GLUED ENTERTAINMENT PVT. LTD.,DELHI V. INCOME TAX OFFICER- WARD 74(3)- DELHI, DELHI

ITA 2718/DEL/2025

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The case involves M/s Glued Entertainment Pvt. Ltd., a private limited company engaged in the business of gaming and entertainment, which appealed against the order of the CIT(A) regarding the tax deduction at source (TDS) on CAM charges. The company had leased space in Logix City Centre Mall, Noida, and was charged CAM for the maintenance of common areas. The Assessing Officer treated these charges as part of the rent, subjecting them to a higher TDS rate under section 194-I. The Tribunal's decision was influenced by a similar case, Connaught Plaza Restaurants (P) Ltd. v. DCIT, where it was held that such charges are not rent but payments for services, thus applicable under section 194C.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779581 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 24-04-2025
• Other Referred Cases: Connaught Plaza Restaurant (P) Ltd. v. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: SOMVIR SINGH; CHARTERED ACCOUNTANT
• Keywords: Set aside; TDS
• Section: 194C

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “एस एम सी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.2718/िदʟी/2025 (िन.व. 2017-18) ITA No.2718/DEL/2025 (A.Y. 2017-18) M/s Glued Entertainment Pvt. Ltd. R–201–202, Dua Complex, Vikas Marg, 24 Veer Savarkar Block, Delhi – 110092. PAN: AAFCG-2207-B ...... अपीलाथᱮ/Appellant बनाम Vs. Income Tax Officer, Ward–74(3), Aayakar Bhawan, District Centre, Laxmi Nagar, Delhi 110092 ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/Appellant by : Shri Somvir Singh, Chartered Accountant ŮितवादीȪारा/Respondent by : Shri Manoj Kumar, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 15/07/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 13/10/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order dated 21.03.2025 passed by the Additional/Joint Commissioner of Income Tax (Appeals), Prayagraj, [in short ‘the CIT(A)’] for assessment year 2017–18. 2. Shri Somvir Singh, appearing on behalf of the assessee submits that the assessee is a private limited company engaged in the business of gaming and entertainment. It had taken space in Logix City Centre Mall, Noida from M/s Logix Buildtech Pvt. Ltd. on lease vide agreement dated 03.08.2015. Besides the monthly lease rent, the assessee was also liable to pay Common Area Maintenance (CAM) charges for upkeep and maintenance of common areas such Printed from counselvise.com 2 ITA No.2718/Del/2025 (AY 2017-18) as parking, lifts, toilets, landscaping, and other shared facilities. During the relevant Financial Year, the assessee deducted TDS @ 10% u/s 194-I of the Act on rent and @ 2% u/s 194C on CAM charges, deposited the same to the Government exchequer, and filed quarterly TDS returns. The Assessing Officer (AO), held that CAM charges are integral to the lease and constitute part of rent, hence, liable to TDS @10% u/s.194-I of the Act. He accordingly treated the assessee as assessee in default and computed interest of Rs.95,660/- u/s 201(1A). Aggrieved, the assessee filed appeal before the CIT(A) but remained unsuccessful. Hence, the present appeal. 3. The ld. Authorized Representative of the assessee contended that the CAM charges were separately invoiced and were not in respect of any exclusive use of premises, but for availing common services of maintenance and housekeeping. Hence, these payments fall within the ambit of work as defined in u/s.194C of the Act and not within rent u/s.194-I of the Act. The ld. AR pointed that in subsequent assessment years i.e. AY 2018-19 and AY 2019-20 similar addition was made by the AO. The CIT(A) following the decision of Tribunal in the case of Connaught Plaza Restaurant (P) Ltd. in ITA Nos. 993 & 1984/Del/2020, order dated 31.12.2021 allowed the appeal of assessee. He further submitted that in any case the CAM charges paid to deductee were subject to tax, as the deductee has offered the same to tax in its Return of Income. 4. Per contra, Shri Manoj Kumar representing the department supported the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submitted that the lease deed itself envisaged both rent and CAM obligations as part of a single arrangement; therefore, payments were covered by the wide definition of rent u/s. 194-I of the Act. Printed from counselvise.com 3 ITA No.2718/Del/2025 (AY 2017-18) 5. I have heard the submissions made by rival sides and have examined the orders of authorities below. The short issue for adjudication is whether the CAM charges paid by the assessee to the lessor are liable for deduction of tax at source u/s 194C of the Act @ 2% or u/s 194-I of the Act @ 10%. Identical issue has been examined by various benches of the Tribunal. In the case of Connaught Plaza Restaurants (P) Ltd. v. DCIT (supra) the Tribunal held that CAM charges are contractual payments for maintenance services and not payments for “use of land or building”. Respectfully following the consistent view of the Tribunal, I hold that CAM charges cannot be treated as rent within the meaning of u/s 194(I) of the Act. The assessee has rightly deducted TDS u/s 194C of the Act @ 2%. Accordingly, the impugned order by the CIT(A) is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Monday the 13th day of October, 2025. Sd/- Sd/- (VIKAS AWASTHY) ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 13/10/2025 NV/- ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. Printed from counselvise.com 4 ITA No.2718/Del/2025 (AY 2017-18) BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "