KUSHALAVA SPINNERS & GINNERS PRIVATE LIMITED,GUNTUR vs. INCOME TAX OFFICER, GUNTUR

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ITA 203/VIZ/2025Status: DisposedITAT Visakhapatnam08 August 2025AY 2016-1716 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's contention that the purchased land was agricultural land was not supported by the sale deed. The sale deed, dated 06.11.2015, described the property as 'factory land' and not agricultural land. Therefore, the exception carved out in Section 194IA for agricultural land did not apply. Regarding the machinery, while the Tribunal agreed in principle that TDS might not be applicable to machinery, it could not accept the assessee's contention as nothing in the sale deed indicated a specific payment of Rs. 99 lacs for machinery. The assessee also conceded not to press the challenge regarding the consideration paid for the building. Consequently, the Tribunal found no merit in the appeal and dismissed it. The issue of ex-parte dismissal was not explicitly decided but the appeal was decided on merits after considering the arguments presented.

What were the facts?

The assessee, Kushalava Spinners & Ginners Private Limited, filed an appeal against the order of the Addl/JCIT (Appeals) - 2, Pune, dated 18.10.2024. This order upheld the Assessing Officer's (AO) decision dated 28.10.2021, which held the assessee liable under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, for Assessment Year 2016-17. The AO initiated proceedings upon receiving information that the assessee purchased property for Rs. 9,90,95,000/- without deducting tax at source as required by Section 194IA. The AO determined the tax liability and interest at Rs. 17,04,430/-. The assessee's appeal before the CIT(A) was dismissed ex-parte due to non-appearance. The assessee then appealed to the ITAT.

What were the issues?

1. Whether the order passed by the CIT(A) confirming the AO's order under Section 201(1A) is in accordance with law and facts (Section 250 of the IT Act)? 2. Whether the CIT(A) erred in dismissing the appeal ex-parte, contrary to Section 250(6) of the IT Act? 3. Whether the CIT(A) erred in confirming the AO's order under Sections 201(1)/(1A), holding the assessee as 'assessee in default' when no TDS was deductible on the impugned purchase transaction (Section 194IA of the IT Act)? 4. Whether the subject immovable property, being agricultural land as per Section 2(14) of the IT Act, was outside the purview of income-tax, thus negating the TDS obligation (Section 194IA of the IT Act)? 5. Whether a portion of the sale consideration was attributable to machinery, on which TDS provisions are not applicable (Section 194IA of the IT Act)? Assessee's Contentions: - The property purchased was agricultural land, hence not subject to TDS under Section 194IA. - TDS provisions are not applicable to the portion of consideration paid for machinery. - The assessee offered to obtain a Form 26A certificate from the payee if an opportunity was granted to remit the issue back to the AO. Revenue's Contentions: - The Revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 250,Section 250(6),Section 194IA,Section 2(14)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Visakhapatnam Bench

For Appellant: Dr. Aparna Villuri, Sr.DR

आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-

1. 1. निर्धाररती/The Assessee : Kushalava Spinners and Ginners Private Limited, D.No.23/11/124, Sadu Complex Eluru Bazar, Guntur – 522003, Guntur. 2. रधजस्व/ The Revenue : The Income Tax Officer, Guntur.

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