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Facts
The assessee, a Limited Liability Partnership engaged in real estate development, entered into a development agreement with landowners. The assessee deducted TDS at 1% under Section 194IA of the Act on payments made to landowners, but the AO held that the rate should be 10% under Section 194IC of the Act, raising a demand for short deduction and interest.
Held
The Tribunal admitted the additional evidence filed by the assessee, which showed that the landowners had already paid tax on the received amount. The matter was restored to the AO for verification of this evidence and fresh adjudication.
Key Issues
Whether the assessee correctly applied Section 194IA for TDS deduction instead of Section 194IC, and if the deductees have already paid the tax, can the assessee be relieved from the demand?
Sections Cited
194IA, 194IC, 201(1), 201(1A), 250, 133A(2A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH MUMBAI
Before: SHRI. ARUN KHODPIA
आदेश/O R D E R
PER BENCH: A bunch of appeal of the assessee was preferred against the order of the Ld. Commissioner of Income Tax, ADDL/JCIT Appeal -1, Lucknow [hereinafter referred to as "CIT(A)"] order passed u/s. 250 of the Income Tax Act, 1961 for Assessment Years 2018-19 to 2020-21 & 2022-23, all the orders passed on dated 13.11.2025. The impugned orders emanated from the order of the Ld. Income Tax Officer, TDS Ward 2(2)(4), Mumbai [hereinafter referred to as "Ld. AO"] order passed u/s. 201(1)/201(1A) of the Act, date of all the orders 27.06.2024.
2 ITA Nos. 8284,8285,8286 & 8287/MUM/2025 (Assessment Years: 2018-19 to 2020-21 & 2022-23) M/s. Sugee Ten Developers LLP 2. Since all the appeals pertain to the same assessee, involving similar issues arising out of a similar factual matrix, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. With the consent of the parties, ITA No. 8284/Mum/2025 is taken as lead case and the decision rendered therein shall apply mutatis mutandis to other appeal before us.
The brief facts of the case are that the assessee is a Limited Liability Partnership (LLP) engaged in the business of development and construction of real estate projects, including the redevelopment of residential buildings. During the relevant assessment year, the assessee entered into a development agreement with the landowners for the construction of buildings named “Janaki Niwas” and “Gangadhar Niwas.” A survey under section 133A(2A) of the Act was conducted at the premises of the assessee on 12.03.2024. During the course of the survey proceedings, it was observed that the assessee had deducted tax at source (TDS) on the consideration paid to the landowners amounting to Rs.15,00,000/- under the provisions of section 194IA of the Act. Subsequently, the Ld. AO initiated proceedings and observed that the assessee had deducted TDS at a lower rate of 1% under section 194IA of the Act. According to the Ld. AO, the payment in question was liable for TDS under section 194IC of the Act at the rate of 10%. Accordingly, the Ld. AO determined the TDS liability on the payment of Rs.15,00,000/- at Rs.1,50,000/-. Consequently, the Ld. AO raised a demand for short deduction of TDS amounting to Rs.1,35,000/- under section 201(1) of the Act, along with interest of Rs.1,02,600/- under section 201(1A) of the Act. Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A). However, the Ld. CIT(A)
3 ITA Nos. 8284,8285,8286 & 8287/MUM/2025 ITA Nos. 8284,8285,8286 & 8287/MUM/2025 (Assessment Years: 2018-19 to 2020- -21 & 2022-23) M/s. Sugee Ten Developers LLP M/s. Sugee Ten Developers LLP upheld the impugned assessment order. Being aggrieved by the same, the upheld the impugned assessment order. Being aggrieved by the same, the upheld the impugned assessment order. Being aggrieved by the same, the assessee has filed the present appeal before us. sent appeal before us.
The Learned Authorized Representative (Ld. AR) submitted that the The Learned Authorized Representative (Ld. AR) submitted that the The Learned Authorized Representative (Ld. AR) submitted that the assessee has placed additional evidence on record on the ground that the assessee has placed additional evidence on record on the ground that the assessee has placed additional evidence on record on the ground that the deductee has already discharged the tax liability on the said income. deductee has already discharged the tax liability on the said income. deductee has already discharged the tax liability on the said income. Accordingly, the additional evidence has been filed before the Bench along ditional evidence has been filed before the Bench along ditional evidence has been filed before the Bench along with a detailed list and supporting documents, which are reproduced with a detailed list and supporting documents, which are reproduced with a detailed list and supporting documents, which are reproduced hereunder.
The Ld. AR contended that, contended that, when the deductee has paid the tax paid the tax the assessee would be relinquished from the payment of would be relinquished from the payment of tax under section 194IC tax under section 194IC of the Act. She argued that identical fact is considered by the She argued that identical fact is considered by the order of order of Co- ordinate Bench of ITAT, Mumbai ITAT, Mumbai “G” Bench in the case of assessee in the case of assessee Sister Concerned in M/s.Sugee Seven Developers Sugee Seven Developers LLP vs ITO in ITA No ITA Nos. 2313 to
4 ITA Nos. 8284,8285,8286 & 8287/MUM/2025 (Assessment Years: 2018-19 to 2020-21 & 2022-23) M/s. Sugee Ten Developers LLP 2316/Mum/2025 date of pronouncement 10.10.2025. The relevant observations of the Co-ordinate Bench in para 9 is reproduce as below:
“9. Now coming to the alternate contention of the assessee, it is the claim of the assessee that Shri Premal Dayalal Doshi has paid capital gains on the transfer under the JDA. We notice that since the assessee could not produce the evidences and Form 26A that the FAA did not accept the submissions of the assessee. With regard to the alternate plea that assessee cannot be treated as assessee in default on this ground, we notice that the ITR for AY 2024-25 filed by Shri PremalDayalalDoshi is submitted by the Id AR (page 45 of the paper book). The Id AR submitted that the income includes the capital gains since the completion certificate was obtained during the said AY. However, before us no new material is brought on record to substantiate that the income offered in AY 2024-25 includes capital gains. We notice in this regard that the FAA has upheld the order of the AO for the same reason that the assessee did not submit any details in this regard. Therefore, we are remitting the appeal back to AO with a direction to verify the claim of the assessee that Shri PremalDayalalDoshi has offered the impugned payments to tax in AY 2024-25. The AO is further directed to allow the claim if supported by evidences as may be submitted by the assessee and not to deny the claim on the ground that Form 26A has not been filed for the years under consideration taking into account the facts peculiar to the present appeals. The AO is also directed to re-compute the interest under subsection (1A) of section 201 as per the proviso to the said sub section for AY 2020-21 to 2023-24. The assessee is directed file the relevant details in support of the claim and co-operate with assessment proceedings. It is ordered accordingly.”
The Learned Departmental Representative (Ld. DR) supported the orders of the revenue authorities. However, with regard to the additional evidence filed by the assessee, the Ld. DR did not raise any serious objection to the submissions made on behalf of the assessee.
5 ITA Nos. 8284,8285,8286 & 8287/MUM/2025 (Assessment Years: 2018-19 to 2020-21 & 2022-23) M/s. Sugee Ten Developers LLP 7. We have heard the rival submissions and carefully considered the documents available on record. The assessee is a developer who had entered into a Joint Development Agreement with the landowners. On the payment made to the landowners, the assessee deducted TDS at the rate of 1% under section 194IA of the Act. Subsequent to the survey operation, assessment proceedings were initiated by the Ld. AO. During the course of such proceedings, the Ld. AO observed that the assessee had incorrectly applied the provisions of section 194IA instead of section 194IC of the Act, and accordingly held that the applicable rate of TDS was 10% instead of 1% on the payments made to the landowners. Consequently, the balance amount of TDS along with interest was demanded on account of short deduction of tax. The Ld. AR relied upon the additional evidence filed before the Bench to demonstrate that the landowners (deductees) had already paid tax on the amount received from the assessee and had duly disclosed the same as income in their respective returns of income. Accordingly, it was contended that the assessee is entitled to relief under section 201 of the Act. We find that the issue is squarely covered by the decision of the Coordinate Bench of the ITAT, Mumbai in the case of M/s. Sugee Seven Developers LLP (supra). In view of the same, we admit the additional evidence filed by the assessee and deem it appropriate to restore the matter to the file of the Ld. AO. The Ld. AO is directed to verify the additional evidence furnished by the assessee regarding payment of tax by the deductees in their respective returns of income. Respectfully following the order of the Coordinate Bench, the matter is restored to the file of the Ld. AO for fresh adjudication in accordance with law. Needless to say, the assessee shall be afforded a reasonable opportunity of being heard during the set-aside
6 ITA Nos. 8284,8285,8286 & 8287/MUM/2025 (Assessment Years: 2018-19 to 2020-21 & 2022-23) M/s. Sugee Ten Developers LLP assessment proceedings. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, appeals of the assessee bearing ITA No. 8284 to 8287/Mum/2025 are allowed for statistical purposes.
Order is pronounced in the open court on 06.03.2026
Sd/- Sd/- ARUN KHODPIA ANIKESH BANERJEE (ACCOUNTNAT MEMBER) (JUDICIAL MEMBER)
Place: Mumbai Dated:06.03.2026 Divya Ramesh Nandgaonkar Stenographer आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to: 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. आयकरआयु� / CIT 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरणDR, ITAT, Mumbai 5. गाड�फाईल / Guard file. स�ािपत�ित //True Copy// आदेशानुसार / BY ORDER,
सहायकपंजीकार (Asstt. Registrar) आयकरअपीलीयअिधकरण / ITAT, Bench, Mumbai.