2019 (6) TMI 1087 - AT - Income Tax

TDS u/s 194IA - purchase of the land on piece meal basis from same party - each transaction is less than 50 lakhs but total amount is much more - consideration for the transfer of an immovable property - HELD THAT - As per sub-section (2) of Section 194IA no deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than ₹ 50 lakhs.The assessee in instant case had purchased three properties on three different dates, although, they bear the same Khasra number and the seller is the same. This indicates that the assessee had purchased the land on piece meal basis. In my opinion, since, the value mentioned in each sale deed is less than ₹ 50 lakhs, therefore, the provisions of Section 194IA will not be applicable to the assessee. Merely because, the seller is the same and the Khasra number of the three properties purchased by the assessee are same, the same cannot be a ground to treat the assessee as an assessee in default when the value mentioned in each sale deed executed on 3 different dates is less than ₹ 50 lakhs. Set aside the order of the CIT(A) and direct the AO not to treat the assessee as an assessee in default. The ground raised by the assessee is accordingly allowed. TDS on Labour payment - payment made by the assessee to labour is below ₹ 20,000/- - CIT(A) has not justified in confirming the same - HELD THAT - Total labour payment of ₹ 27,07,195/- the assessee had not deducted TDS on an amount of ₹ 13,55,585/- for which the AO held the assessee as an assessee in default. Since, the assessee could not substantiate with evidence before the CIT(A) that no payment has been made exceeding ₹ 20,000/- to any person in a single day, he upheld the action of the AO. Assessee that given an opportunity he will produce the details either before the AO or before the CIT(A) as the case may be to substantiate that no payment exceeding ₹ 20,000/- has been paid to any person in a single day and that the assessee is not liable to deduct TDS from such labour payment. Restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction that assessee is not liable to deduct tax @ 2% on the amount of ₹ 13,55,585/- being the labour payment. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The ground raised by the assessee is accordingly allowed for statistical purposes.

Summary

Issues involved:
1. Whether the assessee is liable to deduct TDS under Section 194IA for advance payment made for purchase of land in FY 2014-15.
2. Whether the assessee is liable to deduct TDS on labour payment below ?20,000 in FY 2015-16.

Issue 1: TDS on advance payment for land purchase in FY 2014-15
The AO observed that the assessee made an advance payment for land purchase exceeding ?50 lakhs, triggering TDS liability under Section 194IA. The CIT(A) upheld the AO's decision, emphasizing that multiple registries do not exempt the deductor from TDS obligations. The Tribunal noted that each plot purchased by the assessee was below ?50 lakhs, thus TDS was not applicable. Citing Section 194IA, the Tribunal ruled in favor of the assessee, overturning the CIT(A)'s decision and directing the AO not to treat the assessee as a defaulter.

Issue 2: TDS on labour payment below ?20,000 in FY 2015-16
The AO found the assessee failed to deduct TDS on labour payment below ?20,000, treating them as a defaulter. The CIT(A) upheld this decision due to lack of evidence from the assessee. The Tribunal, considering the circumstances, remanded the issue to the AO for the assessee to provide evidence supporting their claim of not exceeding ?20,000 payments in a day. The Tribunal allowed the assessee's appeal for further proceedings. Additionally, the Tribunal allowed the assessee's appeal related to TDS on land purchase, aligning with the decision in the first issue.

In conclusion, the Tribunal ruled in favor of the assessee on both issues, directing the AO not to treat them as defaulters and providing an opportunity to substantiate their claims.