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 Rs. 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 Rs. 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 Rs. 31, 50, 000/-. Therefore in the instant case where the assessee is responsible for paying Rs. 31, 50, 000/- being the consideration for his share in the property and has actually paid Rs. 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 Rs. 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 Rs. 1,26,00,000, his share was only Rs. 31,50,000, below the Rs. 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 Rs. 31,50,000, as required under Section 194IA. The Revenue asserted that the threshold limit of Rs. 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 Rs. 50 lakhs, and each transferee is a separate entity for tax purposes. Considering the assessee's share of Rs. 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 Rs. 31,500 and Rs. 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 Rs. 31,500 and Rs. 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.