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Income Tax Appellate Tribunal, JODHPUR BENCH :DB
Before: SHRI SAKTIJIT DEY, VICE- & SHRI GIRISH AGRAWAL
O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of learned Commissioner of Income-tax(Appeals)/National Faceless Appeal Centre(NFAC), Delhi - Appeal No. NFAC/2013-14/10013357 dated 26.07.2022 against the order under Section 201(1)/201(IA) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 02.03.2021 passed by ITO, TDS, Bhilwara for the assessment year 2014- 15.
Avinash Rampal Jagetiya, Bhilweara- AY: 2014-15
Sole issue involved in the present appeal is in respect of incorrect inference drawn for section 194IA for non-deduction of tax at source and considering assessee as assessee in default under Section 201 of the Act.
Brief facts of the case as culled out from the record are that assessee along with two family members purchased an immoveable property for a total consideration of Rs.1,37,61,000 on 23.12.2013.
Share of each of the three co-owners in the said purchase transaction was 1/3rd each amounting to Rs.45,87,000. The other two co-owners are Smt. Hem Lata Jagetiya and Smt. Sweta Jagetiya.
3.1 Learned Assessing Officer believed that as per provisions of section 194IA of the Act, any person, being a transferee, responsible for paying (other than the person referred to in section 194IA) to a resident transferor a sum of Rs.50 lakhs or more by way of consideration for transfer of any Immovable property (other than agricultural land), shall at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 1% of such sum as income-tax thereon. Learned Assessing Officer further observed that sub-section (2) of section 194IA provides that no deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than
Avinash Rampal Jagetiya, Bhilweara- AY: 2014-15 Rs.50 lakhs.
3.2. Learned Assessing Officer further observed that in the instant case, consideration for the transfer of an immovable property is Rs. 1,37,61,000/- i.e. more than Rs. Fifty lakhs and the same is executed through a single sale deed made on 23.12.13 and duly registered with Sub-Registrar, Bhilwara in respect of the transfer of an immovable property.
As such, provisions of section 194IA are very much applicable in this case.
3.3. Accordingly, learned Assessing Officer held that as per the provisions of Rule 30(2) of the Income-tax Rules, 1962, (the Rules) the assessee was responsible to deduct tax u/s. 194IA and deposit the same to the credit of the Central Govt. account within a period of seven days from the end of the month. With this view, he held that assessee is in default non deduction of tax liable and interest thereon. Aggrieved, assessee went in appeal before the ld. CIT(A).
Ld. CIT(A) while rejecting the claim of assessee stated in Para 5.1.3 that “The property in question is one and is undivided, and is under joint ownership. individual shares in the property is not demarcated. One joint owner can not sell his share to any outsider without the consent of the co- owners. If one of the co- owners default in making hislher part of payment, UAT would not give partial possession of the property, as there is no question of partial transfer. Hence, the Assessing Officer has rightly held that consideration for the whole immovable property is to be taken
Avinash Rampal Jagetiya, Bhilweara- AY: 2014-15 into account. Even in cases where payments are made in instalments, provisions of this section would apply, though individual instalment is less than the threshold limit. Therefore, the action of the Assessing Officer is upheld. The ground raised is rejected.” Aggrieved, assessee is in appeal before the Tribunal.
Before us, assessee contended that legal provisions under section 194IA states -
“No deduction under sub — section (1) shall be made where the consideration for the transfer of an immoveable property is less than Rs. 50.00 lacs”
5.1 Thus, section 194-IA of Act is not applicable and assessee cannot be termed as “assessee in default” and no interest u/sec. 201(IA) is leviable. Reliance was placed on the following decisions of the coordinate Benches as under: i) Smt Sandhya Gugalia Jaipur v/s DCIT in & 78/JP/2018 dated 08.06.2018 wherein it was held that where total consideration for transfer of immovable property is equal to or exceed Rs.50 Lacs but individual payment to joint owner is less than Rs.50 Lacs, provision of section 194IA are not attracted. ii) Vinod Soni vs. ITO TDS (2019)197 TTJ 352 wherein it it was held as “Section 194I Section 194-1A was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out along with the Finance Bill wherein it was stated that “in order to reduce the compliance burden on the small tax payers, i/ is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakhs rupees.” We further find that the main reason by the AO is that the amount as per sale deed is Rs. 1,50,00,0007-. The law cannot be interpreted and Avinash Rampal Jagetiya, Bhilweara- AY: 2014-15 applied differently for the same transaction, if carried out in different ways.” iii) Oxcia Enterprises Private Limited in ITA to. 291/Jodh/2018 AY 2016-17 order dated 06/05/2019.
5.3 Learned counsel, thus, submitted that assessee is not an assessee- in-default and the demand raised under section 201(1) of Rs. 45,870 and interest under Section 201(IA) of Rs. 39,907, totaling Rs. 85,777 say Rs. 85,780 be deleted.
Per contra, learned Sr. DR placed reliance on the orders of learned Assessing Officer and learned CIT(Appeals).
We have considered the rival contentions and perused the material on record. Admitted fact is that an immoveable property has been purchased jointly by three persons, one of which is the assessee for a total value of Rs.1,37,61,000. Individual share in the purchase consideration for each of the co-owner comes to Rs.45,87,000 which less than Rs.50,00,000 prescribed under Section 194IA of the Act for the purpose of deduction of tax source. We note that sub-section(2) of section 194IA provides an exception from deducting tax of 1% of the consideration for transfer of an immoveable property when it is less than Rs.50,00,000.
7.1 By virtue of section 46 of the Transfer of Property Act, 1882 where immoveable property is transferred for consideration by persons having distinct interest therein, the transferor are, in the absence of contract to Avinash Rampal Jagetiya, Bhilweara- AY: 2014-15 the contrary, entitled to share in the consideration equally, where there interest in the proper of equal value. Thus, in the present case, there is no contract to the contrary brought on record, the total purchase consideration when divided equally in the three co-owners falls below the prescribed limit of Rs.50,00,000 for each person. Accordingly, we are of the opinion that in these set of facts and applicable law, provisions of section 194IA are not applicable. Therefore, assessee cannot be treated as assessee in-default. The demand raised under Section 201(1)/(1A) is deleted. Ground taken by the assessee in this respect is allowed.
In the result, appeal of the assessee is allowed. 8.
Order is pronounced in the open court on 21 .09.2023.