DEPUTY COMMISSIONER OF INCOME TAX, DELHI V. LIBERTY RETAIL REVOLUTIONS LIMITED, DELHI

ITA 4314/DEL/2025

AI Insights

The case revolves around the classification of Common Area Maintenance (CAM) charges and their appropriate tax deduction under the Income Tax Act. The Deputy Commissioner of Income Tax appealed against the order of the CIT(A), which had ruled that CAM charges should be deducted under Section 194C as contractual payments, rather than under Section 194I, which pertains to rent. The Tribunal considered previous rulings and the decision of the Delhi High Court, which had dismissed a similar appeal by the Revenue, affirming that CAM charges do not fall under the definition of rent as per Section 194I.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841420 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-07-2025
• Other Referred Cases: Appejay Surrendera Park Hotels Ltd. vs. UOI, Kapoor Watch Company P. Ltd. vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KHITESH GUPTA
• Assessee Lawyers: SATISH GOEL
• Keywords: Set aside; TDS
• Section: 194C

Judgement Text

"1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI MANISH AGARWAL, HON’BLE ACCOUNTANT MEMBER ITA No. 4314/DEL/2025 A.Y. : 2014-15 DEPUTY COMMISSIONER OF INCOME TAX, VS. LIBERTY RETAIL ROOM NO. 607, 6TH FLOOR, AAYAKAR REVOLUTIONS LIMITED, BHAWAN, LAXMI NAGAR DISTRICT, 4/42, PUNJABI BAGH, NEW DELHI – 110 092 NEW DELHI - 26 [PAN: AABCL0641A] (Appellant) (Respondent) Assessee by : Sh. Satish Goel, CA Department by : Sh. Khitesh Gupta, Sr. DR. Date of Hearing 25 .11.2025 Date of Pronouncement 23.02.2026 O R D E R PER MAHAVIR SINGH, VP: This appeal by the Revenue is emanating from the order of the Ld. Addl/JCIT(A)- 1, Mumbai 19.3.2025 relevant to assessment year 2014-15 on the following grounds:- i) Whether on the facts and in the circumstances of the case and in law, the Addl/JCIT(A)-I, Mumbai was justified in holding that Common Area Maintenance (CAM) charges paid by the assessee are in the nature of contractual payment are liable to be deducted TDS u/s. 194C of the I.T. Act and not as per provisions of Section 194I of the Act. ii) Whether on the fact and in the circumstances of the case and in law, the Addl. /JCIT(A)-I, Mumbai was justified in not considering the Printed from counselvise.com 2 judgment of Hon’ble High Court of Delhi in the case of Appejay Surrendera Park Hotels Ltd. vs. UOI in WP(C) 1924/1999, wherein the Hon’ble Court has held that the word ‘rent’ in section 194I of the I.T. Act has to be interpreted widely and not confined to payments received towards a lease, sub lease or tenancy or transactions of such like nature. 2. At the outset, L.d AR has submitted that the issues in dispute are squarely covered by the decision of the ITAT, Delhi Bench in assessee’s own case for AY 2011-12 passed in ITA No. 1016/Del/2020 vide order dated 22.11.2023 and its subsequent corrigendum dated 1.2.2024. It was further submitted that the facts of the case being identical on the issue of TDS deduction on CAM charges. He further submitted that against the aforesaid order dated 22.11.2023 of the Tribunal, the Department preferred the appeal before the Hon’ble Delhi High Court and the Hon’ble Delhi High Court vide its order dated 22.5.2025 in ITA no. 170/2025 & CM Appeal Nos. 31794/2025, 31795/2025 dismissed the appeal of the Revenue. 3. Ld. DR relied upon the order of the AO and reiterated the contention of the grounds of appeal. 4. We have heard the rival contentions and perused the records. Upon careful consideration, we find force in the contention of the Ld. AR that the issues in the instant appeal are squarely covered by the decision of the ITAT, Delhi Bench in assessee’s own case for AY 2011-12 passed in ITA No. 1016/Del/2020 vide order dated 22.11.2023 and its subsequent corrigendum dated 1.2.2024. It is noted that the facts of the present case are identical on the issue of TDS deduction on CAM charges. We further find cogency in the contention of the Ld. AR that against the aforesaid order dated 22.11.2023 of the Tribunal, the Department preferred the appeal before the Hon’ble Delhi High Court and the Hon’ble Delhi High Court vide its order dated 22.5.2025 in ITA Printed from counselvise.com 3 no. 170/2025 & CM Appeal Nos. 31794/2025, 31795/2025 dismissed the appeal of the Revenue by observing as under:- “7. As noted above, the Assessee filed a second appeal before the learned ITAT. learned ITAT following its earlier decision in ITA No.504/Del/2020, concluded that CAM charges could not be brought within the scope of definition of “rent” as defined under Section 194-I of the Act. According to the ITAT, the payments made would fall within the meaning of “work” as defined under Section 194-C of the Act. 8. In the aforesaid context, the Revenue has projected the following questions for consideration of this Court: “A. Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is correct in deleting the demand of Rs.4,41,121/- on account of short deduction of TDS under Section 194-I of Income Tax Act, 1961 as CAM charges are squarely covered under the provisions of section of 194-I and demand of Rs,4,23,477/- u/s 201(IA) of the Income Tax Act, without going through the facts of the case.” 9. At the outset, it would be relevant to refer to the decision of the learned ITAT in ITA 504/Del/2020. The relevant extract of the same as reproduced by the learned ITAT in the impugned order, is set out below: “9. We have given a thoughtful consideration to the orders of the authorities below. We find force in the contention of the Counsel. This Tribunal in ITA No.504/Del/2020 order dated 15.02.2023 had the occasion to consider an identical grievance in the case of another tenant of the same mall and decided as under:- Printed from counselvise.com 4 “7. We have carefully considered the orders of the authorities below. The undisputed fact is that the impugned payment is not rent but common area maintenance charges paid by various tenants/ owners of the shop to the mall owners. On this undisputed facts the decision of the coordinate Bench (supra) clearly apply wherein the coordinate Bench has held as under :- “In sum and substance, only the payments for use of premises/equipment is covered by Section 194-I of the Act. In our considered view, as the CAM charges are completely dependent 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 194-1 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 Printed from counselvise.com 5 case of Kapoor Watch Company P. Ltd. vs. ACIT in ITA No.889/Del/2020. In the aforesaid case, the genesis of the controversy as in the case of the assessee before us were pertain 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.” 8. Respectfully following the decision of the coordinate Bench (supra) we direct the AO to delete the impugned addition. The appeal of the assessee is allowed.” Printed from counselvise.com 6 10. We find no infirmity with the aforesaid reasoning. CAM charges are essentially maintenance charges paid by a unit for proper maintenance of the common area. The said charges are contributed towards expenditure ON cleanliness, utilities and maintenance. These charges are shared expenses for common works and utilities. The said charges cannot, by any stretch, be construed as payment of rent for occupying the premises in question. The fundamental premise that CAM charges are, by their nature, lease rentals or license charges is erroneous. Thus, the orders passed by the CIT(A) and the AO have rightly been set aside by the learned ITAT.” 5. On finding parity of facts and respectfully following the binding precedents in assessee’s own case, as aforesaid, we affirm the action of the Ld. CIT(A) in deleting the addition in dispute and accordingly reject the grounds of appeal raised by the Revenue. 6 . In the result, the Revenue’s appeal is dismissed in above terms. Order pronounced in the Open Court on 23.2.2026. Sd/- Sd/- (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnaggar Date: 23-2-2026 Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT Assistant Registrar, ITAT, Delhi Benches Printed from counselvise.com 7 Printed from counselvise.com "