Ruling on applicability of threshold limit for withholding obligation in relation to sale of immovable property
In Vinod Soni and others (Taxpayer) v. ITO, the issue before the Delhi Income Tax Appellate Tribunal was whether any withholding obligation triggers on the joint buyers if the cost of the immoveable property is more than specified limit of INR5M but the share of each co-owner is less than that value.
Income tax laws cast an obligation on the buyer to withhold tax on payment to seller of consideration for transfer of immoveable property if value of consideration exceeds INR5M.
The Tribunal held that in a case of joint acquisition of an immovable property by various co-owners, the threshold limit of withholding obligation (i.e. INR5M) is applicable with reference to share of each co-owner and not with reference to consideration of entire property. Accordingly, the Tribunal deleted tax withholding demand raised on co-owners by the Tax Authority.
Article referred: https://www.ey.com/Publication/vwLUAssets/delhitrib/%24FILE/delhitrib.pdf
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