IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `SMC' NEW DELHI
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA Nos. 3920 & 3921/Del/2018
Assessment Year: 2015-16 & 2016-17
Shiv Shakti Builders & vs ITO (TDS)
Developers, Meerut,
97/1, Punjabi Pura, Uttar Pradesh.
Delhi Road, Meerut,
Uttar Pradesh.
PAN No. ABQFS7454M
APPELLANT RESPONDENT
Assessee by Shri V.K. Goel, Adv.
Revenue by Shri S.L. Anuragi, Sr. DR
Date of Hearing 09.05.2019
Date of Pronouncement 20.06.2019
ORDER
ITA No. 3920/Del/2018 filed by the assessee is directed
against the order dated 16.04.2018 of the CIT(Appeals), Meerut
relating to AY 2015-16. ITA No. 3921/Del/2018 filed by the
assessee is directed against the order dated 13.03.2018 of the
CIT(Appeals), Meerut relating to F.Y. 2015-16 i.e. AY 2016-17.
Since, common issues are involved in both these appeals,
therefore, these were heard together and are being disposed of by
this common order.
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ITA Nos. 3920 & 3921/Del/2018
ITA No. 3920/Del/2018 (FY 2014-15):
2. Facts of the case, in brief, are that the assessee is engaged in
the business of purchase and sale of land, construction and sale
of flats etc. During the course of TDS verification the AO observed
from the balance sheet as on 31.03.2015 that the assessee has
made an advance payment of Rs. 61,00,000/- to Shri Vijay Kumar
Ghai for purchase of land. He observed that the assessee
purchased 3 plots measuring 190.15 sq. mt., 230.45 sq mt. and
230.45 sq. mt. during FY 2015-16 that were registered on
05.08.2015, 16.06.2015 and 15.06.2015 respectively. As per the
Registration deeds that have been executed, all these plots bear
the same address i.e., vacant part of Property no. 98, Khasra
number 1922 and 1924, Mohalla Punjabi Pura, Meerut. All these
plots have been purchased from the same person viz., Shri Vijay
Kumar Ghai, S/o shri Roshal Lal Ghai, 369, Kamla Nagar, Bagpat
Road, Meerut. This shows that the registry of the entire property
situated at Mu. No. 98, Khasra number 1922 and 1924, Mohalla
Punjabi Pura, Meerut, was executed in three parts with the sole
intention of evading payment of TDS on the total sale
consideration of the land as per the provisions of section 194IA of
the Act, as the total sale consideration would have exceeded Rs.
50,00,000/- if the entire registry had been executed by one
agreement.
3. According to the AO, since, the advance payment of Rs. 61
lakhs was made in FY 2014-15, therefore, TDS @ 1% should have
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ITA Nos. 3920 & 3921/Del/2018
been deducted by the assessee u/s 194IA of the Act from such
payment. Since, the assessee did not deduct the same the AO
treated the assessee as an assessee in default.
4. In appeal, the Ld. CIT(A) upheld the action of the AO. While
doing so, he held that the word used in the section is "a property"
and, therefore, any number of registries will not save the deductor
from his liability to deduct the TDS. He, accordingly, upheld the
action of the AO.
5. Aggrieved with such order of the CIT(A), the assessee is in
appeal before the Tribunal by raising the following grounds:
1. "That the AO is in error in holding that TDS is payable @
1%, when sale deed is made below Rs. 50,00,000/-.
Hence, liability of TDS on purchase of land shall not be
arises and CIT(A) has not justified in confirming the same.
2. That the assessee has right to add, modify or delete any
ground during the appeal proceedings."
6. The Ld. Counsel for the assessee strongly challenged the
order of the CIT(A) in confirming the action of the AO in treating
the assessee as an assessee in default. He submitted that the
assessee had purchased three plots on three different dates
although from the same person. The value of none of the
properties mentioned by the AO exceeds Rs. 50 lakhs and,
therefore, the assessee is not liable to deduct TDS as per the
provisions of section 194IA of the Act. Referring to the decision of
the Tribunal in the case of Vinod Soni, Babli Soni, Beena Soni and
Pradeep Kumar Soni vs. ITO(TDS), Faridabad he submitted that
the Tribunal in the said decision had set aside the order of the
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CIT(A), wherein the CIT(A) had confirmed the action of the AO in
treating the four assessees as defaulter u/s 201(1) of the Act on
the ground that they jointly purchased a property the value of
which was 1,50,00,000/- although 1/4th share of each purchaser
was less than 50 lakhs. He submitted that since the properties in
the instant case were purchased on 3 different dates and the value
of each property is less than 50 lakhs, therefore, assessee is not
liable to deduct TDS u/s 194IA of the Act.
7. The Ld. DR, on the other hand, strongly supported the order
of the CIT(A). He submitted that the buyer and seller in the
instant case are one and the property also bears the same Khasra
number but the sale deeds are executed in three parts. He
submitted that the assessee just to avoid the payment of TDS on
the total sale consideration of the land as per the provisions of
Section 194IA had executed the sale deeds in three parts. He,
accordingly submitted that the order of the CIT(A) be upheld and
the grounds raised by the assessee be dismissed.
8. I have considered the rival arguments made by both the sides
and perused the orders of the authorities below. I find the
assessee in the instant case purchased three plots measuring
190.15 sq. mt., 230.45 sq. mt. and 230.45 sq. mt. during FY
2015-16 which were registered on 05.08.2015, 16.06.2015 and
15.06.2015 respectively. The value of each plot was Rs. 44 lakhs.
I find the AO held that since all these plots bear the same address
and all these have been purchased from the same person by the
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assessee, therefore, the assessee is liable to deduct TDS @ 1%
from such payment as per the provisions of Section 194IA of the
Act since, the combined value of the properties exceeds Rs. 50
lakhs. It is the submission of the Ld. Counsel for the assessee
that since the properties are registered on three different dates
and the area of each plot is different, therefore, assessee is not
liable to deduct TDS @ 1% as per the provisions of Section 194IA
of the Act.
9. The provisions of Section 194IA reads as under:
"194IA. (1) Any person, being a transferee, responsible
for paying (other than the person referred to in section
194LA) to a resident transferor any agricultural land),
shall, at the time of credit of such sum to the account of the
transferor or at the time of payment of such sum in cash or
by issue of a cheque or draft or by any other mode,
whichever is earlier, deduct an amount equal to one per
cent of such sum as income-tax thereon.
(2) No deduction under sub-section (1) shall be made
where the consideration for the transfer of an immovable
property is less than fifty lakh rupees.
(3) The provisions of section 203A shall not apply to a
person required to deduct tax in accordance with the
provisions of this section.
Explanation. For the purposes of this section, -
a) "agricultural land" means agricultural land in India,
not being a land situate in any area referred to in
items (a) and (b) of sub-clause (iii) of clause (14) of
section 2;
b) "immovable property" means any land (other than
agricultural land) or any building or part of a
building."
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10. As per sub-section (2) of Section 194IA no deduction under
sub-section (1) shall be made where the consideration for the
transfer of an immovable property is less than Rs. 50 lakhs. I
find, the assessee in instant case had purchased three properties
on three different dates, although, they bear the same Khasra
number and the seller is the same. This indicates that the
assessee had purchased the land on piece meal basis. In my
opinion, since, the value mentioned in each sale deed is less than
Rs. 50 lakhs, therefore, the provisions of Section 194IA will not be
applicable to the assessee. Merely because, the seller is the same
and the Khasra number of the three properties purchased by the
assessee are same, the same cannot be a ground to treat the
assessee as an assessee in default when the value mentioned in
each sale deed executed on 3 different dates is less than Rs. 50
lakhs. I, therefore, set aside the order of the CIT(A) and direct the
AO not to treat the assessee as an assessee in default. The
ground raised by the assessee is accordingly allowed.
ITA No. 3921/Del/2018 (FY 2015-16):
11. Ground no. 1 by the assessee reads as under:
1. "That the AO is in error on the issue of labour payment
of Rs. 13,55,585/- is subject to TDS, if payment made
by the assessee to labour is below Rs. 20,000/- and
CIT(A) has not justified in confirming the same."
12. Facts of the case, in brief, are that the AO during the course
of TDS assessment observed that assessee failed to deduct TDS on
labour payment to the tune of Rs. 13,55,585/- during the FY
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2015-16. On being questioned by the AO, it was submitted that
out of the total labour expenses of Rs. 27,07,195/-, TDS has been
deducted on the amount of labour worth Rs. 13,51,610/- u/s
194C of the Act. On the balance amount, assessee is not liable to
deduct TDS. However, the AO was not satisfied with the
explanation given by the assessee. Relying on the provisions of
Section 194C the AO held that the assessee was liable to deduct
TDS @ 2% from the labour payment of Rs. 13,55,585/-. He,
accordingly, treated the assessee as an assessee in default for non
deduction of tax.
13. In appeal, the Ld. CIT(A) confirmed the action of the AO in
absence of filing of any details or copy of accounts to justify that
assessee has not paid any amount exceeding Rs. 20,000/- in a
single day to any person.
14. Aggrieved with such order of the CIT(A), the assessee is in
appeal before the Tribunal.
15. I have considered the rival arguments made by both the sides
and perused the orders of the authorities below. I find out of the
total labour payment of Rs. 27,07,195/- the assessee had not
deducted TDS on an amount of Rs. 13,55,585/- for which the AO
held the assessee as an assessee in default. Since, the assessee
could not substantiate with evidence before the CIT(A) that no
payment has been made exceeding Rs. 20,000/- to any person in
a single day, he upheld the action of the AO. It is the submission
of the Ld. Counsel for the assessee that given an opportunity he
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will produce the details either before the AO or before the CIT(A) as
the case may be to substantiate that no payment exceeding Rs.
20,000/- has been paid to any person in a single day and that the
assessee is not liable to deduct TDS from such labour payment.
16. Considering the totality of the facts of the case and in the
interest of justice, I deem it proper to restore the issue to the file of
the AO with a direction to give one more opportunity to the
assessee to substantiate with evidence to his satisfaction that
assessee is not liable to deduct tax @ 2% on the amount of Rs.
13,55,585/- being the labour payment. The AO shall decide the
issue as per fact and law after giving due opportunity of being
heard to the assessee. I hold and direct accordingly. The ground
raised by the assessee is accordingly allowed for statistical
purposes.
17. Ground no. 2 reads as under:
"2. The the AO is in error in holding that TDS is payable @
1%, when sale deed is made below Rs. 50 lakhs. Hence,
liability of TDS on purchase of land shall not be arises and
CIT(A) has not justified in confirming the same."
18. After hearing both the sides, I find the above ground is
identical to ground no. 1 in ITA No. 3920/Del/2018. I have
already decided the issue and the ground raised by the assessee
has been being allowed. Following similar reasoning, the above
ground raised by the assessee is allowed.
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ITA Nos. 3920 & 3921/Del/2018
19. In the result, ITA No. 3920/Del/2018 is allowed and ITA No.
3921/Del/2018 is allowed for statistical purposes.
Order pronounced in the open Court on 20/06/2019
Sd/-
(R.K. PANDA)
ACCOUNTANT MEMBER
Dated: 20/06/2019
*Kavita Arora
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
TRUE COPY
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 18.6.2019
Date on which the typed draft is placed before the dictating 18.6.2019/
Member 19.6.2019
Date on which the typed draft is placed before the Other Member
Date on which the approved draft comes to the Sr. PS/PS 20.6.2019
Date on which the fair order is placed before the Dictating Member 20.6.2019
for pronouncement
Date on which the fair order comes back to the Sr. PS/PS 20.6.2019
Date on which the final order is uploaded on the website of ITAT 20.6.2019
Date on which the file goes to the Bench Clerk 20.6.2019
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar for
signature on the order
Date of dispatch of the Order
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ITA Nos. 3920 & 3921/Del/2018
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