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2013 (12) TMI 298 - AT - Income TaxPenalty u/s 271C – reasonable cause - The assessees are partners in a firm – Both the assessees has paid interest to firm without deducting tax at source - Held that:- The assessee’s belief that they were not liable to deduct tax at source on the interest paid by them can be considered as a "reasonable cause" in view of the legal position existing between a partner and the partnership firm - The partners and partnership firm are not two different legal entities, though they are two different taxable entities - The partnership firm have duly included the same in its return of income filed before the department and the said partnership firm was not liable to pay any tax, since it declared loss – Following case of Muthoot Financiers [2005 (10) TMI 224 - ITAT COCHIN] - The penalty should be avoided, if there is no loss to Revenue – Decided in favour of assessees.
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