I bought a flat jointly with my husband for Rs 55 lakh in 2015 and I paid Rs 40 lakh of it. The TDS officer has made me an assessee in default under section 194-IA because the property crossed fifty lakh. Was I obliged to deduct?
For a purchase before 1 October 2024, no. The Tribunal held that the obligation cast by section 194-IA is qua each transferee and not qua the aggregate consideration, so where the transferee in question neither credited nor paid more than fifty lakh rupees the section has no application and no default under section 201(1) or 201(1A) arises.
Decided by the ITAT (Shri Challa Nagendra Prasad, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member (order per Pradip Kumar Kedia, A.M.), Income Tax Appellate Tribunal, Delhi Bench 'G') on 2022-08-02, reported as I.T.A. No. 8740/DEL/2019; Assessment Year 2016-17; date of hearing 23 June 2022, order pronounced 2 August 2022. It bears on section 194-IA, section 194-IA(1), section 194-IA(2), section 201(1), section 201(1A) of the Income Tax Act 1961, in TDS Defaults and How Tax Law Is Read matters.
This is the reasoning, rather than the result, that carries the point: the Tribunal read the two limbs of sub-section (1) together and found that the first limb speaks of 'a transferee' in the singular while the second fixes the moment of deduction by reference to what that particular transferee does — credit in his own accounts, or actual payment — so the aggregate reading cannot be worked at all. That is a construction argument, not a concession, and it survives the Revenue's standard answer that the threshold attaches to the property. The limit is chronological and absolute: Parliament inserted a proviso into sub-section (2) with effect from 1 October 2024 aggregating the amounts paid by all the transferees, so this decision states the law for credits and payments before that date and cannot be relied on for later ones. Practitioners should also notice that the assessee here claimed a 75 per cent beneficial share while paying Rs 40 lakh, and the Tribunal decided the case on what was actually paid rather than on the share — payment, not ownership percentage, is what the section keys to.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee purchased a house property jointly with her husband for a total consideration of Rs 55 lakh paid to the seller. As a joint owner she contributed Rs 40 lakh and the other joint owner contributed the remaining Rs 15 lakh; she claimed to be a joint holder to the extent of 75 per cent in the property. The Assessing Officer passed an order dated 27 February 2017 under section 201(1) read with section 201(1A) for AY 2016-17, fastening a liability of Rs 67,200 on the ground that the provisions of section 194-IA(1) had been infringed by non-deduction of tax while making payment for the purchase of the property. The Commissioner of Income Tax (Appeals)-XXXI, New Delhi confirmed that order on 23 January 2019. Before the Tribunal the assessee contended that section 194-IA(1) was not attracted because she had paid less than the fifty lakh rupee threshold, notwithstanding that the aggregate consideration for the property exceeded it; the Revenue contended that the section requires deduction where the purchase consideration of the property is fifty lakh rupees or more, so that the consequences under section 201(1) read with section 201(1A) must follow.
The appeal of the assessee was allowed. The obligation cast under section 194-IA is qua each transferee and not qua the aggregate consideration, so section 194-IA has no application where the transferee in question has neither credited nor paid consideration for the transfer of immovable property in excess of the threshold limit of Rs 50 lakh. The assessee having admittedly paid Rs 40 lakh, she was not an assessee in default for the purposes of section 201/201(1A), and the demand raised under section 201(1) read with section 201(1A) was reversed and cancelled (paragraphs 7.2, 8 and 9).
The Tribunal identified the moot question as whether the obligation under section 194-IA is qua the property or qua the transferee (paragraph 7.1). Reading the text and tenor of the provision, it found that two factors must co-exist: the first limb fixes the obligation on 'a transferee' responsible for paying a resident transferor, in the singular and in distinction to transferees combined, and the second limb fixes the time of discharge of that obligation by reference to credit in that transferee's own accounts or his actual payment. Read together, the provision gives the impression that the obligation is qua each transferee and not qua the aggregate consideration, because the second limb cannot practicably be worked if the Revenue's aggregate reading is accepted (paragraph 7.2). The Tribunal added that the law cannot be read to expect one transferee to deduct tax on behalf of another at the time he takes action towards payment or credit, and that the Revenue's reading — linking the vicarious liability to the value of the property — would produce an anomalous and unintended situation; the assessee's construction was in absolute congruence with the schematic interpretation of the section (paragraph 7.3). On the facts, the assessee having paid Rs 40 lakh, which is below the threshold, the section was not triggered (paragraph 8), and no default having been committed the section 201 consequences could not follow (paragraph 9).
Thus, when the provision is read as a whole, it gives an infallible impression that obligation cast under Section 194IA is qua each transferee and not qua the aggregate consideration.
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Handle my notice → Ask a CA on WhatsAppFor a purchase before 1 October 2024, no. The Tribunal held that the obligation cast by section 194-IA is qua each transferee and not qua the aggregate consideration, so where the transferee in question neither credited nor paid more than fifty lakh rupees the section has no application and no default under section 201(1) or 201(1A) arises. This was decided by the ITAT (Shri Challa Nagendra Prasad, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member (order per Pradip Kumar Kedia, A.M.), Income Tax Appellate Tribunal, Delhi Bench 'G') and bears on section 194-IA, section 194-IA(1), section 194-IA(2), section 201(1), section 201(1A) of the Income Tax Act 1961. It is reported as I.T.A. No. 8740/DEL/2019; Assessment Year 2016-17; date of hearing 23 June 2022, order pronounced 2 August 2022. This is the reasoning, rather than the result, that carries the point: the Tribunal read the two limbs of sub-section (1) together and found that the first limb speaks of 'a transferee' in the singular while the second fixes the moment of deduction by reference to what that particular transferee does — credit in his own accounts, or actual payment — so the aggregate reading cannot be worked at all. That is a construction argument, not a concession, and it survives the Revenue's standard answer that the threshold attaches to the property. The limit is chronological and absolute: Parliament inserted a proviso into sub-section (2) with effect from 1 October 2024 aggregating the amounts paid by all the transferees, so this decision states the law for credits and payments before that date and cannot be relied on for later ones. Practitioners should also notice that the assessee here claimed a 75 per cent beneficial share while paying Rs 40 lakh, and the Tribunal decided the case on what was actually paid rather than on the share — payment, not ownership percentage, is what the section keys to. If it applies to you, the first step is this: Date the credit or payment before you use this decision. It is authority only for a credit or payment before 1 October 2024.
The assessee purchased a house property jointly with her husband for a total consideration of Rs 55 lakh paid to the seller. As a joint owner she contributed Rs 40 lakh and the other joint owner contributed the remaining Rs 15 lakh; she claimed to be a joint holder to the extent of 75 per cent in the property. The Assessing Officer passed an order dated 27 February 2017 under section 201(1) read with section 201(1A) for AY 2016-17, fastening a liability of Rs 67,200 on the ground that the provisions of section 194-IA(1) had been infringed by non-deduction of tax while making payment for the purchase of the property. The Commissioner of Income Tax (Appeals)-XXXI, New Delhi confirmed that order on 23 January 2019. Before the Tribunal the assessee contended that section 194-IA(1) was not attracted because she had paid less than the fifty lakh rupee threshold, notwithstanding that the aggregate consideration for the property exceeded it; the Revenue contended that the section requires deduction where the purchase consideration of the property is fifty lakh rupees or more, so that the consequences under section 201(1) read with section 201(1A) must follow. The matter was decided on 2022-08-02 by the ITAT (Shri Challa Nagendra Prasad, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member (order per Pradip Kumar Kedia, A.M.), Income Tax Appellate Tribunal, Delhi Bench 'G'). On those facts the ITAT held as follows. The appeal of the assessee was allowed. The obligation cast under section 194-IA is qua each transferee and not qua the aggregate consideration, so section 194-IA has no application where the transferee in question has neither credited nor paid consideration for the transfer of immovable property in excess of the threshold limit of Rs 50 lakh. The assessee having admittedly paid Rs 40 lakh, she was not an assessee in default for the purposes of section 201/201(1A), and the demand raised under section 201(1) read with section 201(1A) was reversed and cancelled (paragraphs 7.2, 8 and 9).
The Tribunal identified the moot question as whether the obligation under section 194-IA is qua the property or qua the transferee (paragraph 7.1). Reading the text and tenor of the provision, it found that two factors must co-exist: the first limb fixes the obligation on 'a transferee' responsible for paying a resident transferor, in the singular and in distinction to transferees combined, and the second limb fixes the time of discharge of that obligation by reference to credit in that transferee's own accounts or his actual payment. Read together, the provision gives the impression that the obligation is qua each transferee and not qua the aggregate consideration, because the second limb cannot practicably be worked if the Revenue's aggregate reading is accepted (paragraph 7.2). The Tribunal added that the law cannot be read to expect one transferee to deduct tax on behalf of another at the time he takes action towards payment or credit, and that the Revenue's reading — linking the vicarious liability to the value of the property — would produce an anomalous and unintended situation; the assessee's construction was in absolute congruence with the schematic interpretation of the section (paragraph 7.3). On the facts, the assessee having paid Rs 40 lakh, which is below the threshold, the section was not triggered (paragraph 8), and no default having been committed the section 201 consequences could not follow (paragraph 9). In the words reproduced by the source cited on this page: "Thus, when the provision is read as a whole, it gives an infallible impression that obligation cast under Section 194IA is qua each transferee and not qua the aggregate consideration."
It was decided by the ITAT on 2022-08-02 and is reported as I.T.A. No. 8740/DEL/2019; Assessment Year 2016-17; date of hearing 23 June 2022, order pronounced 2 August 2022. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 194-IA, section 194-IA(1), section 194-IA(2), section 201(1), section 201(1A), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal of the assessee was allowed. The obligation cast under section 194-IA is qua each transferee and not qua the aggregate consideration, so section 194-IA has no application where the transferee in question has neither credited nor paid consideration for the transfer of immovable property in excess of the threshold limit of Rs 50 lakh. The assessee having admittedly paid Rs 40 lakh, she was not an assessee in default for the purposes of section 201/201(1A), and the demand raised under section 201(1) read with section 201(1A) was reversed and cancelled (paragraphs 7.2, 8 and 9). It arises in TDS Defaults and How Tax Law Is Read matters, on section 194-IA, section 194-IA(1), section 194-IA(2), section 201(1), section 201(1A) of the Income Tax Act 1961, and was decided by Shri Challa Nagendra Prasad, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member (order per Pradip Kumar Kedia, A.M.), Income Tax Appellate Tribunal, Delhi Bench 'G'. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Prove what YOU paid, not what your share was: bank statements, the individual cheques or transfers, and the recitals in the sale deed apportioning payment between the buyers. Run the two-limb argument in the order the Tribunal ran it — sub-section (1) speaks of 'a transferee' in the singular, and the time of deduction depends on the act of each transferee separately, so the aggregate reading is unworkable. Add the practical point the Tribunal accepted at its paragraph 7.3: the law cannot be read to expect one transferee to deduct tax on behalf of another at the moment he makes his own payment. Take the consequence expressly — if there is no obligation under section 194-IA there is no default, so the section 201(1) demand and the section 201(1A) interest both fall. Check whether the Assessing Officer has also invoked section 206AA at twenty per cent for a seller without PAN; that enhancement has no independent life once section 194-IA is out of the picture.
Superseded by amendment. The construction the Tribunal adopted has been displaced prospectively. A proviso inserted in section 194-IA(2) with effect from 1 October 2024 provides that where there is more than one transferor or transferee the consideration shall be the aggregate of the amounts paid or payable by all the transferees; it is footnoted in the Act as inserted by Act No. 15 of 2024 with effect from 1 October 2024. The decision therefore remains authority for a credit or payment before 1 October 2024 and must not be applied to a later one — and the date that governs is the earlier of the event of credit or payment. As to how the decision itself has been treated: it was followed and reproduced by the ITAT Jodhpur in Sachin Kumar Kabra v. ITO (TDS), ITA No. 107/Jodh/2023, order dated 23 January 2024; and the reasoning was adopted by a Commissioner (Appeals) whose order is reproduced in ITO (TDS-3) v. Tarun Santramdas Varma (ITAT Ahmedabad, 26 March 2026), where the Revenue's appeal was dismissed. No decision doubting or dissenting from it is recorded, but later treatment has not been systematically established, and no High Court or Supreme Court consideration of the point is recorded. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Paragraph structure: the order runs ORDER, then numbered paragraphs 1, 2, 3, 4, 5, 6, 7, 7.1, 7.2, 7.3, 8 and 9, followed by the line 'In the result, the appeal of the assessee is allowed.' and the signature block — nine numbered paragraphs with three sub-paragraphs under 7, and nothing after 9 except the disposal line. The order reproduces section 194-IA at its paragraph 6 in the pre-2022 form, with the charge on 'such sum' alone and sub-section (2) reading 'where the consideration for the transfer of an immovable property is less than fifty lakh rupees' — which is the correct text for AY 2016-17 and should not be read as the current text. One transcription oddity in the source: paragraph 2 prints 'Section 201(1) r.w.s. 201(1[A)' with a stray bracket, and paragraph 5 prints 'the question thus piosed'; neither affects the sense. The Tribunal did not consider the 1 October 2024 proviso, which did not exist when the order was made. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal of the assessee was allowed. The obligation cast under section 194-IA is qua each transferee and not qua the aggregate consideration, so section 194-IA has no application where the transferee in question has neither credited nor paid consideration for the transfer of immovable property in excess of the threshold limit of Rs 50 lakh. The assessee having admittedly paid Rs 40 lakh, she was not an assessee in default for the purposes of section 201/201(1A), and the demand raised under section 201(1) read with section 201(1A) was reversed and cancelled (paragraphs 7.2, 8 and 9).
TaxSphere, “Shamim Irshad v. ITO, Ward-77(2), New Delhi (ITAT Delhi) — before 1 October 2024 the section 194-IA obligation was qua each transferee, not qua the aggregate consideration”, https://taxnotice.vittsphere.com/caselaw/case/shamim-irshad-194-ia-obligation-is-qua-each-transferee-not-the-aggregate/ (validity last checked 2026-09-08)
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