2019 (6) TMI 1087 - AT - Income Tax

Tribunal rules in favor of assessee on TDS issues for land purchase and labor payments

The Tribunal ruled in favor of the assessee on both issues. Regarding TDS on advance payment for land purchase in FY 2014-15, the Tribunal held that as ... TDS on transfer of immovable property under Section 194IA - Deductor's liability where consideration for transfer is less than fifty lakh rupees - Piece meal registrations and tax avoidance - TDS on payments to contractors and labour under Section 194C - Remand for verification and opportunity to produce evidenceTDS on transfer of immovable property under Section 194IA - Deductor's liability where consideration for transfer is less than fifty lakh rupees - Piece meal registrations and tax avoidance - Applicability of TDS under Section 194IA where the assessee purchased multiple parts of the same property from the same seller by separate sale deeds each showing consideration below Rs. 50 lakhs. - HELD THAT: - The Tribunal found that the assessee purchased three plots on three different dates, each sale deed showing a value below Rs. 50 lakhs, although the plots bear the same Khasra number and the seller is the same. Noting sub section (2) of Section 194IA which excludes deduction where consideration is less than Rs. 50 lakhs, the Tribunal held that separate sale deeds executed on different dates with each deed showing consideration below the threshold attract the statutory exclusion. The mere fact of common seller and same Khasra number, without more, is insufficient to treat the transactions as a single transfer for the purpose of invoking Section 194IA. On this basis the Tribunal set aside the orders treating the assessee as an assessee in default and directed that TDS not be treated as payable for those transactions. [Paras 8, 9, 10]Order of CIT(A) and AO treating the assessee as an assessee in default under Section 194IA set aside; no TDS liability on the individual sale deeds each showing consideration below Rs. 50 lakhs.TDS on payments to contractors and labour under Section 194C - Remand for verification and opportunity to produce evidence - Whether the assessee was liable to deduct TDS under Section 194C on certain labour payments aggregating the disputed amount, and whether the assessee should be given opportunity to substantiate that no single payment exceeded the threshold necessitating deduction. - HELD THAT: - The AO disallowed non deduction of TDS on a portion of labour payments and the CIT(A) confirmed the AO's view for want of supporting details showing that no payment to any person in a single day exceeded the threshold (Rs. 20,000). The assessee sought an opportunity to produce evidence to demonstrate that individual payments were below the threshold. Considering the factual nature of the contention and absence of documentary substantiation before the CIT(A), the Tribunal directed that the issue be restored to the file of the AO and remitted for fresh consideration. The AO is to provide the assessee an opportunity to produce evidence and decide the question as per fact and law. [Paras 12, 13, 15, 16]Issue remanded to the AO for fresh adjudication after affording the assessee an opportunity to furnish evidence; matter restored for decision in accordance with law.Final Conclusion: The appeal concerning TDS under Section 194IA (FY 2014-15 / FY 2015-16) is allowed: the Tribunal set aside the orders treating the assessee as in default because each sale deed showed consideration below Rs. 50 lakhs. The appeal on the labour payment TDS issue is remanded to the AO (FY 2015-16) for fresh decision after the assessee is given an opportunity to produce corroborative evidence. Issues involved:1. Whether the assessee is liable to deduct TDS under Section 194IA for advance payment made for purchase of land in FY 2014-15.2. Whether the assessee is liable to deduct TDS on labour payment below Rs. 20,000 in FY 2015-16.Issue 1: TDS on advance payment for land purchase in FY 2014-15The AO observed that the assessee made an advance payment for land purchase exceeding Rs. 50 lakhs, triggering TDS liability under Section 194IA. The CIT(A) upheld the AO's decision, emphasizing that multiple registries do not exempt the deductor from TDS obligations. The Tribunal noted that each plot purchased by the assessee was below Rs. 50 lakhs, thus TDS was not applicable. Citing Section 194IA, the Tribunal ruled in favor of the assessee, overturning the CIT(A)'s decision and directing the AO not to treat the assessee as a defaulter.Issue 2: TDS on labour payment below Rs. 20,000 in FY 2015-16The AO found the assessee failed to deduct TDS on labour payment below Rs. 20,000, treating them as a defaulter. The CIT(A) upheld this decision due to lack of evidence from the assessee. The Tribunal, considering the circumstances, remanded the issue to the AO for the assessee to provide evidence supporting their claim of not exceeding Rs. 20,000 payments in a day. The Tribunal allowed the assessee's appeal for further proceedings. Additionally, the Tribunal allowed the assessee's appeal related to TDS on land purchase, aligning with the decision in the first issue.In conclusion, the Tribunal ruled in favor of the assessee on both issues, directing the AO not to treat them as defaulters and providing an opportunity to substantiate their claims.