Please help me with this query.
A property(land)is given for development to a developer by a landlord. The developer builds a commercial
building and retains his share of the property as per the agreement between landlord and developer and the
developer takes the whole building on lease which includes the landlord’s share.
He pays a rent of say,Rs.100 to the landlord and gives the whole building on lease to a sub tenant for say,
Rs. 150.
The agreement between landlord and tenant /developer is as follows, "It is specifically agreed between the
parties that the lessors shall pay an X amount towards MUNICIPAL TAXES AND LEVIES."
The same agreement also states "The lease rent paid by lessees to lessors shall be subject to TDS as
per rates applicable from time to time under provisions of Income Tax Act and further subject to any other
DEDUCTIONS OR LEVIES as may be applicable UNDER OTHER ACT(S)."
The whole building is given for lease to the sub tenant. The lease between the Lessee/Developer and the
Sub Tenant states that all taxes(including Service Tax) are to be borne by the sub tenant.
Who is liable to pay service tax for the share of the landlord given to the Lessee/developer? Would it be the
subtenant or Lessee or the Land lord?
Pl note: The rent received by the landlord is exceeding the exemption limit.
CAclubindia
