TDS 194IA not applicable if individual share of assessee is less than 50 lakhs in property

TDS 194IA not applicable if individual share of assessee is less than 50 lakhs in property purchased – ITAT

In a recent judgment, the ITAT Indore held that TDS u/s 194IA not applicable if assessee’s individual share of payment was less than 50 lakhs in property purchased. Law cannot be read that in case of four separate purchase deed for four persons separately, Section 194-IA was not applicable and in case of a single purchase deed for four persons Section 194-IA will be applicable.

ABCAUS Case Law Citation:
ABCAUS 4083 (2024) (06) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming order passed u/s 201(1)/201(1A) of the Income Tax Act, 1961 (the Act) on account of non deduction of TDS u/s 194IA of the Act.

The appellant assessee had purchase his ½ share in a land along with his brother vide a sale dated. There was no dispute that the total consideration of the said land paid by the assessee and his brother was Rs.80,00,000/- and ½ shares of the assessee was Rs.40,00,000/-.

Since the assessee had paid his share of Rs. 40,00,000/- to the seller which was below the threshold limit of Rs.50,00,000/- as provided in section 194IA and therefore, the assessee did not deducted the TDS u/s 194IA in respect of the said payment of purchase consideration.

However, the contention of the Income Tax Department was that provisions of section 194IA what is to be seen is the total value of the property and therefore, total consideration paid for the purpose of property was 80,00,000/- which was more than threshold limit of Rs.50,00,000/-. Referring to the sub-section (2) of section 194-IA it was contended that in case where consideration for transfer of immoveable property and stamp duty value of such property are both less than Rs. 50,00,000/- then only the TDS is not required to be deducted.

Relying on the decisions of the Co-ordinate Bench in the case of his brother (co-purchaser) the assessee contened that he was under no obligation to deduct TDS in respect of the said payment of purchase consideration.

The Tribunal observed that the Co-ordinate Bench has held that as per section 194IA the obligation for deducting tax is on a person and in case in hand the assessee and his brother are two separate individuals and would be regarded as two separate persons for the purpose of section 194IA. What is relevant for threshold limit is the consideration actually paid or stamp duty valuation of immovable property. When the assessee had paid only Rs.40,00,000/- then the assessee is not liable to deduct TDS u/s 194 IA.

The Co-ordinate Bench had relied upon the judgment of the ITAT Jodhpur while dealing with an identical issue it was held that where ¼ share of the assessee in the property was less than Rs. 50 lakhs, the provisions of Section 1941A of the Act cannot be invoked.

Further, the Delhi ITAT in a similar case had held that the law cannot be interpreted and applied differently for the same transaction, if carried out in different ways. The law cannot be read as that in case of four separate purchase deed for four persons separately, Section 194-IA was not applicable, and in case of a single purchase deed for four persons Section 194-IA will be applicable.

The Tribunal following the rule of consistency followed its earlier order and decided this issue in favour of the assesse.

Accordingly, the impugned orders were set aside. 

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