ORDER 

PER S. RIFAUR RAHMAN, AM :

1. This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals)-42, New Delhi [hereinafter referred to as ‘ld. CIT(A)] dated 01.04.2025 for the Assessment Year 2017-18.

2. Brief facts of the case are, assessee is a Branch Office of a foreign company i.e. Air France incorporated under the Laws of France and is operating in India by virtue of RBI approval. It is engaged in the business of ‘Operations of aircraft in international traffic’. During verification under section 201/201(1A) of the Income-tax Act, 1961 (for short ‘the Act’) to verify compliance by the assessee with the provisions of Chapter XVII-B of the Act, several notices were issued to the assessee on various dates and in response, ld. AR of the assessee attended from time to time and submitted the relevant information is called for.

3. On perusal of the submission of the assessee, the AO observed that assessee is a tenant and has paid CAM charges after deducting TDS @ 2% u/s 194C of the Act. The AO observed that these collections / payments are directly relatable to and being part of the rental activity and also mentioned in the same contractual agreement, therefore, he was of the view that provisions of section 194I of the Act is attracted and TDS of 10% is deductible as against 2% deducted by the assessee. Therefore, the AO considered the assessee in default. The AO discussed the provisions of section 194I in his order and subsequent development and amendment w.e.f. 01.10.2009 was discussed and he was of the view that the provisions of section 194I were pertained to the meaning of rent to include CAM charges also. By relying on several decisions, he proceeded to treat the assessee in default and proceeded to determine the difference in deduction of tax as per section 201/201(1A) of the Act and accordingly, he levied the total demand of Rs.4,87,705/- u/s 201/201(1A) of the Act.

4. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A), Delhi-42. After considering the detailed submissions of the assessee and grounds raised before him, ld. CIT (A) deleted the addition made by the AO with the following observations :-

“6.6 I have duly gone through the aforementioned ruling of the Hon'ble Delhi ITAT and observe that in that case, the payment for rent is being made to the mall owner and the maintenance charges were paid to a separate entity maintaining the premises. However, in the case of the appellant, both the payments, i.e., rent and maintenance charges are being paid to the one party, i.e., M/s DLF Cyber City Developers Ltd.

6.7 There are plethora of judicial decisions on this issue which also include judgments of the Hon’ble Jurisdictional Delhi ITAT, where the payments are being made to one party only and through the same single agreement for rent and maintenance charges. The Hon’ble Delhi ITAT has come across this situation in the case of Aero Club vs. DCIT [149 taxmann.com 339 (2023), wherein the tenant and landlord had entered into single agreement for Rent and CAM charges. In its decision in this case, it was held by Hon’ble Delhi ITAT that the payment of CAM Charges is a separately identifiable transaction on which TDS is deductible u/s 194C and this payment cannot be clubbed with payment of Rent to which Section 194-1 applies. It is specifically observed by Hon’ble Delhi ITAT at Para 8-11 as under:

“8. After having considered the submissions of the assessee, the Id. CIT(A) held that undisputedly there is single lease agreement for payment of rent as well as CAM charges. The Id. AR has submitted that payment of CAM charges is nothing but reimbursement of common area maintenance expenses incurred by the lessor on general maintenance, electric, water and security services etc. Further, it has been claimed that, the common area is outside the area which is leased out to the assessee. These arguments are not acceptable because the common area and other services provi