TaxTMI 
TaxTMI 
2019 (2) TMI 862
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....Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Ms. D. Naveena, Advocate, Ms. Amritha Aravindan, Advocate, Shri. S. Kannappan, Advocate, Shri. S. Ramachandran, Consultant for the Appellants Shri. A. Cletus, ADC (AR), Shri. S. Govindarajan, AC (AR), Shri. B. Balamurugan, AC (AR), Ms. T. Usha Devi, DC (AR) for the Respondents ORDER Per Bench : The issue involved in all these appeals being the same, they are taken up together for common disposal. 2.1 The common facts in all these appeals are that they are co-owners of their property leased out to tenants. For example, in Appeal Nos. ST/42206/2016 and ST/42207/2016, Shri. John Dinakar and Smt. Suganthi Joy were joint owners of a Shop....
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....ion 26 of the Income Tax Act, 1961. That the concept of association of persons is not applicable to property jointly owned since the share of income (rent) for each co-owner is definite and ascertainable. They relied upon the various decisions in which it was held that rental income of each co-owner has to be assessed separately and that each co-owner would be eligible for the threshold limit. 3.1 On behalf of the Department, Ld. ARs Ms. T. Usha Devi, Shri. A. Cletus, Shri. B. Balamurugan and Shri. S. Govindarajan appeared and argued the matter. They strongly supported the findings in the impugned Orders. It is pointed out by them that the individual co-owners have come together to form an association of persons to rent out the property ....
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..... 4. Heard both sides. 5. The issue is with regard to the demand of service tax on co-owners when the property is jointly owned by them. Ld. Counsels appearing for the appellants argued that the properties are owned by the appellants jointly and Show Cause Notices have been issued alleging that the co-owners have to be held as 'association of persons' and that they are liable to pay service tax. It is brought out from the records as well as from the submissions that the appellants are receiving the rent individually. They are also assessed to income tax on such rent which is received by them separately. In Appeal Nos. ST/42206-42207/2016, ST/41684-41685/2017 and ST/41170-41171/2018, it was brought to our notice by the Ld. Consultant t....
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....issue as to whether co-owners can be considered as an association of persons. The relevant paragraphs are noticed as under: "7. The basis of allegation by the Revenue against the Appellants rests on the premise that even though the immovable property is jointly owned by several persons, since the property itself is indivisible, and each person cannot separately render the service without involvement of other co-owners, hence the total rent received as a whole, be considered for the purpose of computing aggregate value of taxable services in extending the Notification No. 6/2005-S.T., dated 1-3-2005, as amended. In other words, the Service Tax is assessed on the total amount of rent, without extending the benefit of exemption Notification....
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....ncome tax separately, but not as an association of persons. . . . 9. We find force in the contention of the ld. Advocates representing the respective appellants inasmuch as 'association of persons' has been considered as a separate legal entity under the Income-tax Act for assessment and provided separate PAN number different from the PAN number possessed by individual co-owners; who joined together to form an 'association of persons'. In the present case, the show cause notices were issued in many cases to one person among the Joint owners and in other cases to all the persons who had jointly owned the immovable property provided on rent. Needless to mention, the Service Tax Registration of individual assessees for collection o....
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....o individual co-owners who jointly owned the property and provided the service of renting of immovable property, and received the rent in proportion to the shares in the immovable property." 7.2 This Tribunal in the case of Shri. A. Abdul Huq. & ors. Vs. Commissioner of G.S.T. & Central Excise reported in 2018 (10) T.M.I. 401 - CESTAT Chennai had followed the above said decision to hold that individual co-owners are eligible for SSI exemption while assessing their liability to discharge service tax. 8. Furthermore, we have to say that pertinently when family members come together to rent property belonging to the family or inherited by operation of law, it cannot be considered as an 'association of persons'. The levy of service tax on....