Sale Consideration of Property under Joint Ownership to be distributed equally for Exemption Limit of TDS: ITAT [Read Order]

The Jodhpur Bench of the Income Tax Appellate Tribunal in the case of M/s Oxcia Enterprises Pvt. Ltd. v. DCIT held that since in the case of joint owners, the sale consideration was to be distributed equally, the individual amounts fell below the limit laying TDS.

The assessee company purchased the residential property which was under joint ownership previously. The assessee deducted TDS @1% of the sale consideration by quoting the PAN of a third party in the sale deed, not an actual owner of the property. According to him, TDS should have been deducted in the name of the actual owners and not in the name of the Power of Attorney holder. AO also found fault with the assessee not mentioning the PAN details of the joint owners so AO was of the view that the provisions of sec. 206AA of the Act was applicable and tax was deductible at source @ 20% of the purchase consideration along with interest and hence created a demand of the said amount. The same was upheld before the Commissioner of Income Tax (Appeals) (CIT(A))

The Bench comprising of Vice President N.K. Saini as Judicial Member A.T. Varkey pointed out to section 194-IA of the Act which provides an exception from deduction of tax of 1%  to be if the sale consideration for the transfer of immovable property is less than Rs. 50 lacs. Since in the present case of joint ownership, the consideration for each joint owner comes below the amount and under the exemption, no TDS shall be deducted. Further, with respect to the issue concerning mentioning of the wrong PAN, it was held that:

“In any case, we note that when the department was knowing the PAN details of the Power of Attorney holder Shri Vijay Kumawat who was none other than the son and brother of the Joint Owners Shri Anant Ram Kumawat and Smt. Seema Kumawat respectively, the AO could have easily found out whether these co-owners have reflected the sale consideration as discussed above in their respective Return of Income, if he had made some enquiry or referred the case to the AO who has jurisdiction over the POA holder Shri Vijay Kumawat, (who had obtained the entire sale consideration in his bank account or as to whether POA has shown it as his capital gain or not).”

To Read the full text of the Order CLICK HERE