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M/s.Prestige Estates Projects Limited.

3.5 The A.O. again issued a notice dated 20.11.2013 asking the assessee to show cause by 26.11.2013 as to why the assessee should not be treated as an assessee-in-default under section 201(1) and 201(1A) of the Act in respect of default of not deducting tax under section 194IA from refundable security deposit paid to the land owners. The assessee replied to the said notice vide a letter dated 26.11.2013. The assessee therein sought an adjournment of the hearing. The A.O. was informed by the assessee that it has sought an expert opinion on applicability of section 194IA qua refundable security deposit.

3.8 On appeal, the CIT(A) confirmed the order of the Assessing Officer. Against this, the assessee is in appeal before the Tribunal.

3.9 The learned AR submitted that section 194IA has been inserted by the Finance Act 2013 with effect from 01.06.2013. Section 194IA imposes a liability on a person responsible for payment to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), to deduct tax at source either at the M/s.Prestige Estates Projects Limited.

M/s.Prestige Estates Projects Limited.

In other words a payer is required to withhold tax under section 194IA even if the immovable property constitutes stock-in- trade.

3.61 The definition of the term 'transfer' in section 2(47) is relevant in context of computing 'capital gains' arising out of transfer of a capital asset. Section 194IA does not deal with taxability of capital gains. It fastens an obligation on the payee / transferee to withhold taxes from any consideration paid or credited for transfer of an immovable property [not being an agricultural land]. The provisions of section 2(47) cannot be imported in section 194IA in the absence of a specific mandate.

warrant a deduction. The purpose of section 194IA under such an interpretation would easily be frustrated.

3.63 Thus, the learned AR submits that in view of the above it could be stated that the provisions of section 194IA is attracted if a person is making payment as consideration to secure transfer of an immovable property. The withholding of tax is to be made in the year in which any sum towards consideration for transfer of an immovable property is made or credited pursuant to an agreement to sell. The year of chargeability of capital gains in the hands of the landowner [by virtue of section 2(47(v)] does not translate into year of deductibility of tax for the developer under section 194IA.