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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
ITA. No. 245/JODH/2019 Assessment Year: 2015-16
Shri Rajesh Kumar Nahar, Vs. The ITO (TDS), 3F-17, R.C. Vyas Colony, Bhilwara. Bhilwara, PAN/GIR No.: ADHPN 7592 E Appellant Respondent
ITA. No. 246/JODH/2019 Assessment Year: 2015-16
Shri Dalpat Singh Nacecha, Vs. The ITO (TDS), 3A-38, R.C. Vyas Colony, Bhilwara. Bhilwara, PAN/GIR No.: ACFPN 0410 L Appellant Respondent Assessee by : Shri Hemant Chhajed (C.A.) Revenue by : Miss Kajal Singh (CIT) a Date of Hearing : 12/08/2021 Date of Pronouncement : 16/08/2021 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M.
These are two appeals filed by the respective assessees against the order of ld. CIT(A) dated 21.05.2019 for the assessment year 2015- 16. Both these appeals involving common ground of appeal challenging the order passed U/s 201(1)/201(IA) of the Act which has been
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confirmed by the ld. CIT(A) were heard together and disposed off by this consolidated order.
With the consent of the parties, the case of the assessee in ITA No. 245/Jodh/2019 was taken as a lead case for the purposes of present discussion.
ITA No. 245/JODH/2019
During the course of hearing, the ld. AR submitted that the assessee has purchased a property jointly with his wife and two partners namely Dalpat Singh Nanecha and Reetu Devi Nanecha on 03.09.2014 from UIT, Bhilwara for a consideration of Rs. 1,26,00,000/-. It was submitted that the assessee was only a joint owner of the property to the extent of ¼ share in the property and consideration of the property in the hands of the assessee was only Rs. 31,50,000/- which is less than Rs. 50 lacs, therefore, in terms of provisions of Section 194IA of the Act, there was no requirement to deduct tax at source while making payment to UIT, Bhilwara. It was accordingly submitted that the provisions of Section 194IA of the Act are not applicable in the case and the assessee cannot be treated as assessee in default in respect of non-deduction of tax. In support, reliance was placed on Jaipur Bench decision in case of Smt. Sandhya Gugalia Jaipur vs. DCIT, CPC-TDS (ITA No. 77 & 78/JP/2018 dated 08.06.2018) and Delhi Bench decision in case of Vinod Soni vs. ITO, TDS (ITA No. 2736- 2739/DEL/2015 dated 10.12.2018). It was submitted that both the lower authorities have not properly appreciated the provisions of
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Section 194IA of the Act and has wrongly held the assessee to be in default and raised demand of Rs. 31,500/- and Rs. 16,380/- U/s 201(1) and 201(IA) of the Act which deserves to be set aside.
Per contra, the ld. DR relied on the finding of the lower authorities and submitted that as per information received by the Assessing Officer, the assessee has purchased an immovable property on 03.09.2014 for a consideration of Rs. 1,26,00,000/- from UIT, Bhilwara and as per OLTAS, no tax was deducted U/s 194IA of the Act. Therefore, the assessee was issued a show-cause notice U/s 201 dated 12.01.2017 and thereafter, on 12.01.2018 and after considering the submissions filed by the assessee, the Assessing Officer has held the assessee to be in default within the meaning of Section 201 of the Act. It was submitted that in the instant case, the assessee has failed to deduct tax @ 1% at the time of payment of his share to the transfer of the property as per provisions of Section 194IA of the IT Act. Therefore, the assessee has committed default for non- deduction of TDS on payment of Rs. 31,50,000/- which is ¼ of the total consideration of Rs. 1,26,00,000/-, being the assessee’s share in the property. It was submitted that in case of joint owners of the property, the threshold limit of Rs. 50,00,000/- is to be determined property-wise and not transferee-wise and the number of buyers and sellers would not matter at all and so long as the value of the property is more than Rs 50 lacs, the provisions of Section 194IA of the Act are applicable. It was accordingly submitted that there is no infirmity in the order so passed by the Assessing Officer which has been rightly confirmed by the ld.
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CIT(A) hence, the same should be confirmed and the appeal of the assessee be dismissed.
We have heard the rival contentions and perused the material available on record. In case of Smt. Sandhya Gugalia, Jaipur Vs DCIT, Ghaziabad (supra), speaking through one of us, we have dealt with the provisions of section 194IA, though in the context of consequent levy of interest and late fee, however, the legal position examined therein applies equally in the instant case. The relevant findings therein read as under: “7. We have heard the rival contentions and perused the material available on record. It is an undisputed fact that the assessee has acquired an immoveable property which was jointly owned by Smt. Rashi Harneja and Smt. Ravindra Harneja. It is also an undisputed fact that though the total consideration was agreed at Rs 75,00,000, the assessee has paid Rs 37,50,000/- each to the two individual and joint owners of the said immoveable property.
Section 194-IA which has been invoked in the instant case reads as under:
"Payment on transfer of certain immovable property other than agricultural land 194-IA. (1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum 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
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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 one per cent of such sum as income-tax thereon.” (2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees. (3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section. Explanation.--For the purposes of this section,-- (a) "agricultural land" means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub- clause (iii) of clause (14) of section 2; (b) "immovable property" means any land (other than agricultural land) or any building or part of a building."
A close reading of the above provisions provides that any person, being a transferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property 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 one per cent of such sum as income-tax thereon. It however, provides an exception that no deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable
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property is less than fifty lakh rupees. In other words, it provides that any person responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property exceeding Rs 50 lacs, shall be liable for deduction of tax at source at the rate of one percent of such sum. In the instant case, even though the total consideration for the immovable property has been agreed at Rs 75,00,000, the assessee is responsible for paying consideration of Rs 37,50,000 each to Smt. Rashi Harneja and Smt. Ravindra Harneja individually. In fact, the assessee has actually paid Rs 37,50,000 individually to these two individuals as demonstrated by its filings in Form 27Q which has been accepted by the Revenue authorities and subsequently processed and intimation issued under section 200A of the Act. In light of the same, in our view, the provisions of section 194-IA are not applicable in the instant case. Given that the provisions of section 194-IA are not attracted, there is no basis for levy of interest and late fee under section 234E of the Act and the demand so raised is hereby directed to be deleted. However, we make it clear that TDS already deposited shall not be refunded to the assessee as the transferor would be entitled to claim credit of the same in their respective return of income.”
As held in the aforesaid decision, on harmonious reading of both sub-section (1) and sub-section (2) of section 194IA, the provisions provides that any person responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property exceeding Rs 50 lacs shall be liable for deduction of tax at source at the
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rate of one percent of such sum. In the instant case, undisputedly, the total consideration for acquisition of the immovable property has been agreed at Rs 1,26,00,000/-, at the same time, it is also an admitted fact that the assessee’s share in the said immoveable property is only 1/4 th and the assessee is thus responsible for paying consideration of Rs 31,50,000/-. Further, as evident from the findings of the AO where he has held the assessee to be in default for non- deduction of TDS on payment of Rs. 31,50,000/- which is ¼ of the total consideration of Rs. 1,26,00,000/-, being the assessee’s share in the property and determining TDS default to the tune of Rs. 31,500/-, being 1% of Rs 31,50,000/-, the assessee has actually paid Rs 31,50,000/- only. Therefore, in the instant case, where the assessee is responsible for paying Rs 31,50,000/- being the consideration for his share in the property and has actually paid Rs 31,50,000/- only, there is no requirement to deduct tax at source in terms of section 194IA of the Act.
We find that similar view has been taken by the Coordinate Bench in subsequent decision in case of Vinod Soni vs. ITO, TDS (supra) where it was held that section 194-IA(1) is applicable on any person being a transferee, so section 194-IA(2) is also applicable only w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. The relevant findings read as under:
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“5.2 After perusing the Paper Book and the relevant provisions of law, we find that Section 194-IA(2) provides that Section 194- IA(1) will not applicable where the consideration for transfer of immovable property is less than Rs. 50,00,000/-. However, section 194-IA(1) is applicable on any person being a transferee, so section 194-IA(2) is also, obviously, applicable only w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. In the instant case there are 04 separate transferees and the sale consideration w.r.t. each transferee is Rs. 37,50,000/-, hence, less than Rs. 50,00,000/- each. Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. It is also noted that Section 194-IA was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out alongwith the Finance Bill wherein it was stated that “in order to reduce the compliance burden on the small tax payers, it 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. 1,50,00,000/-. The law cannot be interpreted and applied differently for the same transaction, if carried out in different ways. The point to be made is that, 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. It is noted that AO has passed a common order u/s. 201(1) for all the four transferees. In order to justify his action since in case of separate orders for each transferee separately, apparently, provisions of section 194IA could not had been made applicable since in each case purchase consideration is only Rs. 37,50,000/-. This action of AO shows that he was also clear in his mind that with reference to each transferee, Section 194IA was not applicable. Hence, we are of
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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 cited 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.”
The contentions therefore, advanced by the ld CIT/DR that in case of joint owners of the property, the threshold limit of Rs. 50,00,000/- is to be determined property-wise and not transferee- wise cannot be accepted.
In light of aforesaid facts and circumstances of the case and following the consistent position taken by various Benches of the Tribunal, the assessee cannot be held as assessee in default on account of non-deduction of tax u/s 194IA of the Act and therefore, the demand of Rs. 31,500/- and Rs. 16,380/- U/s 201(1) and 201(IA) of the Act is hereby set aside.
ITA No. 246/JODH/2019
Both the parties submitted that the facts and circumstances of the case in this appeal is exactly identical to facts and circumstances of the case in ITA No. 245/JODH/2019 and therefore, contentions as advanced by the respective parties in ITA No. 245/JODH/2019 may be considered.
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Heard both the parties and purused the material available on record. Admittedly and undisputedly, the assessee is responsible for paying Rs 31,50,000/- being the consideration for his 1/4th share in the immoveable property and has actually paid Rs 31,50,000/- only, therefore, following our findings and directions contained in ITA No. 245/JODH/2019, there was no requirement to deduct tax at source in terms of section 194IA of the Act. The assessee cannot be held as assessee in default on account of non-deduction of tax u/s 194IA of the Act and therefore, the demand of Rs. 31,500/- and Rs. 16,380/- U/s 201(1) and 201(IA) of the Act is hereby set aside.
In the result, both the appeals filed by the respective assessees are allowed.
Order pronounced in the open Court on 16/08/2021.
Sd/- Sd/- (Sandeep Gosain) (Vikram Singh Yadav) Judicial Member Accountant Member
Jodhpur Dated:- 16/08/2021. *Santosh Copy of the order forwarded to: 1. The Appellant- Shri Rajesh Kumar Nahar, Bhilwara. Shri Dalpat Singh Nanecha, Shilwara. 2. The Respondent- ITO(TDS), Bhilwara. 3. CIT 4. CIT(A)
ITA No. 245 &246/JODH/2019 11 Rajesh Kumar Nahar & Othrs.vs. ITO(TDS) 5. DR, ITAT, Jodhpur. 6. Guard File { ITA No. 245 &246/Jodh/2019} By order, Asst. Registrar