In a recent decision, the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, ruled that TDS under Section 194IA is only applicable when the consideration for transferring immovable property is greater than Rs. 50 lacs.
When the assessee filed an appeal against the judgement of the CIT(A), National Faceless Appeal Center, Delhi, dated 20-10-2021, for the assessment year 2015–16, the Jodhpur ITAT made the aforementioned observation.
The assessee’s appeal was based on the argument that the impugned requests of Rs. 31,500 under Section 201(1) and Rs. 16,380 under Section 201(1A) are invalid under the law and based on the case’s circumstances because they lack jurisdiction, and as a result, they should be removed.
The assessee’s attorney, Shri Hemant Chhajed, C.A., has argued that four individuals carried out a transaction to purchase real estate on September 3, 2014, for a consideration of Rs. 1.20 crore.
The consideration for the 1/4th portion of the property amounts to Rs. 31.50 lacs In the hands of the assessee, and the provisions of Section 194IA of the Income Tax Act 1961 are only applicable if the consideration is more than Rs. 50.00 lacs, the continued.
Therefore, the AR sought that the order of the CIT(A) be overturned since the assessee should not have been classified as an assessee in default under Sections 201(1) and 201(1A) of the Act.
On the other hand, Shri S.M. Joshi, the JCIT-DR, purposefully complied with the directives of the lower authorities.
After considering the competing claims of both parties and studying the documentation on file, the ITAT came to the following conclusion:
“We have heard the opposing arguments and examined the presented record. We learned that the assessee is an individual, and based on the facts of the case presented before us and not contested by the revenue body, we came to the conclusion that the assessee and 3 other individuals bought an immovable property on 3-09-2014, for a price of Rs. 1.20 crore. The assessee contributed Rs. 31.50 lacs or 1/4th of the sale consideration. By taking into account the purchase price of Rs. 1.26 crore and applying the requirements of Section 194IA of the Act, the AO treated the assessee as being in default. We observe that where the consideration for the transfer of immovable property is greater than Rs. 50 lacs, the provisions of Section 194IA of the Act are applicable. The provisions of Section 194IA of the Act cannot be used in the instant case because the assessee paid a consideration of Rs. 31.50 lakhs.”
We were unable to find any validity in it, therefore, “the study of the Id CIT(A) is set aside” and “the demand raised by the AO under Section 201(1) for non-deduction of tax of Rs. 31,500 and interest levied under Section 201(1A) at Rs. 16,380 is removed”. The committees of Manish Borad, an accountant, and Khul Bharat, a judge, were added.
In light of this, the ITAT concluded, “In the result, the assessee’s appeal is allowed.”
| Case Title | Reetu Devi Nanecha Vs. The ITO TDS Bhilwara |
| Citation | ITA NO. 118/JODH/2021 |
| Date | 24.03.2023 |
| Assessee By | Shri Hemant Chhajed, CA |
| Revenue By | Shri S.M. Joshi, JCIT-DR |
| Jodhpur ITAT | Read Order |