Individual Share Below ₹50 Lakh Threshold in Joint Property Purchase Does Not Attract TDS Section 194-IA

ORDER

C.N. Prasad, Judicial Member.- This appeal is filed by the assessee against the order of Ld. CIT(A)/NFAC dated 26.05.2025 for the A.Y. 2025-26, arising out of the order passed u/s.200A of the Act by the AO for non deduction of TDS on the payment made for purchase of property by the assessee.

2. None appeared on behalf of the assessee nor any adjournment application was moved, thus the appeal of the assessee is disposed of after hearing the Ld. DR.

3. In this case intimation u/s.200A of the Act was passed by the ACIT, CPC, TDS, treating the assessee in default for non deduction of TDS on the payment made for property purchase of property by the assessee. The short deduction of TDS was arrived at Rs.3,48,333/- and including interest the net payable was determined at Rs.3,51,820/-. Before the NFAC the assessee submitted that the provisions of section 194-IA of the Act are not applicable and the assessee is not required to deduct TDS @ 1% on the purchase of the property when value of such property is less of Assessee’s share than Rs.50 lakhs. The Assessee contended that the provisions of section 194-IA of the Act are not applicable to the assessee for the reason that the purchase consideration of Rs.55 lacs was jointly paid by the assessee alongwith two other persons and therefore, the assessee’s share in the property was only Rs.18,13,333/- and this amount is less than Rs.50 lacs, thus the assessee was not required to deduct TDS. The assessee placed reliance on various decisions of the Delhi Tribunal to support his contentions.

4. However, the Ld. CIT(A) / NFAC was of the view that the threshold limit of Rs.50 lacs is not to be considered on the basis of respective share of co transferee and rather has to be taken as total value of the property. Against this order of the Ld. CIT(A) the assessee is in appeal before us.

5. We find merit in the contentions of the assessee. We observed that identical issue came up for consideration before the Delhi Bench of the Tribunal in the case of Vinod Soni v. ITO 174 ITD 598 (Delhi – Trib.) in ITA No.2736/Del/2015 & 2739/Del/2015 and the Tribunal by order dated 10.12.2018 held as under :-

“5. We have heard both the parties and perused the records especially the impugned order as well as the provisions of law on the subject and the case laws cited by the Ld. DR in his written submissions. We find that in the instant case Sh. Pradeep Soni; Smt. Babli Soni; Sh. Vinod Soni and Smt. Beena Soni of same family, purchased 1/4th undivided equal shares in immovable property, Plot No. 94, Block-F, SLF Model Town, Sector-10, Faridabad vide single registered sale deed dated 3.7.2013 for Rs. 1,50,00,000/-. The 1/4th share purchase consideration for each person was only Rs. 37,50,000/- each. The AO held that since the value of the property purchases under single sale deed was exceeding Rs. 50,00,000/-therefore, as per section 194 IA(2), the assessee was required to deduct TDS @1%. The AO thus held that all the four assessees as defaulter u/s. 201(1) and created a total liability @ 1% i.e. Rs. 1,50,000/- by a common order u/s. 201(1) of the Act and Ld. CIT(A) confirmed the findings of the AO. During the hearing, Ld. Counsel for the assessee draw our attention towards the Paper Book-I Page no. 1 to 8 which is a copy of purchase deed dated 3.7.2013 was attached especially page no. 6 para no. 4 of the Sale Deed which is reproduced as under:-

5.1 He further draw our attention towards Paper Book-II Page No. 14 having the details of party wise payment for purchase of property and page no. 15 to 20 which are the copies of Banks Statements showing payment by Sh. Pradeep Soni; Smt. Babli Soni; Sh. Vinod Soni and Sh. Beena Soni and also draw our attention towards page no. 21 which the copy of Loan Statement ICICI showing payment (all 04 parties).

5.2 After perusing the Paper Book and the relevant provisions of law, we find that Section 194-IA(2) provides that Section 194-IA(1) will not applicable where the consideration for transfer of immovable property is less than Rs. 50,00,000/-. However, section 194-IA(1) is applicable on any person being a transferee, so section 194-IA(2) is also, obviously, applicable only w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. In the instant case there are 04 separate transferees and the sale consideration w.r.t. each transferee is Rs. 37,50,000/-, hence, less than Rs. 50,00,000/- each. transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee /person. It is also noted that Section 194-IA was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out alongwith the Finance Bill wherein it was stated that “in order to reduce the compliance burden on the small tax payers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakhs rupees.” We further find that the main reason by the AO is that the amount as per sale deed is Rs. 1,50,00,000/-. The law cannot be interpreted and applied differently for the same transaction, if carried out in different ways. The point to be made is that, the law cannot be read as that in case of four separate purchase deed for four persons separately, Section 194-IA was not applicable, and in case of a single purchase deed for four persons Section 194-IA will be applicable. It is noted that AO has passed a common order u/s. 201(1) for all the four transferees. In order to justify his action since in case of separate orders for each transferee separately, apparently, provisions of section 1941A could not had been made. applicable since in each case purchase consideration is only Rs. 37,50,000/-. This action of AO shows that he was also clear in his mind that with reference to each transferee, Section 1941A was not applicable. Hence, we are of the considered view that the addition made by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law, thus the same is deleted. As far as issue of charging interest is concerned, the same is consequential in nature, hence, need not be adjudicated. As regards the case laws cited by the Ld. DR are concerned, the same are on distinguished facts and therefore, not applicable in the present case. Accordingly, the grounds raised by the assessee stand allowed and as a result thereof, the appeal of the assessee is allowed.”

6. As could be seen from the above the Tribunal held that the law cannot be interpreted and applied differently from the same transaction if carried out in different ways i.e. in case of four separate purchase deeds for four persons separately u/s.194-IA of the Act was not applicable and in case of single purchase deed for four persons section 194-IA of the Act will be applicable.

7. The ratio of the decision squarely applies to the facts of the asessee’s case. Respectfully following the said decision we hold that the order passed u/s.200A of the Act and also the order of the Ld. CIT(A) in sustaining such order is not sustainable in the eyes of law. Grounds raised by the assessee are allowed.

8. In the result, the appeal of the assessee is allowed.