TDS on Maintenance Charges

[Md. Mosaraf Hossain]

Dear Friends

 

One of my client Which is a Private Limited Company having turnover of more than Rs. one crore per annum is the owner of ground floor of a multistoried building and doing resturant business on that premises. It pays maintenance charges to the owners' association of that building which exceed Rs. 1,80,000/- per annum. Now my question is whether my cleint is liable to deduct TDS on payment of such maintenance charges u/s 194I or under other section of the Income Tax Act. If there is any case law ,circular or notification on this matter kindly provide me.

 

Thanks & Regard

M.Hossain

Advocate & Tax Consultant

09831045765

[M Hossain]

Sent from BlackBerry® on Airtel

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From: "Md. Mosaraf Hossain" <uni...@gmail.com>

Date: Tue, 21 Aug 2012 18:53:20 +0530

To: <foru...@googlegroups.com>

Subject: TDS on Maintenance Charges

[KIRTI TULSYAN]

Dear Friends 

One of my client Which is a Private Limited Company having turnover of more than Rs. one crore per annum is the owner of ground floor of a multistoried building and doing resturant business on that premises. It pays maintenance charges to the owners' association of that building which exceed Rs. 1,80,000/- per annum. Now my question is whether my cleint is liable to deduct TDS on payment of such maintenance charges u/s 194I or under other section of the Income Tax Act. If there is any case law ,circular or notification on this matter kindly provide me. 

Thanks & Regard 
M.Hossain 
Advocate & Tax Consultant 
09831045765 

REPLY 1

Definition of Rent in Section 194I does not lay any emphasis on the nomenclature used.To my mind if the subject property is on rent/lease and if payment of maintenance charge is in consequence thereof TDS will lie.please see CBDT circular no.699 dated 30/1/1995 on this for greater clarity. 
regards 
kalidas 

REPLY 2

With the information given to my understanding, Yes TDS shall be deducted 
u/s 194I in your case as the payment exceeds 1.8 lacs in a year and that 
such payment emanates out of the arrangement for use of the land and 
building. 



CA S K choudhary 

REPLY 3

Dear Mr. Hossain, 

Rent has to be separated from any maintenance charges. Here, it is clear 
that 
there is no Rent, and the maintenance has to be paid annually which must be 
documented by some agreement or contract. 

Thus, your client should deduct TDS u/s 194C and not under 194I. 

Regards, 

CA. DEBAYAN PATRA 

REPLY 4

Dear Mr. Hossain, 



The payment of maintenance charges by the owner of the premises to the 
society cannot be said to be a payment of rent to be covered u/s 194I or to 
be a payment to contractor for carrying out work on behalf of the owner of 
the premises. These payments were made to defray common cause. There is no 
contract for maintenance between the society and the owner of the premises. 
It is a payment to common fund to be used for the benefit of the owners of 
the premises. The payment by the member of the society is governed by the 
principle of mutuality and the society does not derive any income. 



Also same was upheld by ITAT in the case of Mitsutor Shipping Agency Pvt Ltd 
Vs DCIT (ITAT Mumbai) 



Hope that you query is resolved. 



Thanks & Regards, 



CA. SAWAN KUMAR 

SAWAN KUMAR & ASSOCIATES 

--

Best Regards, 
Kirti Tulsyan
B.Com.,ACA,CS


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