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TMI Blog2025 (4) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... per the information gathered by the TDS Wing, the assessee had purchased land situated at Survey No.196, Khata No. 430, at Village Shiholi Moti, Dist. Gandhinagar, for total consideration of Rs. 1,23,67,360/-. The share of the assessee in the said property was Rs. 53,67,360/-. 2.1. Based on this transaction, the AO initiated proceedings under section 201 of the Act for failure to deduct tax at source (TDS) under section 194IA of the Act. The AO issued notices to the assessee on multiple occasions including 11.08.2021, 07.10.2021 and 21.12.2021, seeking explanations along with copies of sale deeds and details of payment of TDS, if any. 2.2. In response to the notices issued by the AO, the assessee, vide letter dated 14.08.2021, submitted that the land purchased was agricultural land situated in Village Shiholi, Taluka Kalol, District Gandhinagar. It was stated that the land was purchased jointly and the share of the assessee in the total consideration of Rs. 1,23,67,360/- was Rs. 53,67,360/-. The assessee submitted that since the land is agricultural land, the provisions of section 194IA of the Act are not applicable. It was further submitted that since the payment to each seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see argued that the land was covered by the exclusion set out in section 2(14)(iii)(b)(II) of the Act, which provides that land shall not be treated as a capital asset if it is situated beyond a certain distance from a municipality, and the population of the relevant area does not exceed the prescribed limit. Since both conditions failed, the land could not be treated as a capital asset, and hence, the provisions of section 194IA of the Act were not applicable. The assessee also contended that even assuming for a moment that the land was not agricultural, the provisions of section 194IA(2) of the Act were still not attracted. It was submitted that the total purchase consideration was Rs. 1,23,67,360/-, which was jointly paid by the assessee and her co-owner. The assessee's individual share in the property was Rs. 53,67,360/-, but the consideration was paid in two parts to two separate sellers - Rs. 21,83,680/- and Rs. 31,83,680/- respectively - and hence, payment to each seller was below Rs. 50 lakhs. 4.1. In addition to the above, the assessee further submitted that the AO had erred in treating her as an assessee-in-default under section 201(1) of the Act without satisfying the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid amount to each landowner less than Rs. 50 lacs, however the Ld. CIT(A) and ITO has wrongly interpreted the section 201(1)/ 201(1A) and raised heavy demand of Rs. 1,00,907/- is require to be deleted. 5. That the assessee is govern by proviso to section 201(1) of the Income Tax Act, 1961, Further the ITO has without ascertaining whether deductees have failed to pay the tax directly or not, heavy addition made may please be deleted. 6. The learned assessing officer erred in treating the assessee as 'assessee in default' under section 201(1) without demonstrating the satisfaction of the requirements of Explanation to section 191 and first proviso to section 201(1) of the Act and as such the demand raised of Rs. 1,00,907/- requires to be deleted. 7. That the assessee has not made any default U/s 201(1) / 201(1A), however the penalty proceedings-initiated u/s 271C of the act, requires to be dropped. 8. The assessee craves leave to add, alter, amend or delete any grounds of appeal before the appeal finally heard and decided. Condonation of Delay 6. At the outset, the registry has noted that there is a delay of 438 days (494 days as computed by the assessee) in filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of hearing before us, the Authorized Representative (AR) of the assessee reiterated the facts and stated that the assessee's share in the purchase consideration was Rs. 53,67,360/-, and the amount was paid to two different sellers-none of whom received more than Rs. 50 lakhs. The AR clarified that while the assessee earlier relied on section 194IA(2) of the Act to argue that the consideration paid to each seller was below Rs. 50 lakhs, it is now evident that a proviso to section 194IA(2) of the Act has been inserted only with effect from 1st October 2024 by the Finance Act, 2023. Therefore, the benefit of the amended provision is not available for Assessment Year 2015-16. The AR placed reliance on a decision of the Co-ordinate Bench of ITAT Ahmedabad in the case of Bhikhabhai H. Patel vs. DCIT (ITA No. 1680/Ahd/2018, order dated 31.01.2020), where the Co-ordinate Bench held, following the decision of co-ordinate bench in case of Vinod Soni v. ITO (ITA No. 2736/Del/2015 order dated 10.12.2018), that for the purposes of section 194IA of the Act, the obligation to deduct tax must be examined with reference to each transferee and each transferor individually. Where the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Vinod Soni v. ITO (supra), held that for the purpose of section 194IA of the Act, the threshold of Rs. 50 lakhs is to be examined with reference to each transferee-transferor pair individually, and that where the consideration paid to each seller is below Rs. 50 lakhs, the provisions of section 194IA of the Act are not attracted. 9.2. We find merit in the submission made by the AR. In the present case, as recorded in the assessment order and not disputed by the revenue, the assessee had paid Rs. 21,83,680/- to one seller and Rs. 31,83,680/- to another seller, both of which are individually below the threshold of Rs. 50 lakhs prescribed under section 194IA of the Act. The assessee's reliance on the decision of the Co-ordinate Bench in the case of Bhikhabhai H. Patel (supra) is well placed where it was held that for the purposes of section 194IA of the Act, the threshold of Rs. 50 lakhs is to be examined with reference to each transferee and each transferor individually. Where the amount paid to any one transferor is below Rs. 50 lakhs, the transferee is not obliged to deduct tax under section 194IA of the Act. 9.3. In paragraph 5.2 of its order in the case of Vinod Soni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made applicable since in each case purchase consideration is only Rs. 37,50,000/ -. This act ion of AO shows that he was also clear in his mind that with reference to each transferee, Sect ion 194IA was not applicable. Hence, we are of the considered view that the addition made by the AO and confirmed by the Ld. 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. As regards the case laws ci ted by the Ld. DR are concerned, the same are on distinguished facts and therefore, not applicable in the present case. Accordingly, the grounds raised by the assessee stand allowed and as a result thereof, the appeal of the assessee is allowed." 9.4. Applying the above reasoning to the facts of the present case, 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 (supra), we hold that the provisions of section 194IA of the Act were not attracted in the case of the assessee. 9.5. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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