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2018 (1) TMI 685 - AT - Income TaxTDS u/s 194A - assessee assessed as an AOP - non deduction of tds - responsibility for paying interest to SNFL - Liability of representative assessee - Held that:- The assessee has been rightly assessed as an AOP – in which status in fact it has returned its income, qua its entire income (surplus), taxing the same at the maximum marginal rate. Further, interest to SNFL is paid by the assessee and not the individual members of its member SHGs, so that there has been, without doubt, contravention of s. 194A. The assessee is, however, entitled to the saving of the second proviso to s. 40(a)(ia) inasmuch as the same has been held as curative and, thus, retrospective by the Hon'ble Courts. This in fact has also been the uniform and unequivocal view of the tribunal. The said issue, accordingly, stands restored to the file of the AO for adjudication in light thereof after allowing the assessee an opportunity to present it’s case. There is no reference to or discussion in the order by the tribunal as to why the surplus arising to the assessee, which is a result of a systematic and organized activity, undertaken on a continuous basis, with elaborate provisions for managing the trust, is not to be regarded as a business income. The assessee’s activity is in fact akin to that of a bank. Involving the representatives of the persons needing financial assistance in the management of the trust, it thus ensures better targeting, including attending to micro level needs, besides meting out technical or other assistance, so that its activities are, rather, more comprehensive and penetrative than of a bank. Section 161(1A) is also relevant in this regard, to which again there has been no reference. The finding as to mutuality is, again, without any discussion on the essential conditions of mutuality, as well as to the precedents. We were therefore, with respect, constrained not to follow the said order and, accordingly, proceeded with our independent examination of the issues arising. Before parting with our order, we find that the income added by the AO, i.e., excluding disallowance u/s. 40(a)(ia), is ten times that returned. This appears to be by way of a mistake as the assessee has admittedly returned 1/10th of the surplus, so that the addition ought to be for the balance 9/10th. The AO shall look into this aspect as well, making necessary rectification/s, where required. - Decided partly in favour of assessee for statistical purposes.
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