No TDS even if consideration of property exceeds RS 50 Lakhs

[Sandeep Rawat]

No TDS is required to be deducted by purchaser even if consideration of property exceeds ₹ 50 lakhs

Income Tax Appellant Tribunal ( ITAT), Delhi in case of  Vinod Soni Vs ITO  [ 2018 (12) TMI 636 - ITAT DELHI ITA No 2736/Del/2015]has held that Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. Hence, No TDS is required to be deducted in case amount in respect of each tranferee is lessthan ₹ 50 lakh even if total consideration exceeds ₹ 50 Lakh.

In the instant case 4 assessee has purchased property for ₹ 1.50 crore. Each assessee has paid ₹ 37,50,000/- Assessee submitted that property was purchased for a consideration of ₹ 1.50 crores from Smt. Rutash Kumari by Sh. Pardeep Soni, Smt. Babli Soni and Smt. Beena Soni. It was further submitted that every co-owner having equal share in the property i.e. share of every co-owner comes on amounting to ₹ 37,50,000/- which is under the threshold limit as provided by Section 194IA of the Income Tax Act, hence, Section 194IA is not applicable.

AO has found assessee default for non deducted TDS @1% and also levy interet on such amount. CIT(A) also uphold the action of AO. Thereafter, Assessee fied appeal before ITAT.

ITAT observed that the Propety is being purchased by 4 assessee each assessee has 1/4th shares in the property. In the instant case there are 04 separate transferees and the sale consideration w.r.t. each transferee is ₹ 37,50,000/-, hence, less than ₹ 50,00,000/- each. Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person.

It is also noted that Section 194-IA was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out alongwith the Finance Bill wherein it was stated that “in order to reduce the compliance burden on the small tax payers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than 50 lakhs rupees.”

Further, ITAT pointed out that, the law cannot be read as that in case of four separate purchase deed for four persons separately, Section 194-IA was not applicable, and in case of a single purchase deed for four persons Section 194-IA will be applicable.

Considering the above ITAT allowed appeal of the assessee.

Mr Sandeep rawat can be reached at sandeeprawatca@gmail.com