INCOME TAX OFFICER (TDS-3), AHMEDABAD, AHMEDABAD vs. TARUN SANTRAMDAS VARMA, AHMEDABAD

Facts

The Revenue appealed against the CIT(A)'s order deleting the demand raised under section 201/201(1A) for failure to deduct TDS under section 194-IA. The AO held that TDS was applicable as the total property consideration exceeded Rs. 50 lakh, while the assessee contended that individual payments were below the threshold. The CIT(A) agreed with the assessee, holding section 194-IA inapplicable due to multiple buyers/sellers and the nature of the land.

Held

The Tribunal held that the CIT(A) rightly admitted official documents and that the land parcels were indeed agricultural and situated beyond the prescribed distance from municipal limits, thus not a capital asset. The provisions of Section 194-IA were not applicable as the transaction did not involve a capital asset and the individual consideration for each buyer was below the threshold.

Key Issues

Whether TDS under Section 194-IA is applicable when individual buyer's consideration is less than Rs. 50 lakh, and whether the land in question is agricultural and not a capital asset.