ITO Vs Tarun Santramdas Varma (ITAT Ahmedabad)
The ITAT Ahmedabad dismissed the Revenue’s appeal challenging the deletion of TDS demand under Section 194-IA for property purchases. The Tribunal upheld the CIT(A)’s findings that no TDS liability arose since each buyer’s payment to individual sellers was below ₹50 lakh, and the law applicable for A.Y. 2015-16 required consideration to be examined per buyer-seller transaction, not on an aggregate basis. It was also held that the Finance Act 2024 amendment introducing aggregation is prospective and not applicable retrospectively. Further, payments made to a confirming party were held outside the scope of Section 194-IA, as such parties are not transferors of immovable property. Importantly, the land parcels were classified as rural agricultural land based on official certificates and distance criteria, thus falling outside the definition of capital asset and the ambit of Section 194-IA. Consequently, the assessee was not treated as in default.
Facts of the Case
The assessee, an individual engaged in various sources of income, filed his return declaring total income of ₹3.30 crore. The assessment under section 143(3) was completed without any adverse findings, particularly with respect to purchase of land parcels during the year. Subsequently, the TDS Officer initiated proceedings under sections 201 and 201(1A) on the allegation that the assessee failed to deduct tax at source under section 194-IA in respect of purchase of certain immovable properties, the total consideration of which exceeded ₹50 lakh.
