CA Ankit Adhyaru (Partner - Yusuf Ankit & Co.) (201 Points)
03 December 2014Is developer required to deduct tax at source u/s 194IA in case of Development Agreement? If yes, when? (At the time of execution of Agreement or at the time of making payment to the land owners)
Z
( )
(2960 Points)
Replied 04 December 2014
Sir this will depend upon how the agreement has been drafted. If the agreement contains a clause wherein possession has been granted to the developer and he is free to use it whatver way he wish to use the land then ,certainly full possession has been given when the agreement was entered into
If the agreement contains clause which is like
Developer is allowed to enter into the premise solely for the purpose of construction and the possession of land will not be given to him unless the consideration is received.
In this case possession will be when consideration is received
TDS provisions will attract when there is a transfer,transfer will be materiallized when possession is given, possession is given on the basis of the agreement
Am citing a few cases for better understanding
T.K Dayalu Karnataka H.C
Atam Prakash & Sons Delhi HC
Smt Vasavi Pratap Chand V DCIT 89 ITD 73
Jasbir Singh Sarkaria 2007 AAR [I recommend you start reading from this ruling as this was the base of other rulings and which contradicts the ruling of Chaturbhuj Dwarka Das Kapadia]
[SIDE NOTE- SINCE YOU ARE A CA, The ex-president of ICAI in a conference decided to go with the judgement of Chaturbhuj Dwarkadas Kapadia, but many practicing members consdier this law as old, specially when the new judgement I have cited have come]
Also read S. 53A of the transfer of property act (Its a MUST READ)
2013 TaxCorp (lJ) 1661 (ITAT-Chennai) [READ IT WITH THAT ATAM PRAKASH & SONS CASE]
Read with Kumudhini Venugopal 5 ITR Tribunal 145 & Navneet Kumar Thakkar V. ITO 110 ITD 525
Also consider
WILLINGNESS TO PERFORM THE CONTRACT
There are many more.
I find this topic to be one of the most difficult topics
CAclubindia
