Assessee not liable for TDS under section 194IA on joint property purchase for specific share

The ITAT Jodhpur allowed the assessee's appeal regarding TDS under section 194IA on joint property purchase. The assessee bought land with his brother and paid Rs 31,50,000 for his 1/4th share. Following the precedent in Dalpat Singh Nanecha vs. ITO, the tribunal held that since the assessee was responsible only for consideration of his specific share in the immovable property, no TDS deduction was required under section 194IA. The demand under sections 201(1) and 201(IA) was set aside, and the assessee was not held in default for non-deduction of tax.

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Issues Involved:
1. Applicability of Section 194-IA of the Income Tax Act, 1961 for joint property purchase.
2. Interpretation of the threshold limit for TDS deduction under Section 194-IA.

Detailed Analysis:

Issue 1: Applicability of Section 194-IA for Joint Property Purchase

The assessee, along with his brother, purchased an immovable property worth Rs. 65,11,000/- from UIT Bhilwara. The Assessing Officer (AO) held the assessee liable for not deducting TDS as per Section 194-IA on his share of Rs. 32,55,500 (1/2 share of Rs. 65,11,000/-) and raised a demand of Rs. 62,180/-. The assessee contended that Section 194-IA is inapplicable since the share of each transferee in the purchase is less than Rs. 50 lakh. The CIT(A) dismissed the appeal, stating that the threshold limit of Rs. 50 lakh is with reference to each property, and if a property transaction involves more than one buyer, TDS will be deducted and deposited by each buyer in respect of their respective share in the property.

Issue 2: Interpretation of the Threshold Limit for TDS Deduction

The CIT(A) interpreted that the threshold limit of Rs. 50 lakh is applicable to the aggregate value of the property and not to the individual shares of the buyers. The assessee argued that the provision should be applied to each transferee separately, not the total consideration of the property. The assessee cited various case laws to support this interpretation, including decisions from ITAT Delhi, ITAT Jaipur, and ITAT Jodhpur, which held that Section 194-IA applies to the individual share of each transferee.

Judgment Analysis:

The tribunal analyzed the provisions of Section 194-IA and the judicial precedents cited by the assessee. The tribunal noted that Section 194-IA(2) provides that the section will not apply where the consideration for the transfer of immovable property is less than Rs. 50 lakh. This provision should be read with reference to each transferee and not the aggregate value of the property.

The tribunal referred to the decision in the case of Dalpat Singh Nanecha, Bhilwara vs. ITO, where it was held that the obligation to deduct TDS under Section 194-IA is qua each transferee and not qua the aggregate consideration. The tribunal also cited the case of Reetu Devi Nanecha vs. ITO, where it was held that the provisions of Section 194-IA are applicable where the consideration for transfer of an immovable property is more than Rs. 50 lakh, and since the consideration paid by the assessee was Rs. 31.50 lakh, the provisions of Section 194-IA do not apply.

Based on these precedents and the interpretation of the law, the tribunal concluded that the assessee's contention was correct. The tribunal directed the AO to delete the alleged demand for TDS liability under Section 194-IA, as the consideration paid by each transferee was below the threshold limit of Rs. 50 lakh.

Conclusion:

The appeal of the assessee was allowed, and the tribunal held that the provisions of Section 194-IA apply to each transferee's share in the property. The assessee was not liable to deduct TDS as his share of the consideration was below Rs. 50 lakh. The tribunal directed the AO to delete the demand raised under Section 201(1) and 201(1A) of the Income Tax Act, 1961.

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