TMI Blog2006 (7) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of persons co-owning one property falls under section 194-I(b) of the Income-tax Act. As such TDS on rent was liable to be deducted." The facts of the case are that the assessee was a company running automobile business at the premises taken on rent at different places from different land-lords. These premises taken on rent were at Ludhiana, Jalandhar, Amritsar, Chandigarh, Karnal and Patiala and in each property, there were two co-owners who had separately let out their respective shares to the assessee on rent. The assessee had separately paid rent to each land-lord and at the time of such credit/payment of rent, the assessee also deducted tax at source at the rate of 15 per cent and p paid the same in the Government account within due dates. In terms of provisions of section 194-I(a) of the Income-tax Act, 1961 (In short 'the Act'). All the co-owners were separately being assessed to tax for the last several years and the rent so received from the assessee was separately shown in their individual returns and was assessed as such. Even the investments in the properties given on rent were separately shown in the books of account and accounted for in the returns filed for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Smt. Bishaka Sarkar was distinguishable on facts because that was a case of tenancy in common standing in the name of four landlords and said conglomeration of four persons was treated as common to fall within the category of other cases as per section 194-I(b) of the Act. It was submitted that since the assesses had paid the rent to individual co-owners having their separate and specific share and it was not a case where the rent was paid to one entity and thereafter divided among the co-owners, the judgment of Calcutta High Court in the case of Smt. Bishaka Sarkar was not applicable to the facts of the present case. It was further submitted that the assessee had deducted tax in respect of income of the individual who had separately filed the individual returns disclosing therein such g rental income. They also paid tax due on the income declared in the return. It was submitted that once the tax has been paid by the co-owners in their respective returns, the Assessing Officer was not justified in raising the demand in the hands of the assessee. Reliance was also placed on the following judgments: (i) CIT v. Life Insurance Corpn. [1987] 166 ITR 191 (MP) (ii) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer the rental income was credited to the individual accounts of the land-lords and then the tax was deducted. The provisions of section 26 were invoked by Assessing Officer in the order (it was not the contention of the appellant before the Assessing Officer) and having invoked section 26 and the shares of the land-lords being definite and ascertainable the Assessing Officer by referring to the decision of Hon'ble Calcutta High Court came to conclusion that though the income of such property cannot be assessed as income of the AOP itself. It was the contention of the Assessing Officer during appellant proceedings that irrespective of the said fact section 194-I represents complete code in itself and there being more than one individual then provision of section 194-I(b) are applicable than section 194-I(a). Accepting that section 194-I(a) represents complete code the responsibility of payer (appellant) to deduct the tax at source at the rate of 15 per cent or 20 per cent is dependent on the credit of rental income to the account of the payee and as per details lying on the record the payer credited the rental income to the individual account of the payees. As per the only ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggrieved with the orders of the CIT(A). Hence, this appeal before us. 4. The ld. D.R. heavily relied on the orders of the Assessing Officer and submitted that the case of the assessee was covered by the judgment of Calcutta High Court in the case of Smt. Bishaka Sarkar as the rent had been paid to various co-owners. He submitted that the case of the assessee was covered under section 194-I(b) of the Act and not under section 194-I(a) of the Act. He further submitted that the very fact that rental income has been taxed in the hands of individual co-owners under section 26 of the Act does not mean that the case of the assessee was not covered under section 194-I(6) of the Act. Thus, he submitted that the assessee ought to have deducted tax at the rate of 20 per cent instead of tax deducted at the rate of 15 per cent. 5. The ld. counsel for the assessee, on the other hand, heavily relied on the orders of the CIT(A) and reiterated the submissions which were made before the authorities below. 6. We have heard both the parties and given our thoughtful consideration to the rival contentions, examined the facts, evidence and material placed on record. We have also gone through the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as paid to conglomeration of four persons as a group and thereafter was distributed among the co-owners. We are, therefore of the opinion that the case was covered under section 194-I(a) of the Act and, therefore, the assessee rightly deducted tax at source at the rate of 15 per cent within meaning of section 194-I(a) of the Act. Further, it is a fact that the rental income received from the assessee had been declared by the co-owners in their respective cases and the tax has also been paid thereon. Even if the tax has been deducted at source by the assessee, it did not absolve the co-owners from the liability of accounting for such income in their return', and payment of tax thereon which they did in their Individual cases. Once the payees of the rent had declared such income and had paid tax thereon, the Assessing Officer was not correct in treating the assessee as default for the short payment of TDS because the liability already stood discharged on the date when the Assessing Officer initiated such proceedings. The judgments of Madhya Pradesh High Court in the cases of M.P. Agro Morarji Fertilizers Ltd., Manager, Madhya Pradesh State Co-operative Development Bank Ltd. and Life ..... X X X X Extracts X X X X X X X X Extracts X X X X
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