TMI Blog2017 (5) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... tal rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. Conceptually service tax is levied on the service provided, which is an intangible thing and hence it is not necessary to be identified with physical demarcation of the immovable property given on rent against individual co-owners. Once the value of service provided by a service provider is ascertainable service tax is accordingly charged - This Tribunal in similar facts and circumstances in the cases of Commissioner of Central Excise, Nasik Versus Deoram Vishrambhai Patel [2015 (9) TMI 790 - CESTAT MUMBAI] after considering the issues raised, rejected the contention of the Revenue and allowed the benefit of exemption Notification No.6/2005-ST, dt.1.3.2005 as amended to individual co-owners who jointly owned the property and provided the service of renting of immovable property, and received the rent in proporti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to state the facts in Appeal ST/540/2011. 2. Briefly stated, the Appellants owned and in possession of an immovable property which they have provided on rent/lease to one M/s Shri Qatar Airways for managing an office since January 2008. The said immovable property has been jointly owned by six co-owners. There is no dispute of the fact that Service Tax is leviable on providing the service of lease/renting of immovable property under the taxable category of renting of immovable property service as defined under Section 65 of Finance Act, 1994. All the six co-owners received the rent, proportionate to the share in the property and claimed individually the benefit of exemption notification No.6/2005-ST, dt.1.3.2005 as amended by subsequent Notification No.4/2007-ST, dt.1.3.2007, Notification No.8/2008-ST, dt.1.3.2008, up to the limit prescribed under the said notifications. Alleging that the services provided by the respective owners are indivisible and the property being collectively owned, for the purpose of Service Tax, all the owners be considered as an association of persons, and be treated as single service provider, hence, the benefit of said Notification No.6/2005-ST, dt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1960 (4) TMI 7 - Supreme Court . The learned Advocate submits that analyzing the dictionary meaning of association, their Lordships observed that when the combination of individuals who were engaged together in some joint enterprise, but did not in law constitute partnerships, and the combination of persons formed for the promotion of joint enterprise then, these persons did constitute an association. The said judgment has been followed by Hon'ble Madras High Court in the case of Commissioner of Income Tax, Tamil Nadu Vs Deghamwala Estates - 1979 (3) TMI 30 - Madras High Court . Further, he has contended that the association of persons is recognized as separate entity, and eligible to separate assessment under the Income Tax Act, holding separate PAN number, therefore, co-owners of the immovable property cannot be considered as an association of persons. Similar arguments have been advanced by other Advocates. 4. The learned Authorized Representative for the Revenue reiterates the findings of the lower authorities. It is his contention that the learned Commissioner after taking into consideration the percentage of share of individual co-owners in the property against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Rules, 1994. 2. The exemption contained in this notification shall apply subject to the following conditions, namely:- i) the provider of taxable service has the option not to avail the exemption contained in this notification and pay service tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year; ii) the provider of taxable service shall not avail the CENVAT credit of service tax paid on any input services, under rule 3 or rule 13 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), used for providing the said taxable service, for which exemption from payment of service tax under this notification is availed of; iii) the provider of taxable service shall not avail the CENVAT credit under rule 3 of the said rules, on capital goods received in the premises of provider of such taxable service during the period in which the service provider avails exemption from payment of service tax under this notification; iv) the provider of taxable service shall avail the CENVAT credit only on such inputs or input services received, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (B) aggregate value not exceeding four lakh rupees means the sum total of first consecutive payments received during a financial year towards the gross amount, as prescribed under section 67 of the said Finance Act, charged by the service provider towards taxable services till the aggregate amount of such payments is equal to four lakh rupees but does not include payments received towards such gross amount which are exempt from whole of service tax leviable thereon under section 66 of the said Finance Act under any other notification. 4. This notification shall come into force on the 1st day of April, 2005. 7. The basis of allegation by the Revenue against the Appellants rests on the premise that even though the immovable property is jointly owned by several persons, since the property itself is indivisible, and each person cannot separately render the service without involvement of other co-owners, hence the total rent received as a whole, be considered for the purpose of computing aggregate value of taxable services in extending the Notification No.6/2005-ST, dt.1.3.2005, as amended. In other words, the Service Tax is assessed on the total amount of rent, without e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... association of individuals were substituted for the former words. By the Income-tax Amendment Act of 1939 (VII of 1939) the Section was again amended and it then said: Where any Act of the Central Legislature enacts that income-tax shall be charged for any year at any rate or rates, tax at the rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually. By the same Amending Act (VII of 1939), sub-section (3) of Section 9 was also added. Now, Section 3 imposes a tax in respect of the total income . of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually. In the absence of any definition as to what constitutes an association of persons, we must construe the words in their plain ordinary meaning and we must also bear in mind that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the meaning of Section 3 of the Income-tax Act, and they have been accepted and followed in a number of later decisions of different High Courts to all of which it is unnecessary to call attention. It is, however, necessary to add some words of caution here. There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a conclusion that there is an association of persons within the meaning of Section 3; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not. Learned Counsel for the Appellant has suggested that having regard to Sections 3 and 4 of the Indian Income-tax Act, the real test is the existence of a common source of income in which two or more persons are interested as owner or otherwise and it is immaterial whether their shares are specific and definite or whether there is any scheme of management or not. He has submitted that if the persons so interested come to an arrangement, express or tacit, by which they divide the income at a point of time before it emanates from the source, then the association ceases; otherwise it continues to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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