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Facts
The assessee and his father purchased a flat from a non-resident Indian. The seller obtained a lower TDS deduction certificate for capital gains. The assessee deducted TDS at 3% as per the certificate and deposited it. However, a demand was raised for short deduction of TDS.
Held
The Tribunal held that the assessee had correctly deducted TDS at the rate specified in the lower deduction certificate. They noted that a similar case involving the assessee's father had also been decided in favor of the assessee, and differential treatment was not warranted.
Key Issues
Whether the assessee was liable for short deduction of TDS when they acted as per a lower deduction certificate issued under Section 197 of the Income Tax Act.
Sections Cited
147, 148, 154, 200A, 197, 254
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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI C. N. PRASAD & SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2022-23, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2024- 25/1073747783(1) dated 26.02.2025 against the order of assessment passed u/s 254 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 08.05.20225 by the Assessing Officer, Dy. CIT, CPC-TDS (hereinafter referred to as „ld. AO‟).
The assessee has raised the following grounds of appeal:-
“1. The Appellant craves leave for adducing necessary evidence, amendments and explanations including written one to the aforesaid grounds and also raise additional grounds in the course of hearing of the appellate proceedings.
2. That the Ld. CIT(A) has erred in law and on facts in upholding 2 the action of the Ld. CPC, TDS in raising the demand for an amount of Rs.3,54,180/- in an order passed u/s 154 of the Act.
3. That having regards to facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the action of Ld. CPC, TDS in making an addition of Rs.3,18,500/- on account of short deduction of TDS, is bad in law and against the facts and circumstances of the case.
4. That having regards to facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the action of Ld. CPC, TDS in making an addition of Rs.35,675/- (Rs.390/- + Rs.35,035/- + Rs.250/-) on account of interest etc. on short deduction of TDS, is bad in law and against the facts and circumstances of the case.
5. That the order u/s 154 of the Act so passed and upheld suffers from perverse findings, contrary to the facts on record and without providing an opportunity of hearing to the Appellant, which has amounted to violation of principle of natural justice.
That the levy of interest under the Act is disputed and as such unsustainable in law besides being excessive.”
We have heard the rival submissions and perused the material available on record. The assessee and his father Shri Bhupender Singh Yadav purchased a flat at Gurgaon from Shri Prashant Singh and Smt. Pooja Singh. At the time of agreement entered on 13.04.2021, Rs. 5 lakhs was paid. It is not in dispute that seller is a non-resident Indian. The seller Shri Prashant Singh obtained a lower deduction of TDS certificate from the competent authority on 06.07.2021 wherein, only the name of Shri Bhupender Singh Yadav (assessee‟s father) was mentioned with long term capital gain claimed of Rs. 87,50,000/-. The ITO, International Taxation, Gurgaon, being the competent authority, allowed deduction of tax at source @3% while making payment for purchase of property. In this certificate, the total long term capital gain figure for Rs. 87,50,000/- as fully attributable to Shri Bhupender Singh Yadav. It was submitted that this certificate was obtained inadvertently in the name of Shri Bhupender Singh Yadav alone instead of separately obtaining 2 certificates for Shri Bhupender Singh Yadav (50% portion) and Shri Sumit Yadav (assessee herein) for remaining 50% portion. On 26.11.2021, the seller obtained a lower deduction certificate @3% in respect of payment pertaining to the assessee. This second certificate was obtained by the seller on realizing the mistake that in the original certificate obtained u/s 197 of the Act on 06.07.2021, only the name of Shri Bhupender Singh Yadav was mentioned instead of mentioning the name of Shri Bhupender Singh Yadav for 50% portion. The seller also obtained another lower deduction certificate separately u/s 197 of the Act in the name of assessee herein also on 26.11.2021 from ITO (International Taxation), Gurgaon clearly mentioning the long term capital gain figure of Rs. 43,75,000/- being the 50% portion alone. In other words, vide revised certificate obtained u/s 197 of the Act from ITO (International Taxation), Gurgaon, the share belonging to the assessee was Rs 43.75 lacs and share belonging to Shri Bhupender Singh Yadav was Rs. Rs 43.75 lacs. Both the parties were directed to deduct TDS @3% while making payment to the seller. The assessee duly deducted TDS @3% and deposited the same to the account of the Central Govt and had also duly furnished the quarterly TDS returns in Form 27Q. It was pleaded by the assessee there was no short deduction of TDS made by the assessee and strict compliance had indeed been made for the lower deduction certificate obtained u/s 197 of the Act. This contention of the assessee was not accepted by the DCIT, CPC, TDS and accordingly a demand of Rs. 3,54,180/- was raised on the assessee vide order passed u/s 154 read with Section 200A of the Act on the assessee for short deduction of TDS. Ultimately the sale deed was executed on 23.07.2021 after making the complete payment to the seller on 21.07.2021 and 23.07.2021.
It is pertinent to note that in the case of Shri Bhupender Singh Yadav, similar treatment made by the revenue was deleted by the ld NFAC vide order dated 13.01.2023 accepting the entire contentions thereon and also holding that for the entire payment made to the seller Shri Prashant Singh, TDS rate shall be only 3% plus applicable cess thereon. Against this order, no appeal has been preferred by the revenue. The assessee herein is one of the co-purchaser along with this father. Hence, differential treatment cannot be given to the assessee herein on the very same set of facts and documents. Hence, we have no hesitation to hold that payment made by the assessee to the seller Shri Prashant Singh shall be liable for deduction of tax at source @3.12% which is in consonance with lower deduction certificate obtained u/s 197 of the Act. Hence, we hold that assessee had rightly deducted the tax at source and there is no short deduction of tax at source made by the assessee. Hence, the demand raised on the assessee is hereby directed to be deleted and grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 29/08/2025.