2021 (8) TMI 711 - AT - Income Tax

TDS u/s 194IA - assessee has purchased an immovable property on 03.09.2014 for a consideration from UIT, Bhilwara - no tax was deducted on payment of his share to the transfer of the property assessee to be in default within the meaning of Section 201 - HELD THAT - On harmonious reading of both sub-section (1) and sub-section (2) of section 194IA, the provisions provides that any person responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property exceeding ₹ 50 lacs shall be liable for deduction of tax at source at the rate of one percent of such sum. In the instant case, undisputedly, the total consideration for acquisition of the immovable property has been agreed at ₹ 1,26,00,000/-, at the same time, it is also an admitted fact that the assessee s share in the said immoveable property is only 1/4 th and the assessee is thus responsible for paying consideration of ₹ 31,50,000/-. Therefore, in the instant case, where the assessee is responsible for paying ₹ 31,50,000/- being the consideration for his share in the property and has actually paid ₹ 31,50,000/- only, there is no requirement to deduct tax at source in terms of section 194IA of the Act. We find that similar view has been taken by the Coordinate Bench in subsequent decision in case of Vinod Soni vs. ITO, TDS 2018 (12) TMI 636 - ITAT DELHI where it was held that section 194-IA(1) is applicable on any person being a transferee, so section 194-IA(2) is also applicable only w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. The contentions advanced by the ld CIT/DR that in case of joint owners of the property, the threshold limit of ₹ 50,00,000/- is to be determined property-wise and not transferee wise cannot be accepted. Thus assessee cannot be held as assessee in default on account of non-deduction of tax u/s 194IA and therefore, the demand U/s 201(1) and 201(IA) of the Act is hereby set aside. - Decided in favour of assessee.

Summary

Issues:
Appeals challenging order under Section 201(1)/201(IA) of the Act regarding non-deduction of tax at source on property purchase.

Detailed Analysis:
1. The appeals were filed against the order of ld. CIT(A) for the assessment year 2015-16, involving common grounds challenging the order passed under Section 201(1)/201(IA) of the Act. The case of the assessee in ITA No. 245/Jodh/2019 was taken as a lead case for discussion.
2. The assessee argued that as a joint owner of a property purchased for ?1,26,00,000, his share was only ?31,50,000, below the ?50 lakh threshold in Section 194IA, hence no TDS was required. Citing previous decisions, the assessee contended that the lower authorities wrongly held him in default.
3. The Revenue argued that the assessee failed to deduct 1% TDS on his share of ?31,50,000, as required under Section 194IA. The Revenue asserted that the threshold limit of ?50,00,000 applies property-wise, not transferee-wise, and the assessee was correctly held in default.
4. The Tribunal referred to a previous decision where it was held that Section 194IA applies to consideration exceeding ?50 lakhs, and each transferee is a separate entity for tax purposes. Considering the assessee's share of ?31,50,000, which he paid in full, no TDS was required.
5. The Tribunal found that the consistent position taken by various Benches supported the assessee's position. It held that the joint owners' threshold limit should be determined individually, not collectively, setting aside the demand of ?31,500 and ?16,380 under Section 201(1) and 201(IA) of the Act.
6. In another identical case (ITA No. 246/JODH/2019), following the same reasoning, the Tribunal set aside the demand of ?31,500 and ?16,380 under Section 201(1) and 201(IA) of the Act.
7. Both appeals were allowed, and the orders were pronounced on 16/08/2021.