Section 194-1A – Four persons who purchased immovable property of Rs. 1.5 crore jointly not liable to deduct tax at source since purchase consideration for each person was Rs. 37.5 lakh which was less than the threshold limit of Rs. 50 lakh prescribed in the provisions.

7.  Vinod Soni vs. ITO (Delhi) Members:  H.S. Sidhu (J. M.) Ando.P. Kant (A. M.) ITA
No. 2736/Del/2015 A.Y.:
2014-15.  Dated:
10^th December, 2018 Counsel
for Assessee / Revenue:  Raj Kumar / B.S.
Rajpurohit

Section
194-1A – Four persons who purchased immovable property of Rs. 1.5 crore jointly
not liable to deduct tax at source since purchase consideration for each person
was Rs. 37.5 lakh which was less than the threshold limit of Rs. 50 lakh
prescribed in the provisions.

FACTS

The
assesse and three of his family members each purchased 1/4^th
undivided equal shares in an immovable property vide single sale deed for Rs.
1.5 crore. The purchase consideration for each person was Rs. 37.5 lakh.
According to the AO, since the value of the property purchased under single
sale deed exceeded Rs. 50 lakh, as per section 194 IA(2), the assessee was
required to deduct tax at source @1%. For his failure, the AO held the assessee
as defaulter u/s. 201(1) and levied a penalty of Rs. 1.5 lakh. The levy was
confirmed by the CIT(A). 

HELD

The
Tribunal noted that as per the purchase deed each of the vendees had become the
absolute and undisputed owner of the said plot in equal share.  It also noted from details of party wise
payment furnished that each of the vendee had made payment from their own bank
account / loan account.  Further, the
tribunal also noted that the provisions of section 194-IA do not apply where
the consideration for transfer of immovable property was less than Rs. 50 lakh.
According to the Tribunal, since the said provisions apply to a person being a
transferee, the provision would apply only w.r.t. the amount related to each transferee
and not with reference to the amount as per a sale deed.  In the instant case, there were four separate
transferees and the sale consideration w.r.t. each transferee was Rs. 37.5
lakh, i.e. less than Rs. 50 lakh each. Each transferee was a separate income
tax entity therefore, it observed that the law has to be applied with reference
to each transferee as an individual transferee/person. Accordingly, it was held
that the provisions of section 194-IA were not applicable and allowed the
appeal of the assesse.