2018 (12) TMI 636 - AT - Income Tax

TDS u/s 194IA - threshold limit for non deduction of TDS - transfer of an immovable property - single purchase deed for four persons - Held that - Section 194-IA was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out alongwith the Finance Bill wherein it was stated that in order to reduce the compliance burden on the small tax payers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakhs rupees. The main reason by the AO is that the amount as per sale deed is ₹ 1,50,00,000/-. The law cannot be interpreted and applied differently for the same transaction, if carried out in different ways. The point to be made is that, the law cannot be read as that in case of four separate purchase deed for four persons separately, Section 194-IA was not applicable, and in case of a single purchase deed for four persons Section 194-IA will be applicable. It is noted that AO has passed a common order u/s. 201(1) for all the four transferees. In order to justify his action since in case of separate orders for each transferee separately, apparently, provisions of section 194IA could not had been made applicable since in each case purchase consideration is only ₹ 37,50,000/-. This action of AO shows that he was also clear in his mind that with reference to each transferee Section 194IA was not applicable. The addition made by the AO and confirmed by the CIT(A) is not sustainable in the eyes of law, thus the same is deleted. As far as issue of charging interest is concerned, the same is consequential in nature, hence, need not be adjudicated. - Decided in favour of assessee.

Issues Involved:
1. Applicability of TDS provisions under Section 194-IA.
2. Liability for TDS on purchase consideration paid prior to 1.6.2013.
3. Application of the first proviso to Section 201(1).
4. Correct rate of interest under Section 201(1A).
5. Period for charging interest under Section 201(1A).
6. Opportunity of hearing.
7. Validity of common proceedings for multiple buyers.

Detailed Analysis:

1. Applicability of TDS Provisions under Section 194-IA:
The primary issue was whether the provisions of deduction of TDS at 1% under Section 194-IA were applicable to the assessee, given that the purchase consideration for each individual was ?37,50,000, which is below the threshold limit of ?50,00,000. The Tribunal found that Section 194-IA(2) specifies that no deduction shall be made if the consideration for the transfer of an immovable property is less than ?50,00,000. Since each transferee's share was ?37,50,000, the Tribunal concluded that the TDS provisions were not applicable.

2. Liability for TDS on Purchase Consideration Paid Prior to 1.6.2013:
The assessee argued that liabilities under Sections 201 and 201(1A) for amounts paid before 1.6.2013 were unsustainable as Section 194-IA became operative from 1.6.2013. The Tribunal did not specifically address this issue separately, as the primary finding rendered the detailed discussion on this point unnecessary.

3. Application of the First Proviso to Section 201(1):
The assessee contended that no liability should have been created under Section 201(1) in view of the first proviso to the section. However, the Tribunal's primary finding that Section 194-IA was not applicable due to the consideration being below ?50,00,000 for each transferee rendered this point moot.

4. Correct Rate of Interest under Section 201(1A):
The assessee argued that interest under Section 201(1A) was wrongly charged at 1.5% per month instead of the correct rate of 1% as provided in Section 201(1A)(i). The Tribunal did not need to adjudicate this issue separately as the primary finding negated the need for any interest calculation.

5. Period for Charging Interest under Section 201(1A):
The assessee also argued that interest under Section 201(1A) should only be charged until the date of furnishing the return of income by the resident person from whom the property was purchased. This issue was also rendered moot by the Tribunal's primary finding.

6. Opportunity of Hearing:
The assessee claimed that no reasonable opportunity of hearing was provided. The Tribunal did not specifically address this procedural issue, focusing instead on the substantive legal issues.

7. Validity of Common Proceedings for Multiple Buyers:
The assessee argued that the proceedings were vitiated as a single and common order was passed for four individual buyers. The Tribunal noted that the AO had passed a common order under Section 201(1) for all four transferees, which indicated that the AO was aware that Section 194-IA was not applicable to each individual transferee. This supported the Tribunal's conclusion that the addition made by the AO and confirmed by the CIT(A) was not sustainable.

Conclusion:
The Tribunal allowed the appeals, holding that the provisions of Section 194-IA were not applicable as the purchase consideration for each transferee was below ?50,00,000. Consequently, the additions made by the AO and confirmed by the CIT(A) were deleted. The Tribunal's decision applied to all four appeals as the facts and circumstances were identical.

Order:
All four appeals filed by the assessee were allowed, and the order was pronounced on 10-12-2018.

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