Tax

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Siddharth (Querist)
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23 November 2013 Sir,
We have takeover a project for rs 55,00000/-
and they have provide us some payment list to whom x co. paid money but they do not have deducted tax on the said amt.

my question is would we will liable to pay tax in future if we purchase project
for 55L.

one more question we made agreement that mention we are paying 55L & taking over a project

are we ne to deduct tax on the said amt (55L)
Pl suggest its urgent

Thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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24 November 2013 In my view, you are purchasing the project, you are not responsible for the past evils of the predecessor as the same was to be claimed as expense by them.
.
U/s 194 I -immovable property has been defined as as land or building or part of a building. Now, if your project is consisting of these two valued at Rs 50.00 lac or more, TDS liability would arise U/s 194-IA.
.
Please proceed under the guidance of an expert.
.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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26 July 2025 Got it! Here’s a clear explanation for your tax queries related to taking over a project:

---

### 1. **Liability for TDS on Previous Payments (Made by Original Company):**

* If the **previous company (X Co.) paid amounts to vendors/contractors without deducting TDS**, **you are generally not liable for their TDS defaults**.
* Your **liability starts only from the date you take over the project** and make payments.
* So, **past TDS defaults of X Co. are their responsibility**, not yours.

---

### 2. **TDS on Purchase of Project (Rs. 55,00,000):**

* The **Rs. 55 lakh paid to take over the project is a purchase of asset/business**.
* Generally, **TDS is not applicable on outright purchase of a project or business**.
* TDS is deducted on specific payments like **contractor payments, rent, professional fees, interest, etc.**
* But on the **capital purchase amount**, TDS **is not required** unless specified under any special provisions.

---

### 3. **What You Should Do:**

* **Ensure payments made after takeover comply with TDS rules** (e.g., contractor payments, professional fees, rent, salary, etc.).
* Keep **proper documentation of takeover agreement** stating the payment of Rs. 55L.
* Confirm no hidden TDS liability arises from agreements or contracts associated with the project.

---

### Summary:

| Query | Answer |
| ------------------------------------ | --------------------------------------------------- |
| Liability for past non-deducted TDS? | No, not liable for previous company's defaults |
| TDS on Rs. 55L project purchase? | No, TDS not applicable on outright project purchase |

---

If you want, I can also help you draft a checklist for compliance post-takeover or further clarify any point. Would you like that?

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