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TMI Blog2012 (4) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... ing - Section 26 of the Act provides that where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons –Appeal of Revenue failed - IT Appeal DEFECTIVE NO. 295 OF 2005 - - - Dated:- 27-2-2012 - R.K. AGRAWAL AND B. AMIT STHALEKAR, JJ. Shambhu Chopra for the Appellant. Kartikeya Saran and Vipin Sinha for the Respondent. JUDGMENT R K Agrawal, J. Income Tax Appeal Defective Nos. 296, 299, 302, 303, 306, 310 and 319 of 2005 have been filed by the Commissioner of Income Tax, Muzaffarnagar against a common order dated 17th February, 2005 passed by the Income Tax Appellate Tribunal, New Delhi, in respect of the orders passed under Section 201(1) and 201(1A) of the Income-tax Act, 1961, hereinafter referred to as "the Act", against the Manager, State Bank of India, Hanuman Road, Shamli, district Muzaffarnagar. for the Financial Years 1995-96 to 2001-02 (Assessment Years 1996-97 to 2002-03). 2. Income Tax Appeal Defective Nos. 295, 298, 301, 305, 308, 309 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60th Share(GIR No.R-214/S) ( x ) Shri Ashok Kumar, (HUF) 4/60th Share (GIR No.A-215/S) ( xi ) Shri Rakesh Gupta, (HUF) 4/60th Share(GIR No.R-239/S) ( xii ) Shri Prem Chand Sons (HUF), 4/60th Share (GIR No.R-258/S) ( xiii ) Shri Rajnesh Kant, (HUF) 4/60th Share (GIR No.R-258/S) ( xiv ) Shri Ashish Agarwal, (HUF) 4/60th Share (GIR No.A-247/S) ( xv ) Shri Ramesh Chand, 12/60th Share (GIR No.R-8/DOC/MZN) 5. Each of the fifteen co-owners had shown their investment as also their share in the rental in the building in question in their return filed under the Act and the assessment has also been made by accepting it. 6. Fourteen persons, including M/s. Atma Ram Brothers, executed a registered lease deed on 2nd January, 1986 giving lease of 6290 sq.ft covered area on the ground floor of the aforesaid property to the Manager, State Bank of India, Hanuman Road, Shamli, Muzaffarnagar. The Bank was paying monthly rent of Rs.9435/- including all taxes. After the expiry of the deed a fresh lease deed was executed on 30th May, 1998 which was effective from 1.12.1996. It was entered into by the twelve persons as co-owners of the house property. In the lease deed dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.1,88,362/- towards tax and surcharge and Rs.1,10,604/- towards interest. 8. We have heard Sri Shambhu Chopra, learned Senior Standing Counsel, appearing on behalf of the Revenue and Sri Kartikeya Saran, learned counsel holding brief of Sri Vipin Sinha, Advocate, on behalf of the State Bank of India and have perused the orders dated 17th February, 2005 passed by the Income Tax Appellate Tribunal as also the orders passed by the Assessing Officer and the Commissioner of Income Tax(Appeals). 9. Sri Shambhu Chopra, learned counsel, submitted that on a plain reading of Section 194-I of the Act, it is clear that the tax has to be deducted at source on rentals paid to any person if it exceeds Rs.1,20,000/- in a year. According to him, as the premises let out to the Bank had not been divided/partitioned by metes and bounds it cannot be said that any specified portion was let out to the Bank as owned by a particular person so as to enable the Bank to get out of the statutory obligation of deducting tax at source as provided under Section 194-I of the Act. He submitted that the order passed by the Assessing Officer determining the amount of tax and surcharge which ought to have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... divided family, who is responsible for paying to any person any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of- ( a ) fifteen per cent, if the payee is an individual or a Hindu undivided family; and ( b ) twenty per cent, in other cases: Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed one hundred and twenty thousand rupees. Explanation. --For the purposes of this section.-- ( i ) "rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building(including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee; ( ii ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d below: "S.26.Property owned by co-owners.--Where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income. Explanation. --For the purposes of this section, in applying the provisions of sub-section (2) of section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that sub-section." 16. It has come on record that each of the co-owners has a definite share in the building. Their shares have already been reproduced hereinbefore. It is not necessary that there should be a physical division of the property by metes and bounds in order to attract the provisions of Section 26 of the Act. It will come into play the moment the share of each co-owner in the property is determined and ascertainable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay down that where shares of each legal heir is well determined i.e. it is definite and ascertainable the income from such property is to be assessed in the individual hands of such person and not in the hands of the Association of persons, if any. The proposition laid down in the aforesaid decisions squarely apply to the facts of the present case also. 19. It has come on record that after the letter written by one of the coowners that the premises is owned by 15 co-owners and their shares are definite, the Bank has been paying rent to each co-owner by a separate cheque, the total of which did not exceed Rs.1,20,000/- a year Thus, the amount received by each co-owner is assessable in his hand. separately. This fact also stands established as the rent received by each of the co-owners from the Bank has been assessed separately in their hands in their respective assessments. The clarification issued by the Central Board of Direct Taxes in Circular No.715 dated 8th August, 1995 in reply to the Question No.21 squarely covers the present case as each of the co-owners has received less than Rs.1,20,000/- as rent in a year from the Bank. 20. In view of the foregoing discussion we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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