CAM Charges Are Contractual Payments Under Section 194C, Not Rent Under Section 194-I: ITAT Delhi Rules in Favour of Biba Apparels
Case Background and Overview
DCIT Vs Biba Apparels Pvt. Ltd. (ITAT Delhi)
Assessment Years: 2013-14, 2014-15, and 2015-16
**ITA Nos.😗* 7689/Del/2025, 7684/Del/2025, and 7687/Del/2025
The Income Tax Appellate Tribunal, Delhi, recently delivered a significant ruling on the long-debated question of whether Common Area Maintenance (CAM) charges paid by mall occupants attract Tax Deducted at Source (TDS) under Section 194C or Section 194-I of the Income Tax Act, 1961. Three separate appeals filed by the Revenue — all arising out of orders passed by the Commissioner of Income Tax (Appeals) dated 29.09.2025 — were taken up together and disposed of through a consolidated order, with Assessment Year 2013-14 treated as the lead case.
The Tribunal's ruling firmly settled the position that CAM charges represent payments for maintenance services rendered under a contractual arrangement and cannot be equated with rent for the purpose of TDS obligations.
Who Is the Assessee?
Biba Apparels Pvt. Ltd. is a well-known company engaged in the manufacture and retail of ethnic clothing sold under the flagship brands "Biba" and "Rangriti." The assessee had taken up commercial space in malls operated by the Ambience Group — specifically Ambience Mall, Gurugram, and Ambience Mall, Vasant Kunj — and paid CAM charges to the mall operator in addition to rent.
On the CAM charges, the assessee deducted TDS at 2% under Section 194C, treating such payments as contractual payments for maintenance services. The Revenue, however, contended that these charges were inseparable from the rental arrangement and should have attracted TDS at 10% under Section 194-I.
How the Dispute Originated
A survey was conducted under Section 133A(2A) of the Income Tax Act, 1961 in the case of the Ambience Group on 12.02.2018. During the course of this survey, it emerged that the Ambience Group had been recovering CAM charges from its tenants and licensees, and that these occupants had uniformly deducted TDS at 2% under Section 194C on such payments.
The Revenue took the position that CAM charges formed an integral part of rental activity. Accordingly, the Assessing Officer (AO) initiated proceedings under Section 201 of the Act against various tenant-assessees, including Biba Apparels Pvt. Ltd., treating them as assessees-in-default for short deduction of TDS.
The Assessee's Defence Before the Assessing Officer
The assessee responded to the notices issued under Section 201 with the following submissions:
- CAM charges are fundamentally payments for services rendered — specifically, maintenance of common areas and shared facilities within the mall premises.
- Such payments squarely fall within the definition of "work" under
Section 194Cand have been correctly subjected to TDS at 2%. - Even if a technical default were established, the assessee cannot be treated as an assessee-in-default because:
- The payee (Ambience Group) had filed its return of income under
Section 139of the Act. - The payee had included the CAM charges received in its income computation.
- The payee had discharged its full tax liability on the income so declared.
- The payee (Ambience Group) had filed its return of income under
Despite these submissions, the AO rejected the assessee's stand. He held that CAM charges were intrinsically linked to rental activity and therefore fell within the ambit of Section 194-I. An order under Section 201(1)/201(1A) was passed on 19.03.2021 raising a demand of Rs. 40,58,520/- on account of alleged short deduction of TDS.