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of <h1>Section 194IA TDS threshold applies individually before 01.10.2024, no default under section 201(1) for AY 2015-16</h1> <h3>Ashvinkumar Naranbhai Patel Versus The ITO TDS Ward-1 Ahmedabad</h3> The ITAT Ahmedabad held that the amounts paid by the assessee to each land transferor were individually below Rs. 50 lakhs, thus section 194IA TDS ... TDS u/s 194IA - default u/s 201(1)/ 201(1A) - whether amount paid to each transferor of land less than Rs. 50 lacs? - HELD THAT:- The assessee paid Rs. 21,83,680/- to one transferor and Rs. 31,83,680/- to another, both of which are individually below Rs. 50 lakhs. Therefore, provisions of section 194IA are not attracted. We further note that the amendment to section 194IA(2) of the Act by insertion of a proviso vide Finance Act, 2023, which treats the threshold on aggregate basis, is applicable only from 01.10.2024 and hence has no application to Assessment Year 2015–16 under consideration. Assessee could not have been treated as an assessee-in-default under section 201(1) of the Act in respect of the transaction under consideration. Assessee appeal allowed. ISSUES: Whether the provisions of section 194IA of the Income-tax Act, 1961 are attracted when the consideration paid to each individual seller is less than Rs. 50 lakhs, despite the total transaction value or the transferee's share exceeding Rs. 50 lakhs.Whether the assessee can be treated as an 'assessee in default' under section 201(1) for non-deduction of TDS under section 194IA without verifying if the sellers have declared the receipts and paid taxes thereon, as required by the Explanation to section 191 and the first proviso to section 201(1).Whether the appellate authority under section 250 of the Act is obliged to pass a reasoned and speaking order dealing with each ground of appeal.Whether the amendment to section 194IA(2) by the Finance Act, 2023, which aggregates consideration for threshold purposes, applies retrospectively to assessment years prior to 01.10.2024. RULINGS / HOLDINGS: The threshold limit under section 194IA(2) must be tested with reference to each individual transferor-transferee pair, and where the amount paid to any one transferor is below Rs. 50 lakhs, the transferee is not obliged to deduct tax under section 194IA. The court held that 'the provisions of section 194IA of the Act were not attracted' in the present case as the payments to individual sellers were below Rs. 50 lakhs.The Assessing Officer failed to satisfy the requirements of the Explanation to section 191 and the first proviso to section 201(1) before treating the assessee as an 'assessee in default'. Therefore, the demand raised under sections 201(1) and 201(1A) was not sustainable.The appellate authority erred in dismissing the appeal without a reasoned order and without addressing the specific legal contentions raised, thus failing to discharge the statutory obligation under section 250(6) of the Act. The appellate order was held to be 'legally unsustainable.'The amendment to section 194IA(2) by the Finance Act, 2023, effective from 01.10.2024, which treats the threshold on an aggregate basis, 'has no application to Assessment Year 2015-16 under consideration.' RATIONALE: The court applied the statutory provisions of sections 194IA, 201(1), 201(1A), and 250 of the Income-tax Act, 1961, and relied on binding precedents from coordinate benches interpreting section 194IA(2) to require threshold testing on a per transferor-transferee basis rather than on aggregate transaction value.The decision followed the ratio in Bhikhabhai H. Patel vs. DCIT and Vinod Soni v. ITO, which emphasized that section 194IA(1) imposes an obligation on 'any person being a transferee' and that the exemption threshold in section 194IA(2) must be applied individually to each transferee-transferor pair.The court noted the legislative intent, as explained in the Finance Bill, 2013, to reduce compliance burden on small taxpayers by exempting transactions below Rs. 50 lakhs per transferor-transferee pair from TDS deduction.The court highlighted the procedural requirement under section 250(6) for the appellate authority to issue a reasoned and speaking order addressing each ground of appeal, and found the CIT(A)'s order deficient for non-compliance with this mandate.The court distinguished the amendment by the Finance Act, 2023, clarifying its prospective applicability from 01.10.2024, and thus rejected its retrospective application to the assessment year in question.
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