SMT. SANDHYA GUGALIA,JAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX-CPC-TDS, GHAZIABAD

Briefly stated, the facts of the case are that the assessee entered into an agreement for purchase of a residential house at C-127, Rishabh Path, Bhagirath Marg, Shyam Nagar, Jaipur which was jointly owned by Smt. Rashi Harneja and Smt. Ravindra Harneja for a sum of Rs. 75,00,000/-. Thereafter, in respect of payment of Rs. 37,50,000/- to Smt. Rashi Harneja, the assessee deposited a sum of Rs. 37,500/- towards TDS vide challan-cum-Form 26QB on 25.09.2013. Similarly, in respect of payment of Rs. 37,50,000/- to Smt.

During the course of hearing, the ld. AR submitted that as per section 194IA, the liability to deduct TDS is applicable if the consideration for transfer of any immovable property is equal to or greater than Rs. 50,000,00/-. It was submitted in the instant case, the assessee has paid a sum of Rs. 37,50,000/- to Smt. Rashi Harneja which is less than Rs. 50,000,00/-. Similarly, the assessee has paid a sum of Rs. 37,50,000/- to Smt. Ravindra Harneja which is less than Rs. 50,000,00/-. It was accordingly submitted that the provisions of section 194IA are not applicable in the case of the assessee.

It was further submitted that merely because the assessee has deducted TDS by mistake, the same cannot be basis for levy of interest and late fee u/s 234E of the Act.

It was further submitted that late fee u/s 234E is not applicable before 01.06.2015. It was submitted that the amendment made u/s 200A which has come into effect on 01.06.2015 has been held by the Courts to have prospective effect, hence, no computation of fee could have been made for TDS deducted for assessment year prior to 01.06.2015. It was submitted that the transaction occurred on 26.06.2013 and intimation u/s 200A was received on 30.03.2015 which was prior to 01.06.2015. In support, reliance was placed on the decision of the Hon’ble Karnataka High Court in case of Fatheraj Singhvi & others vs. Union of India in writ appeal no. 2663-2674/2015 (T-IT) dated 26th August, 2016. 2

Per contra, the ld. DR has relied on the order of the ld. CIT(A) and submitted that the transfer value of the immovable property is Rs. 75,000,00/- which is more than prescribed limit, hence section 194IA is clearly applicable. Further, she relied on the Hon’ble Rajasthan High Court decision in case of M/s Dundlod Shikshan Sansthan and others vide order dated 28.07.2015 where it was held that even prior to these amendments the imposition of fees u/s 234E was not illegal.

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 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.