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2025 (4) TMI 215 - AT - Income TaxTDS u/s 194IA - AO rejected the assessee s claim that the land in question was agricultural in nature and therefore outside the purview of section 194IA - AO treated the assessee as an assessee-in-default under section 201(1) of the Act for failure to deduct tax - HELD THAT - We note that the assessee paid Rs. 21, 83, 680/- to one seller and Rs. 31, 83, 680/- to another seller both of which are individually below Rs. 50, 00, 000/-. In line with the interpretation adopted in the case of Bhikhabhai H. Patel 2020 (2) TMI 1032 - ITAT AHMEDABAD we hold that the provisions of section 194IA of the Act were not attracted in the case of the assessee. CIT(A) while upholding the AO s action failed to consider the legal issue squarely raised by the assessee and did not deal with the applicable precedent or examine the transaction structure in light of judicial interpretation. The approach of the appellate authority in summarily concurring with the AO without addressing these key issues does not meet the standard required under section 250(6) of the Act. The demand raised under section 201(1) and 201(1A) of the Act is liable to be deleted. As the assessee has been held not to be in default for failure to deduct tax u/s 194IA of the Act all other grounds raised in the appeal including those relating to section 2(14)(iii) of the Act the proviso to section 201(1) of the Act the Explanation to section 191 of the Act and penalty u/s 271C are rendered redundant and academic and are therefore not adjudicated. Accordingly the assessee could not have been held to be an assessee-in- default under section 201(1) of the Act and the consequential levy of interest under section 201(1A) of the Act also fails. The orders of the lower authorities are therefore liable to be set aside on this short ground alone.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Applicability of Section 194IA of the Act The relevant legal framework includes section 194IA of the Income Tax Act, which mandates TDS on the transfer of immovable property where the consideration exceeds Rs. 50 lakhs. The assessee argued that the land was agricultural and thus exempt from TDS under section 2(14)(iii) of the Act. However, the AO and CIT(A) determined that the land did not qualify as agricultural based on its proximity to municipal limits. The Tribunal examined whether the transaction was subject to TDS under section 194IA. The Tribunal found that the land was not agricultural as per the statutory definition, thus not exempt from TDS requirements. 2. Threshold for TDS under Section 194IA The Tribunal considered whether the threshold of Rs. 50 lakhs should be applied to the entire transaction or individually to each seller. The Tribunal relied on precedents, including the decision in Bhikhabhai H. Patel vs. DCIT, which held that the threshold should be applied to each transferee-transferor pair individually. In this case, the payments to each seller were below Rs. 50 lakhs, so TDS was not applicable. 3. Assessee-in-default under Section 201(1) The Tribunal considered whether the assessee could be held as an assessee-in-default for failing to deduct TDS. Given the conclusion that section 194IA was not applicable due to the individual consideration amounts, the Tribunal found the assessee could not be held in default. 4. Condonation of Delay The Tribunal evaluated the reasons for the delay in filing the appeal, which was attributed to non-receipt of the CIT(A) order. While the Tribunal emphasized the responsibility of taxpayers to track communications, it adopted a liberal approach in condoning the delay to prevent injustice, subject to a nominal cost. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
Overall, the Tribunal allowed the appeal, setting aside the orders of the lower authorities based on the interpretation of section 194IA and the application of precedents. The Tribunal's decision emphasizes the importance of applying legal thresholds individually and the need for appellate authorities to conduct thorough analyses of legal and factual issues.
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