2018 (6) TMI 810 – CESTAT NEW DELHI – TMI – Renting of immovable property – joint ownership – SSI exemption – Clubbing of clearances – threshold limit of ₹ 10 lakhs under SSI exemption N/N. 8/2008 dated 01/03/2008 in each case – Held that:- The ownership title of the property which is on lease with M/s ICICI Bank Ltd. is individually in the name of the four appellants who has entered into a joint lease agreement with the tenant namely M/s ICICI Bank Ltd. and the amount of rent on monthly basis has also been received by them separately and individually – As per the Income Tax Act all the four appellants who are recipient of the rent proceeds have to show their income in the individual name and has to pay rent under the Income Tax Act, 1962 accordingly.
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The SSI exemption N/N. 8/2008 dated 01/03/2008 (previously 6/2005 dated 01/03/2005) shall be available for individual owner of the above property for considering the taxable value of the service received by the individual ow
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the registration of the property in four individual names and execution of rent lease agreement with M/s ICICI Bank in the separate names is only to evade the payment of the service tax by availing the threshold limit of ₹ 10 lakhs under SSI exemption Notification No. 8/2008 dated 01/03/2008 (which was 6/2005 dated 01/03/2005 previously) in each case. The case has been adjudicated originally by Additional Commissioner wherein it has been held that:- 7.7 I find that in case of renting of immovable property the provider/s are the owners of the property which is being rented out. In case of the property owned by a firm or a company, the liability of assessment and payment of the service tax is on the firm/company and not individually upon its share holders or partners, as the law recognized them as one legal entity. In the instant case, I observe that the said property has been jointly leased out to M/s ICICI Bank Ltd. by the co-owners vide Lease Deed dated 15/11/2006 . 2. It can be
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of the four appellants who has entered into a joint lease agreement with the tenant namely M/s ICICI Bank Ltd. and the amount of rent on monthly basis has also been received by them separately and individually. As per the Income Tax Act all the four appellants who are recipient of the rent proceeds have to show their income in the individual name and has to pay rent under the Income Tax Act, 1962 accordingly. It has also been held by Hon ble Supreme Court in the case of CIT vs. Shiv Sagar Estate that lease rent from property purchased jointly with specific shares is separately assessable in the hands of individual co-owner and not in the hands of association of persons. It has also been held in several orders of this Tribunal that for considering the SSI benefit under Notification 8/2008 dated 01/03/2008 (previously 6/2005 dated 01/03/2005) the receipt of the service provider need to be considered individually and only after they have crossed the threshold limit of ₹ 10 lakhs the
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arises, should be confined without the benefit of the notification No. 6/2005-S.T. 7. It is undisputed that the property which has been rented out by the respondent and his brothers is jointly owned property; service tax liability arises on such renting of property. 8. On deeper perusal of impugned order, we find that the first appellate authority has considered all the angles in the dispute and came to the correct conclusion. The findings of first appellate authority is as under. 6.2 On mere reading of the Order-in-Original, it is evident that the adjudicating officer has considered above named four persons as one person for determining tax liability and imposition of penalties without telling any legal basis for doing so. The appellants have contested the Order in Original mainly on the grounds that rented property belongs to four separate persons (all brothers) but the service tax has been demanded wrongly by the department from the appellants by clubbing the rent received by all t
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al rental receipts and not collective one. From the various lease agreements made with above mentioned Commercial firms, it cannot be disputed that monthly rent was paid by the above named concerns to each appellant after deducting tax at their end. 6.3 From the show cause notice dated 19-10-2012, it is evident that the appellants had received rent as detailed below :- Sr. No. Period Amount (Rs.) 1. 2007-08 (1-6-2007 to 31-3-2008) ₹ 29,21,048/- 2. 2008-09 ₹ 36,27,024/- 3. 2009-10 ₹ 46,72,744/- 4. 2010-11 ₹ 52,63,304/- 5. 2011-12 ₹ 44,28,360/- But as the rent was distributed equally among each of the appellant, it is evident that each of them received an amount lesser than ₹ 8 lakhs and 10 lakhs in the years 2007-08 and 2008-09 respectively which is below the exemption limit of eight lakhs and ten lakhs during the relevant period. The appellants were, therefore, not liable to pay service tax on the amounts received by them during these two years by vi
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ady accepted their tax liability and paid Service tax along with interest on 14-2-2012. The said payment of service tax is certainly a delayed payment, but was made by the appellants on their own when they realized that their taxable value for renting of property had exceeded the exemption limit of ₹ 10 lakhs. The adjudicating authority has claimed in his order that the appellants paid service tax only after Department started investigation, but is not supported by any evidence or the facts on record. The SCN or the OIO do not talk of any audit objection or Preventive action or any inspection etc. on the basis of which not payment of service tax by the appellants was pointed out. Instead in the SCN, one statement of Shri Chandulal Vishrambhai Patel is only referred to which was recorded on 22-2-2012 which is 8 days after the appellants had paid service tax along with interest on their own. Thus, the claim of the appellant that they had paid service tax for the years 2009-10 and 2
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imposable in this case for the period 2009-10 and 2010-11. 9. It can be seen from the above reproduced findings of the first appellate authority, the conclusion arrived at is very correct, as co-owners of the property cannot be considered as liable for a Service Tax jointly or severally as Revenue has identify the service provider and the service recipient for imposing service tax liability, which in this case, we find our individual. The conclusion arrived at by the first appellate authority is correct and he has confirmed the demand raised on the respondents by extending the benefit of Notification No. 6/2005-S.T. We do not find any reason to interfere in such a detailed order . 5. In view of above and following the principle of judicial discipline, we are of the view that the SSI exemption Notification No. 8/2008 dated 01/03/2008 (previously 6/2005 dated 01/03/2005) shall be available for individual owner of the above property for considering the taxable value of the service receive
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