Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Limit U/s. 194IA Is Qua Transferor Or Qua Immovable Property?

QUERY: Mr. & Mrs. H are joint owners of a plot of land. The plot is sold to Mr. T for Rs. 52 lakhs

(i) Whether the tax is required to be deducted u/s. 194IA, though the amount payable to each co-owner is less than Rs. 50 lakhs?

(ii) Whether the limit is qua immovable property or qua transferor/s?
ANSWER: Section 194IA provides that any person being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall deduct an amount equal to one per cent of such sum 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 cheque or draft or any other mode, whichever is earlier.

It further provides that no deduction shall be made where consideration for the transfer of an immovable property is less than fifty lakh rupees.

Explanation to said section defines the expressions “agricultural land’ and ‘immovable property’

The section is applicable from June 1, 2013.

Now, reading query it is clear that it is a joint property of co-owners, who have definite share in the property. The same is sold to Mr. T and Mr. T has to pay each co-owner separately, which is less than fifty lakh rupees. Therefore no tax is required to be deducted. The section applies to qua transferor and not qua immovable property.
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One comment on “Whether Limit U/s. 194IA Is Qua Transferor Or Qua Immovable Property?
  1. CA. Mukesh Saran says:

    What will be the position if instead of “Plot” a house sold by Mr and Mrs. H for 52 lakhs. In sub section (2) of sec 194IA word used “an immovable property”. Can a single house owned by 2 persons be treated as 2 immovable properties for this purpose. I think words used in ss (2) indicate the consideration qua “immovable property”. Please enlighten me.

    To extent my query further, what will be the position if whole consideration in the above case paid to Mr. H, though Mrs. H was also joint owner. I whose hands capital gain will be taxable, in the hands of MR. H or in the hands of Mr H and Mrs. H as per their defined share in the property.

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