TDS on jointly paid rent depends on collective payee status and, after apportionment, each co-owner's threshold entitlement.

Tax deduction at source on rent paid jointly to co-owners was treated as lawful under section 194-I because the rent was payable to them collectively and the rate of deduction depended on whether the payee was an individual or a body of individuals. Where the later arrangement required apportionment of rent among the petitioners, the deduction position then depended on each person's share; no TDS would apply if an individual entitlement did not cross the prescribed annual threshold.

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Issues: Whether tax was deductible at source on rent paid jointly to the petitioners under section 194-I of the Income-tax Act, 1961, and whether the deduction would cease if, after apportionment, each petitioner was not individually entitled to receive rent exceeding the statutory threshold.

Analysis: Section 194-I distinguishes between an individual and a body of individuals, and the rate of deduction varies according to the character of the payee. On the facts, the petitioners had let out the property jointly to the tenant prior to the later individual arrangement, so the rent payable to them collectively attracted deduction at source. The subsequent individual letting arrangement meant that rent had to be apportioned, and the tax liability would depend on whether each petitioner's share exceeded the prescribed annual limit.

Conclusion: The deduction of tax at source was held to be lawful in respect of the joint rent payable to the petitioners. After apportionment, no deduction would be permissible if any petitioner's individual entitlement did not exceed the statutory threshold.

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