Limit of sec 194i if house is co-owned

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Sabareesh (Querist)
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15 February 2016 Dear experts,
Our company is paying rent of 5,00,000/- p.a & the rent agreement stipulates 1,80,000/- is to be paid to Mr A ; 1.8L to Mr B; 1.4L to Mr C. Do we need to deduct TDS as per 194 I?

Going with the view given by the Allahabad HC, the case mentioned there was that the house is co-owned, but in my case we dont know whether the house is co-owned. Only the agreement for rent provides the pattern. Does the onus to prove that the house is co-owned is on us or the landlord??

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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15 February 2016 Yes the onus to prove the house is co-owned is on the landlord. Further, in any case. the amount paid to Mr.A & Mr.B are subject to TDS since the amount is over threshold limit. Only in case of Mr.C is the share of rent below Rs.1.8 lac and hence not liable to TDS.

Ganeshbabu K

Ganeshbabu K (Expert)
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15 February 2016 If A,B and C are co-owned property then you don't need to deduct TDS as individual co-owner enjoys threshold limit of Rs.1,80,000.

But where Deductor have no proper evidence to prove that property is co-owned by A,B and C deductor is responsible to deduct TDS on total payment made to A,B and C,

So in case you cannot have proper evidence to prove property is owned by A,B and C you need to deduct TDS on total payment made to A,B and C i.e, TDS applicable on Rs.5,00,000 @ 10% as per section 194I

Sabareesh

Sabareesh (Querist)
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15 February 2016 Respected Suresh Ramaswamy Sir,
Threshold limit has not exceeded to Mr A & Mr B because they are receiving only 1,80,000/- because 194I provides exemption if it is up to 1,80,000/-. Am I correct??

Sabareesh

Sabareesh (Querist)
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15 February 2016 Respected Ganesh sir,
Is there any case law supporting the view you have opined?

Ganeshbabu K

Ganeshbabu K (Expert)
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16 February 2016 Where the share of each co-owner in the property is definite and ascertainable, the limit of Rs. 180,000 will be applicable to each co-owner separately.

Reference

1)Clarification issued by the Central Board of Direct Taxes vide Circular No. 715 dated 08-08-1995, particularly to the question No. 22

2)The few of the cases which can be relied upon in support of the above view are as under:

a] Gora Chand Sen v. CIT (1985) 154 ITR 435 (Cal).

b] Tulsidas Kilachand v. CIT (1987) 63 CTR (Bom) 324.

c] CIT v. Nauseer K. Kanga (1979) 120 ITR 404 (Bom).

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