. That the C1T(A)/ assessing officer erred in not appreciating
that though rent and CAM charges were paid in accordance with the
same agreement, however both rent payable and CAM charges were
distinctly defined in the agreements by way of separate schedules.
I.T.As. No.993 & 1984/DEL/2020 3
4.5. That the ClT(A)/assessing officer erred in alleging that CAM
charges are a part of rent without disputing the arm’s length amount
of rent paid by the appellant.
4.6. Without Prejudice, that the CIT(A) erred in not appreciating
that once tax on receipt was paid by the recipients, the same could
not have been recovered again from the appellant.
5. That on the facts and circumstances of the case and in law, the
CIT(A) erred in not directing the assessing officer to delete interest
charged under section 201/201(1 A) of the Act.”
2. Briefly stated, the assessee company which is, inter alia,
engaged in the business of running fast food restaurants in
North and East India under the brand name of “Mc. Donalds”
had on 29.09.2011 filed its return of income for AY 2011-12,
declaring an income of Rs.23,50,89,091/- (before setting off
the brought forward business losses and unabsorbed
depreciation).
3. Shorn of unnecessary details, in order to verify
compliance of the provisions of Chapter XVII-B of the Act,
survey proceedings u/s.133A of the Act were conducted in the
case of Ambience Group which owns and operates malls
having units/shops that had either been sold or leased out.
During the course of survey proceedings, it was gathered by
the survey officials that the Ambience group (supra) had
collected Common Area Maintenance (CAM) charges on which
tax was deducted by the payers under Section 194C of the Act
i.e @2%. Backed by the aforesaid information gathered in the
course of the survey proceedings, it was observed by the A.O
that the assessee company which had taken spaces on lease
in the malls owned by the Ambience Group (supra) for
carrying out its business activities had deducted tax at source
I.T.As. No.993 & 1984/DEL/2020 4
on the amount of the CAM charges u/s 194C i.e @2% instead
of u/s 194-I i.e @10%. In the backdrop of his aforesaid
observations, the A.O called upon the assessee to explain that
as to why it may not be treated as an assessee-in-default u/s
201(1) of the Act for having short deducted the amount of tax
at source on the CAM charges. As the reply filed by the
assessee did not find favour with the AO, therefore, he held
the assessee as an assessee-in-default for the alleged short
deduction of tax at source on the CAM charges of
Rs.4,26,15,083/-, which therein resulted to a consequential
demand of tax/interest u/ss. 201(1)/201(1A) amounting to
Rs.64,70,346/-, viz, (i) demand towards short deduction of
tax at source u/s. 201(1) of the Act: Rs.34,09,207/-; and (ii)
demand towards interest u/s 201(1A) : Rs.30,61,140/.
4. Aggrieved, the assessee assailed the aforesaid order
passed by the AO u/ss. 201(1)/201(1A) of the Act before the
CIT(A). Observing, that there was a single lease agreement for
payment of rent as well as CAM charges, the CIT(A) was of the
view that there was no distinction between the CAM charges
and the lease rent payments made by the assessee, except for
the fact that separate invoices were raised for the same. The
CIT(A) further drawing support from definition of the term
“rent” as provided in the “Explanation” to Section 194-I of the
Act a/w the CBDT Circular No.715, dated 08.08.1995
(Question no.24), and the judgment of the Hon’ble High Court
of Punjab and Haryana in the case of Sunil Kumar Gupta vs.
ACIT (2016) 389 ITR 38 (P&H) therein concluded that as CAM
I.T.As. No.993 & 1984/DEL/2020 5
charges paid by the assessee company formed a part of the
rent, therefore, the assessee company was liable for deduction
of tax at source on the same u/s.194-I of the Act. Qua the
claim of the assessee that the order passed by the AO treating
the assessee company as an assessee-in-default u/s.201(1) of
the Act was barred by limitation, the same did not find favour
with the CIT(A). Observing, that pursuant to the amendment
of sub-section (3) to Section 201 of the Act, vide the Finance
Act, 2014 i.e w.e.f. 01.10.2014, the time period for passing an
order under sub-section (1) to Section 201 of the Act i.e
deeming a person as an assessee-in-default for his failure to
deduct the whole or any part of the tax from a person resident
in India had been extended upto 7 years from the end of the
financial year in which payment was made or credit was
given, the CIT(A) was of the view that as the said amendment
being clarificatory in nature would have a retrospective effect,
therefore, the order passed by the A.O u/ss. 201(1)/201(1A)
of the Act being well within the extended period of 7 years was
saved by limitation. Accordingly, finding no merit in the claim
of the assessee that the order passed by the AO u/s. 201(1) of
the Act was barred by limitation the CIT(A) rejected the same.
At the same time, the CIT(A) principally concurred with the
assessee that now when the respective payees to whom CAM
charges were paid by the assessee company had paid taxes on
the said amount, therefore, as per the “proviso” to Section
201(1) of the Act and the judgment of the Hon’ble Supreme
Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd.
I.T.As. No.993 & 1984/DEL/2020 6
vs. CIT (2007) 293 ITR 226 (SC) it could not be treated as an
assessee-in-default, thus, directed the AO to verify the factual
position, and in case if the deductees were found to have paid
the tax on CAM charges by filing their respective returns of
income u/s.139 of the Act, then, the assessee company be not
treated as an assessee-in-default.
5. The assessee being aggrieved with the order of the CIT(A)
has carried the matter in appeal before us.
6. We have heard the ld. Authorized Representatives for
both the parties, perused the orders of the lower authorities
and the material available on record, as well as considered
the judicial pronouncements that have been pressed into
service by the ld. AR to drive home his respective contentions.
Before us the assessee has assailed the sustaining of the
order passed by the A.O u/ss. 201(1)/201(1A) by the CIT(A),
on two fold grounds, viz, (i) that the order passed by the AO
u/ss. 201(1)/201(1A) of the Act is barred by limitation; and
(ii) that both the lower authorities had erred in concluding
that the assessee was obligated to deduct tax at source on the
CAM charges u/s.194-I and not u/s. 194C of the Act.
7. We shall first advert to the challenge thrown by the
assessee to the validity of the order passed by the AO u/ss.
201(1)/201(1A) of the Act, for the reason, that as per him the
same was barred by limitation. On a perusal of sub-section (3)
to Section 201 of the Act, as was made available on the
statute vide the Finance Act, 2009 w.e.f. 01.04.2010, we find
that the same read as under:
I.T.As. No.993 & 1984/DEL/2020 7
“(3) No order shall be made under sub-section (1) deeming a person
to be an assessee in default for failure to deduct the whole or any
part of the tax from a person resident in India, at any time after the
expiry of –
(i) two years from the end of the financial year in which the
statement is filed in a case where the statement referred to in
section 200 has been filed;
(ii) four years from the end of the financial year in which payment is
made or credit is given, in any other case” (emphasis supplied)”
In so far the time limit for passing of an order u/s. 201(1) of
the Act in a case where statement of tax deducted at source
u/s. 200 of the Act was not filed by the deductor, the same
was thereafter extended vide the Finance Act, 2012 from 4
years as was earlier provided in clause (ii) of sub-section (3) to
Section 201 of the Act to a period of 6 years w.r.e.f
01.04.2010, i.e., from AY 2010-11 onwards. However, the
time limit for deeming a person to be an assessee-in-default
for failure to deduct the whole or any part of the tax from a
person resident in India, in a case where a statement of tax
deducted at source u/s 200 of the Act was filed by the
deductor remained unchanged i.e 2 years as was earlier
provided on the statute vide the Finance Act, 2009 w.e.f.
01.04.2010. We find that the aforesaid time limit for deeming
a person to be an assessee-in- default within the meaning of
sub-section (1) to Section 201 of the Act, had thereafter
further been extended vide the Finance Act, 2014 w.e.f.
01.10.2014 to a period of 7 years from the end of the financial
year in which payment is made or credit is given.
8. Controversy involved in the present appeal as regards
the validity of the order passed by the AO u/s. 201(1) of the
I.T.As. No.993 & 1984/DEL/2020 8
Act, dated 29.03.2018 lies in a narrow compass, i.e., as to
whether the time limit for deeming the assessee as an
assessee-in-default under sub-section (1) to section 201 of the
Act is regulated by the time period that was made available on
the statute vide the Finance Act, 2009, w.e.f. 01.04.2010, as
claimed by the assessee, or the same is regulated by the
extended time period of 7 years as had been made available
on the statute vide the Finance Act, 2014, w.e.f., 01.10.2014,
as is claimed by the revenue. Before adverting any further, it
would be relevant to cull out the respective dates on which
the statements referred to in Section 200 of the Act had been
filed by the assessee company, as under:
Type of Form Acknowledgment No. Date of filing
26Q1 074020100030273 15.07.2010
26Q2 074020200084423 15.10.2010
26Q2 074020100036993 14.01.2011
26Q4 060660200370840 14.05.2011
It is the claim of ld. AR, that as per the mandate of sub-
section (3) to Sec. 201 as was made available on the statute
vide the Finance Act, 2009 w.e.f. 01.04.2010, the time limit
for passing of an order under sub-section (1) to Section 201 in
the case of the assessee for AY 2011-12 was 2 years from the
end of the financial year in which the statement referred to in
Section 200 was filed by it, therefore, the order passed by the
AO u/ss. 201(1)/201(1A), dated 29.03.2018 was clearly
barred by limitation as the same by any means could not
have been passed beyond 31.03.2014. On the contrary, it is
I.T.As. No.993 & 1984/DEL/2020 9
the claim of the revenue that as the extended period of 7
years for passing an order under sub-section (1) to Section
201 i.e deeming a person to be an assessee-in-default for
failure to deduct the whole or any part of the tax from a
person resident in India, as had been made available on the
statute vide the Finance Act, 2014 w.e.f. 01.10.2014, is
clarificatory in nature and would apply retrospectively,
therefore, the order passed by the AO u/ss. 201(1)/201(1A) is
well within the period of limitation.
9. After deliberating at length on the issue in question, we
find substance in the claim of the ld. AR that the
aforementioned order passed by the AO u/ss. 201(1)/201(1A)
of the Act, dated 29.03.2018 is barred by limitation.
Admittedly, as per sub-section (3) to Section 201 of the Act,
the time limit for passing an order under sub-section (1) to
Section 201 i.e deeming a person to be an assessee- in-default
for failure to deduct the whole or any part of the tax from a
person resident in India, in a case where the statement
referred to in Section 200 was filed by the assessee prior to
01.10.2014, was 2 years from the end of the financial year in
which such statement was filed. Accordingly, as stated by the
ld. AR, and rightly so, the time limit for passing of an order
under sub-section (1) to Section 201 in the case of the
assessee before us could have been done latest by
31.03.2014. Rebutting the aforesaid claim of the assessee, it
is the case of the revenue that as the amendment to sub-
section (3) to Section 201 of the Act, that had been made
I.T.As. No.993 & 1984/DEL/2020 10
available on the statute vide the Finance Act, 2014, w.e.f.
01.10.2014, therein enlarging the time limit for passing of an
order under sub-section (1) to Section 201 to 7 years from the
end of the financial year in which payment is made or credit
is given, is clarificatory in nature, therefore, it would be
applicable retrospectively and as a consequence thereto the
order passed by the Assessing Officer in the case of the
assessee u/ss. 201(1)/201(1A) of the Act, dated 29.03.2018
would be saved by limitation. We are unable to persuade
ourselves to subscribe to the aforesaid claim of the revenue.
As observed by us hereinabove, in the case of the assessee
before us the order under sub-section (1) to Section 201 i.e
deeming the assessee as an assessee-in-default for failure to
deduct the whole or any part of the tax from a person resident
in India could have been passed latest by 31.03.2014. On
01.10.2014, i.e., the date on which sub-section (3) to Section
201 of the Act was amended vide the Finance Act, 2014, the
limitation to pass an order under sub-section (1) to Section
201 in the case of the assessee had already lapsed. As stated
by the ld. AR, and rightly so, as per the settled position of law,
an amendment enlarging the limitation cannot revive the
limitation which had already expired prior to the date of such
amendment, and as and where the legislature had intended to
amend the enacted law with retrospective effect, it had
expressly provided for a retrospective operation of the same.
In sum and substance, the proceedings which due to bar of
limitation had attained finality under the existing law cannot
I.T.As. No.993 & 1984/DEL/2020 11
be revived by referring to the enlarged period of limitation
made available on the statute vide a subsequent amendment,
unless the amended provision is clearly given a retrospective
applicability. Our aforesaid observation is supported by the
judgment of the Hon’ble Supreme Court in the case of K.M.
Sharma vs. ITO, 254 ITR 772 (SC). In its aforesaid order, the
Hon’ble Apex Court while dealing with the scope and gamut of
the amendment to sub-section (1) of Section 149 of the Act,
had observed, that if it was to be held that the amendment to
sub-section (1) of Section 149 would enable the authorities to
reopen the assessments which had already attained finality
due to bar of limitation prescribed u/s.149 as was applicable
prior to 01.04.1989, then, it would amount to giving sub-
section (1) a retrospective operation which was neither
expressly nor impliedly intended by the amendment so made
available on the statute. In fact, we find that the issue before
us is squarely covered by the judgment of the Hon’ble High
Court of Gujarat in the case of Tata Teleservices vs. UOI, 385
ITR 497 (Guj). As in the case before us, the assessee before
the Hon’ble High Court had received notices dated 09.10.2014
u/ss. 201(1)/201(1A) for Financial Years 2007-08 and 2008-
09. It was the claim of the assessee that as it was regularly
filing its statements u/s 200 of the Act, therefore, the period
of limitation for passing an order under sub-section (1) to
Section 201 i.e a period of 2 years from the end of the
financial year in which the statement was filed, as prescribed
in sub-section (3) to Section 201, had already lapsed,
I.T.As. No.993 & 1984/DEL/2020 12
therefore no order treating it as an assessee-in default could
validly be passed. However, the AO rejected the aforesaid
claim of the assessee, and observed, that as the amendment
to sub-section (3) of Section 201 of the Act that was made
available on the statute vide the Finance Act, 2014, w.e.f.
01.10.2014 had extended the time limit for passing of the
order under sub-section (1) to Section 201 to 7 years,
therefore, the order to be passed in the case of the assessee
was well within limitation. On a writ petition filed by the
assessee, the Hon’ble High Court held that as the amended
provisions were to apply prospectively, therefore no order u/s.
201(1) of the Act could have been passed, as the limitation for
passing of such an order had already expired prior to the
amendment that was made available on the statute vide the
Finance Act, 2014 w.e.f. 01.10.2014. For the sake of clarity
the relevant observations of the Hon’ble High Court are culled
out as under:
“15. Considering the law laid down by the Hon’ble Supreme Court in
the aforesaid decisions, to the facts of the case on hand and more
particularly considering the fact that while amending section 201 by
Finance Act, 2014, it has been specifically mentioned that the same
shall be applicable w.e.f. 1/10/2014 and even considering the fact
that proceedings for F.Y. 2007-08 and 2008-09 had become time
barred and/or for the aforesaid financial years, limitation under
section 201(3)(i) of the Act had already expired on 31/3/2011 and
31/3/2012, respectively, much prior to the amendment in section 201
as amended by Finance Act, 2014 and therefore, as such a right has
been accrued in favour of the assessee and considering the fact that
wherever legislature wanted to give retrospective effect so specifically
provided while amending section 201(3) (ii) of the Act as was
amended by Finance Act, 2012 with retrospective effect from
1/4/2010, it is to be held that section 201(3), as amended by Finance
Act No.2 of 2014 shall not be applicable retrospectively and therefore,
no order under section 201(i) of the Act can be passed for which
limitation had already expired prior to amended section 201(3) as
I.T.As. No.993 & 1984/DEL/2020 13
amended by Finance Act No.2 of 2014. Under the circumstances, the
impugned notices / summonses cannot be sustained and the same
deserve to be quashed and set aside and writ of prohibition, as
prayed for, deserves to be granted.
16. In view of the above and for the reasons stated above, all these
petitions succeed. The impugned notices /summonses are held to be
invalid and the same are hereby quashed and set aside and the
respondents herein are hereby restrained by writ of prohibition from
proceedings with the impugned notices / summonses which are, as
such, hereby quashed and set aside. Rule is mad absolute
accordingly in each of the petitions. In the facts and circumstances the
case, there shall be no order as to costs. ” (emphasis supplied)”
10. In the backdrop of our aforesaid observations read a/w
the settled position of law, we are of the considered view, that
as the time limitation for passing an order under sub-section
(1) to Section 201 i.e deeming the present assessee before us,
as an assessee-in-default under sub-section (1) to Section 201
of the Act could have validly been done within a period of 2
years from the end of the financial year in which the
statement u/s. 200 was filed by the assessee, i.e., latest by
31.03.2014, as per the law as was then available on the
statute, therefore, the order passed by the AO u/ss. 201(1)
/201(1A) of the Act, dated 29.03.2018 is clearly barred by
limitation. We, thus, in terms of our aforesaid observations
quash the order passed by the AO u/s.201(1)/201(1A), dated
29.03.2018 as barred by limitation. The Grounds of appeal
Nos. 1 to 3 are allowed in terms of our aforesaid
observations.
11. We shall now advert to the claim of the assessee that
both the lower authorities had erred in law and the facts of
the case in concluding that the CAM charges paid by the
I.T.As. No.993 & 1984/DEL/2020 14
assessee to Ambience Group (supra) were liable for deduction
of tax at source @10%, i.e., u/s.194-I and not @2%, i.e.,
u/s.194C of the Act, as claimed by the assessee. Succinctly
stated, the assessee company which is engaged, inter alia, in
the business of running of fast food restaurants in North and
East India under the brand name “Mc. Donalds”, had taken
shop/spaces/units in commercial areas/malls on lease from
various parties by way of lease agreements. Apart from the
rent, the assessee-company had also paid CAM charges, i.e.,
charges which are fundamentally for availing common area
maintenance services, which may either be provided by the
landlord or any other agency. In so far the CAM charges that
were paid by the assessee to the same party to whom rent
was being paid pursuant to the lease agreements, or to an
appointed or related party with whom the lease agreement
had been entered into, the AO was of view that the assessee
was obligated to deduct tax at source @10%, i.e., 194-I of the
Act. Backed by his aforesaid conviction the A.O had held the
assessee as an assessee-in-default u/s.201(1) of the Act, for
short deduction of tax at source @2%, i.e. u/s.194C instead
of @10% u/s 194-I of the Act.
12. Issue involved qua the aforesaid controversy lies in a
narrow compass, i.e., as to whether the CAM charges paid by
the assessee were liable for deduction of tax at source
u/s.194-I, i.e., @10% or u/s 194C, i.e, @2%. Before adverting
any further it would be relevant to cull out the provisions of
Section 194-I of the Act, which reads as under:
I.T.As. No.993 & 1984/DEL/2020 15
“194-1.Rent.
Any person, not being an individual or a Hindu undivided family, who is
responsible for paying to a resident any income by way of rent, shall, at the
time of credit of such income to the account of the payee or at the time
ofpayment thereof in cash or by the issue of a cheque or draft or by any other
mode, whichever is earlier, deduct income-tax thereon at the rate of–
(a) two per cent for the use of any machinery or plant or equipment; and
(b) ten per cent for the use of any land or building (including factory
building) or land appurtenant to a building (including factory building) or
furniture or fittings:
Provided that no deduction shall be made under this section where the amount
of such income or, as the case may be, the aggregate of the amounts of such
income credited or paid or likely to be credited or paid during the financial
year by the aforesaid person to the account of, or to, the payee, does not exceed
one hundred and eighty thousand rupees:
…………………. …………………….
Explanation.-For the purposes of this section,-
(i) “rent” means any payment, by whatever name called, under any
lease, sublease, tenancy or any other agreement or arrangement for
the use of (either separately or together) any, –
(a) land; or
(b) building (including factory building); or
(c) land appurtenant to a building (including factory building); or
(d) machinery; or
(e) plant; or
(f) equipment; or
(g) furniture; or
(h) fittings,
whether or not any or all of the above are owned by the payee;
………… ………………..” (emphasis supplied)
On a perusal of the definition of the terminology “rent” as had
been provided in the aforesaid statutory provision, viz. Sec.
194-I of the Act, we find that the same includes payment for
the use of land, building, land appurtenant to a building,
machinery, plant, equipment, furniture or fittings. In sum
and substance, only the payments for use of
I.T.As. No.993 & 1984/DEL/2020 16
premises/equipment is covered by Section 194-I of the Act. In
our considered view, as the CAM charges are completely
independent and separate from rental payments, and are
fundamentally for availing common area maintenance
services which may be provided by the landlord or any other
agency, therefore, the same cannot be brought within the
scope and gamut of the definition of terminology “rent”. On
the other hand, we are of the considered view, that as the
CAM charges are in the nature of a contractual payment
made to a person for carrying out the work in lieu of a
contract, therefore, the same would clearly fall within the
meaning of “work” as defined in Section 194C of the Act. In
our considered view, as the CAM charges are not paid for use
of land/building but are paid for carrying out the work for
maintenance of the common area/facilities that are available
along with the lease premises, therefore, the same could not
be characterized and/or brought within the meaning of “rent”
as defined in Section 194-I of the Act.
13. In the backdrop of our aforesaid deliberations, we
concur with the claim of the ld. AR that as the payments
towards CAM charges are in the nature of contractual
payments that are made for availing certain services/facilities,
and not for use of any premises/equipment, therefore, the
same would be subjected to deduction of tax at source
u/s.194C of the Act. Our aforesaid view is supported by the
order of the ITAT, Delhi in the case of Kapoor Watch Company
P. Ltd. vs. ACIT in ITA No.889/Del/2020. In the aforesaid
I.T.As. No.993 & 1984/DEL/2020 17
case, the genesis of the controversy as in the case of the
assessee before us were certain proceedings conducted by the
Department in the case of Ambience Group (supra) to verify
the compliance of the provisions of Chapter XVII-B of the Act.
On the basis of the facts that had emerged in the course of
the proceedings, it was gathered by the Department that the
owners of the malls in addition to the rent had been collecting
CAM charges from the lessees on which TDS was deducted
@2% i.e u/s.194C of the Act. Observing, that payment of CAM
charges were essentially a part of the rent, the AO treated the
assessee as an assessee-in-default for short deduction of tax
at source u/ss. 201(1)/201(1A) of the Act. On appeal, it was
observed by the Tribunal that the CAM charges paid by the
assessee did not form part of the actual rent that was paid to
the owner by the assessee company. As the facts involved in
the case of the assessee before us remains the same as were
therein involved in the aforesaid case, therefore, in the
backdrop of our aforesaid deliberations, and respectfully
following the aforesaid order of the Tribunal, we herein
conclude, that as claimed by the assessee, and rightly so, the
CAM charges paid by it were liable for deduction of tax at
source @2%, i.e., u/s.194C of the Act. We, thus, in terms of
our aforesaid observations set-aside the order of the CIT(A)
who had approved the order passed by the AO treating the
assessee company as an assessee-in-default u/s.201(1) of the
Act. The Grounds of appeal no.4 to 4.5 are allowed in terms
of our aforesaid observations.
I.T.As. No.993 & 1984/DEL/2020 18
14. That as we have quashed the order passed by the A.O
u/ss. 201(1)/201(1A) as barred by limitation, and have also
on merits concurred with the assessee that CAM charges so
paid/credited by it were liable for deduction of tax at source
u/s 194C of the Act, therefore, the claim of the assessee that
the CIT(A) had erred in not appreciating that now when the
recipients of the amount in question i.e CAM Charges had
paid the tax on the same, the assessee company thereafter
could not be deemed as an assessee-in-default u/s 201(1) of
the Act, is rendered as academic in nature. Accordingly, the
Ground of appeal No. 4.6 is dismissed in terms of our
aforesaid observations.
15. That as we have quashed the order passed by AO u/ss.
201(1)/201(1A) of the Act, and had even otherwise held that
the assessee company could not be held as an assessee-in-
default u/s. 201(1) of the Act, therefore, the contention of the
assessee that the AO be directed to delete the interest charged
u/s. 201(1A) of the Act having been rendered as infructuous
is therein dismissed. The Ground of appeal no.5 is
dismissed.
16. Resultantly, the appeal filed by the assessee is allowed
in terms of our aforesaid observations.
ITA No. 993/Del/2020 (Assessment Year 2012-13)
17. We shall now take up the assessee’s appeal for AY 2012-
13 wherein the impugned order passed by the CIT(A) has been
assailed before us on the following grounds :
I.T.As. No.993 & 1984/DEL/2020 19
1. That on the facts and circumstances of the case and in law, the
order dated 28.03.2019 passed by the assessing officer under
section 201(1)/ 201(1 A) of the Income Tax Act, 1961 (‘the Act’) is
without jurisdiction, illegal, bad in law and liable to be quashed.
2. That on the facts and circumstances of the case and in law, the
impugned order passed by the Commissioner of Income Tax
(Appeals) [‘CIT(A)’] is erroneous inasmuch as the same has been
passed without correct appreciation of facts and is liable to be
quashed.
3. That on the facts and circumstances of the case and in law, the
CIT(A) erred in not appreciating that the assessment order dated
passed under section 201(1)/ 201(1 A) for assessment year 2012-13
is void ab initio, invalid and bad in law on account of being time
barred in period of limitation prescribed under section 201(3) of the
Act.
4. That on the facts and circumstances of the case and in law, the
CIT(A) erred in holding that tax on Common Area Maintenance
Charges (‘CAM charges’), paid by the appellant to the lessor, was
liable to be deducted under section 1941 as against tax deducted
under section 194C of the Act by the appellant.
4.1. That the CIT(A) erred on facts and in law in treating the
CAM charges paid by the appellant as part of rent without
appreciating that the same were paid by the appellant for various
common service/ facilities which are not at disposal of appellant and
not for use of any land/ building/ space or premise to attract
provisions of section 1941 of the Act.
4.2. That the CIT(A) erred in facts and in law in not appreciating
that CAM charges paid by the appellant were nothing but the
recovery of expenditure incurred by lessor in lieu of maintenance of
the common area, which does not fall within the ambit of section
1941 of the Act.
4.3. That the CIT(A) erred on facts and circumstances of the
case in not appreciating that tax on CAM charges, if at all, will fall
under the provisions of section 194C and not section 194-1 of the Act
as the same are being paid for work carried out for maintenance of
common areas/ facilities available alongwith leased premises.
4.4. That the CIT(A)/ assessing officer erred in not appreciating
that though rent and CAM charges were paid in accordance with the
same agreement, however both rent payable and CAM charges were
distinctly defined in the agreements by way of separate schedules.
4.5. That the CIT(A)/assessing officer erred in alleging that
CAM charges are a part of rent without disputing the amount of rent
paid by the appellant.
I.T.As. No.993 & 1984/DEL/2020 20
4.6. Without Prejudice, that the CIT(A) erred in not appreciating
that once tax on receipt was paid by the recipients, the same could
not have been recovered again from the appellant.
5. That on the facts and circumstances of the case and in law, the
CIT(A) erred in not directing the assessing officer to delete interest
charged under section 201/201(1 A) of the Act.”
18. At the very outset of the hearing of the appeal, it was
submitted by the ld. AR that he would confine his contentions
in so far the present appeal is concerned only qua the
sustainability of the view taken by the AO/CIT(A) on merits i.e
the deeming of the assessee company as an assessee-in-
default u/s 201(1) of the Act for having short deducted the
tax at source u/s 194C i.e @2% instead of u/s.194-I i.e
@10%.
19. Ld. Authorized Representatives for both the parties
admitted that the issue in question, i.e., as to whether the
assessee company was obligated to deduct tax at source
u/s.194C or u/s.194-I of the Act remained the same as was
there in the appeal of the assessee for the immediately
preceding year, i.e., AY 2011-12 in ITA no.1984/Del/2020. In
the backdrop of the aforesaid factual position, now when the
facts and the issue involved in the present appeal remains the
same as were there in the appeal of the assessee for the
immediately preceding year i.e A.Y 2011-12 in ITA No.
1984/Del/2020, therefore, our order therein passed, qua the
said limited issue, while disposing off the Grounds of appeal
No. 4 to 4.6 in ITA No.1984/Del/2020 for AY 2011-12 shall
apply mutatis mutandis for the purpose of disposing off the
Grounds of appeal no. 4 to 4.6 of the present appeal, i.e., ITA
I.T.As. No.993 & 1984/DEL/2020 21
No.993/Del/2020 for AY 2012-13. Accordingly, in terms of
our observations recorded while disposing off the Grounds of
appeal Nos. 4 to 4.6 in the assessee’s the appeal for AY 2011-
12 in ITA No.1984/Del/2020, the assessee’s appeal for the
year under consideration, i.e., AY 2012-13 in ITA No.
993/Del/2020 qua the aforesaid limited issue i.e merits of the
case is allowed. The Grounds of appeal No. 4 to 4.5 are
allowed in terms of our observations recorded hereinabove.
20. The Ground of appeal No. 4.6 is disposed off in terms of
our observations recorded hereinabove.
21. As the ld. A.R had not raised any contentions as regards
the Grounds of appeal Nos. 1 to 3, therefore, they are
dismissed as not pressed.
22. Resultantly, the appeal of the assessee is partly allowed
in terms of our aforesaid observations.
23. Accordingly, while for the appeal of the assessee for A.Y
2011-12 in ITA No. 1984/Del/2020 is allowed, that for A.Y
2012-13 in ITA No. 993/Del/2020 is partly allowed in terms
of our observations recorded hereinabove.
Order pronounced in the Open Court on 31st December, 2021
Sd/- Sd/-
[G.S. PANNU] [RAVISH SOOD]
[PRESIDENT] [JUDICIAL MEMBER]
DATED: 31/12/2021
**Prabhat
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