2026 (3) TMI 1610 - AT - Income Tax

Transferor-wise threshold under TDS on property purchases prevails; no default arises where each co-owner's share is below limit.

Section 194-IA was held inapplicable where immovable property was purchased from multiple co-owners and the consideration attributable to each transferor ... TDS u/s 194IA - Payment on transfer of certain immovable property other than agricultural land - threshold of Rs. 50 lakhs prescribed u/s 194IA - Aggregation of consideration for multiple transferors - HELD THAT: - The Tribunal held that, for the year under consideration, section 194-IA did not contain any provision requiring aggregation of consideration in cases involving multiple co-owners. The later amendment introduced by the Finance Act, 2024 was held to be prospective and therefore inapplicable. Since the consideration relatable to each co-owner was admittedly below the statutory threshold, the assessee had no obligation to deduct tax at source under section 194-IA. The coordinate bench decisions in Aakash Pursottambhai Vaghela [2025 (6) TMI 2003 - ITAT AHMEDABAD], Bhikhabhai Hirabhai Patel [2020 (2) TMI 1032 - ITAT AHMEDABAD] and Archanaben Rajendrasingh Deval [2025 (4) TMI 215 - ITAT AHMEDABAD] were followed. Once no default under section 194-IA survived, the demand under section 201(1) and the consequential interest under section 201(1A) were also unsustainable. [Paras 13, 14, 15, 16] The assessee could not be treated as an assessee in default under section 201(1), and the consequential interest under section 201(1A) was also deleted. Final Conclusion: The Tribunal held that, for A.Y. 2015-16, section 194-IA did not apply where the consideration attributable to each co-owner was below the prescribed threshold and aggregation was not mandated by the law then in force. The demand under section 201(1) and the consequential interest under section 201(1A) were therefore deleted and the assessee's appeal was allowed. Issues: Whether, for the assessment year under consideration, tax deduction at source under section 194-IA was attracted where the immovable property was purchased from multiple co-owners and the consideration attributable to each co-owner was below the statutory threshold, and whether the consequent demand under section 201(1) and interest under section 201(1A) could survive.Analysis: The consideration attributable to each transferor was below Rs. 50 lakhs. The provision as applicable to the relevant year did not provide for aggregation of consideration in the case of multiple transferors. The amendment introducing aggregation was inserted by the Finance Act, 2024 with effect from 01.04.2024 and operated prospectively. The cited coordinate bench decisions consistently held that, for periods prior to that amendment, the threshold had to be tested transferor-wise and not on the aggregate sale consideration.Conclusion: Section 194-IA was not attracted on the facts. The assessee could not be treated as an assessee in default under section 201(1), and the interest levied under section 201(1A) also failed.