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Issues involved: Challenge to deduction of rent by Bank of India u/s 194-I of Income-tax Act, 1961 for tenancy-in-common with four landlords.
Summary: The High Court of Calcutta, in this writ proceeding, addressed the challenge against Bank of India's deduction of rent at 20% u/s 194-I of the Income-tax Act, 1961 for a tenancy-in-common with four landlords. The court analyzed the definition of "rent" as per the Act, emphasizing that rent is a composite concept and cannot be fragmented. The Act mandates a deduction at source of 15% for individuals and Hindu undivided families, and 20% for other cases. The court determined that the four landlords collectively do not fall under the definition of an individual or Hindu undivided family, hence categorizing them under "other cases" for the 20% deduction. As the Bank of India, a Government undertaking, is the tenant, it is obligated to deduct and remit the 20% amount to income-tax authorities to avoid penal consequences. The court upheld the bank's right to deduct 20% from the rent due to fulfill its statutory obligation, dismissing the writ petition against the bank's actions. Therefore, the court ruled against issuing any writ to prohibit the bank from deducting 20% from the rent at source, affirming the bank's compliance with section 194-I of the Income-tax Act. The writ petition was dismissed, and the concerned department was directed to provide a certified copy of the order upon request.
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