'Common Area Maintenance Charge' Paid To Mall By Showroom Is Not Rent, Not Liable To TDS U/S 194-I Income Tax Act: Delhi High Court

Section 194I stipulates that TDS applies if the total rent paid or payable in a financial year exceeds a specified limit.

A division bench of Justices V. Kameswar Rao and Vinod Kumar dismissed an appeal preferred by the Income Tax Department against Diamondtree Jewels, which is situated in the city's Ambience Mall, for not deducting TDS on CAM under Section 194I.

The High Court observed that “CAM charges can be covered under provisions of 194C of the Act of 1961”.

Section 194C governs TDS on payments made to contractors and subcontractors for work contracts.

The High Court cited Commissioner of Income Tax (TDS)-1, Delhi v. Liberty Retail Revolutions Limited where it was held that CAM charges are in the nature of a contractual payment made to a person for carrying out the work in lieu of a contract.

It was further held that 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”.

Thus stating that only payments made for use of premises/ equipment is covered by Section 194-I of the Act, the High Court ruled that CAM “cannot be construed as payment of rent for occupying the premises in question.”

As such, it dismissed Revenue's appeal.

Appearance: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, JSC & Ms.Aditi Sabharwal, Advocate for Appellant

Case title: Commissioner Of Income Tax-Tds-01 v. Diamond Tree

Citation: 2025 LiveLaw (Del) 1035

Case no.: ITA 275/2025 + ITA 276/2025

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