Deepak R. Shah, A.M.: All these appeals by assessees are arising out of common order of learned CIT(A)-V, Bangalore, dt. 19th Sept., 2003 in appeal against order passed by AO under ss. 201(1) and 201(1A). Since issue involved is common, all these appeals are disposed of by this common order. only issue in appeal is regarding whether tax should be deducted at rate of 20 per cent or at rate of 15 per cent on rent payable to members of appellant. Facts All appellants are deriving rental income from properties rented out to LIC. tenants deducted tax in respect of rental payment at rate of 15 per cent AO held that applicable rate of deduction is 20 per cent and passed orders holding appellants as assessee-in-default under s. 201(1) and levied interest under s. 201(1A). Learned CIT(A) held that though assessment in respect of each co-owner is to be made under s. 26 of Act, yet since payee is not individual or HUF but AOP, rate applicable is 20 per cent. assessees are in further appeal before us. Learned counsel for assessee, Shri Vittal Madmannaya submitted that appellant is AOP consisting of 26 members. appellant owns commercial complex at Bangalore. rent derived from commercial complex is being assessed to income-tax in hands of its members as co- owners in terms of s. 26 of IT Act, 1961. members of appellant have specific share in commercial complex and assessments have been framed on individual members in terms of s. 26 of Act right from beginning. portion of commercial complex owned by appellant is being leased. said tenant was deducting income-tax at source at 15 per cent of rent in terms of s. 194-I of Act. appellant also brought to notice of TDS authorities through tenant part of Circular No. 715, dt. 8th Aug., 1995 [(1995) 127 CTR (St) 13] issued by CBDT question No. 21 and answer given by Board is relevant, extracted herein: "Question 21: Where limit of Rs. 1,20,000 per annum would apply separately for each co-owner of property? Answer: Under s. 194-I taxes deductible from payment by way of rent, if such payment to payee during year is likely to be Rs. 1,20,000 or more. If there are number of payees, each having definite and ascertainable share in property, limit of Rs. 1,20,000 will apply to each of payee/co- owners separately. payers and payees are, however, advised not to enter into sham agreements to avoid TDS provisions." He accordingly contended that rent receivable by members of appellant are to be treated as individual income in terms of s. 26 of Act as co-owners. As property is owned by members and all of them are being assessed in individual status, appropriate rate is only 15 per cent. In view of provisions of s. 26, co-owners of property cannot be construed as AOP. Since recipients are co-owners and status of co-owners is individual, rate applicable is 15 per cent and not 20 per cent. All members of AOP have furnished their individual returns and, taxes in this respect have been paid and, assessment, which has resulted in refund, has been granted. Thus, there is no case of any short deduction or levying interest on such short deduction. Learned Departmental Representative on other hand kly defended impugned order. He submitted that as per s. 194-I, if payment is made to payee other than individual or HUF, appropriate rate of TDS is 20 per cent. There is no provision in s. 194-I to hold that if property is owned by co- owners, and if assessment is made under s. 26, tax is to be deducted at 15 per cent. He also relied upon decision of Hon ble Kolkata High Court in case of Smt. Bishaka Sarkar vs. Union of India (1996) 134 CTR (Cal) 558: (1996) 219 ITR 327 (Cal). In reply, learned counsel for assessee submitted that as per CBDT Circular No. 715, dt. 8th Aug., 1995 [(1995) 127 CTR (St) 13: (1995) 215 ITR (St) 16] appearing in even for arriving at limit of Rs. 1,20,000, amount payable to each co-owner is to be seen and not total amount payable to association of which each co-owner has definite and identifiable share. We have carefully considered relevant facts and arguments advanced. Sec. 194-I provides that any person other than individual or HUF, who is responsible for paying to any person any income by way of rent shall deduct tax at rate of 15 per cent, if payee is individual or HUF and 20 per cent in other cases. tax is to be deducted only when amount paid in financial year exceeds Rs. 1,20,000. In present case, it is seen that though immediate payee is association, yet property is owned by various co-owners, whose shares are definite and identifiable. In case of M/s Vijaya Enterprises, there are 26 co-owners. Only two co-owners have share of 10 per cent in such property and rent payable in this regard is exceeding Rs. 1,20,000. In case of Pal Associates, property is owned by 36 co-owners. Nine co-owners are receiving rent in sum exceeding Rs. 1,20,000. All these co-owners have filed their return of income declaring income from property in their respective hands. same is assessed in their individual hands in terms of s. 26 of Act. credit for TDS is also granted to each of them in proportion to their share of income. It is contended by learned counsel for assessee that assessment in all these cases have been completed, which has resulted in refund of TDS. intention of introducing TDS provision is that payee who is assessee (is) liable to pay income-tax, while paying same not by way of advance tax but by way of TDS. Thus, it is clear that what is to be seen is that who is assessee, is liable to pay tax on such income subject to TDS. In terms of s. 26 of Act, immediate payee-association is not liable to pay any tax as income is not to be assessed in hands of AOP but in hands of respective co-owners, as property is owned by co-owners and their respective shares are definite and ascertainable. When assessment is not to be made in hands of AOP and when assessees are individual or HUF, they are to be considered as payee in this regard. Circular No. 715, dt. 8th Aug., 1995 of CBDT also clarifies situation in sense that threshold limit of Rs. 1,20,000 is to be examined in case of each payee, who is co- owner having definite and ascertainable share. In following decisions, it has been held that where regular assessment of payee has been completed and amount of tax is fully paid by him, AO has no jurisdiction under s. 201 to demand further tax from payer in respect of tax short deducted relating to such payee. (i) CIT vs. Manager, Madhya Pradesh State Co-operative Development Bank Ltd. (1982) 31 CTR (MP) 187: (1982) 137 ITR 230 (MP); (ii) CIT vs. Divisional Manager, New India Assurance Co. Ltd. (1983) 33 CTR (MP) 248: (1983) 140 ITR 818 (MP); (iii) CIT vs. Shri Synthetics Ltd. (1984) 39 CTR (MP) 72: (1985) 151 ITR 634 (MP); (iv) Gwalior Rayon Silk Co. Ltd. vs. CIT (1983) 37 CTR (MP) 351: (1983) 140 ITR 832 (MP); (v) CIT vs. MP Agro Morarji Fertilizers Ltd. (1988) 73 CTR (MP) 180: (1989) 176 ITR 282 (MP). We accordingly hold that since ultimate payee is individual or HUF, w h o are co-owners of property and whose shares are definite and ascertainable, appropriate rate of deduction of tax at source is 15 per cent and not 20 per cent under s. 194-I. Thus, tenants are not to be treated as assessee-in-default under s. 201(1). Consequently, no interest is to be levied under s. 201(1A). In result, all appeals are allowed. *** VIJAYA ENTERPRISES & ANR. v. INCOME TAX OFFICER