Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

THE COMMISSIONER OF INCOME TAX (TDS) , COCHIN. Versus MR. THOMAS MUTHOOT, MUTHOOT HOUSE, KOZHENCHERRY

Penalty levied under Sec.271C - Non deduction of TDS on interest paid thus violation of Section 194A - Whether in the light of the specific exemption provided in section 194A (3)(iv) to such income credited or paid by a firm to a partner of the firm, the assessee is reasonably entitled to entertain the belief that payment of interest by the partners to the firm is similar or similarly placed? - ITAT deleted penalty levy - Held that:- While Section 194A provided for deduction of tax on interest, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tered accountants at their disposal, could entertain a belief that they were not liable to deduct tax at source on the interest paid to the firm. This, therefore, means that the alleged belief of the assessees is certainly not one a reasonable person would have entertained nor such persons would have acted in the same way given the totality of circumstances.

Therefore, we cannot accept the plea that the belief allegedly entertained by the assessees was a bonafide one or could be accep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the assessees. However, the object of these provisions being different from section 194A read with Section 271C, such an order passed by the Tribunal cannot come to the rescue of the assessees. In any case, principles of res-judicata and estoppel are alien to tax jurisprudence and therefore, this contention also cannot improve the case of the assessees. One another reason which has weighed with the Tribunal is that the firm had declared the interest received in its return and that since the f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ME TAX FOR THE RESPONDENT : SRI.T.M.SREEDHARAN (SR.), SRI.V.P.NARAYANAN AND SMT.DIVYA RAVINDRAN JUDGMENT Antony Dominic, J. 1.These appeals are filed by the Revenue challenging the common order passed by the Income Tax Appellate Tribunal, Cochin Bench in ITA Nos.385/Coch/2011 and 391/Coch/2011. 2.Briefly stated the relevant facts are that the respondents are Partners of a firm M/s.Muthoot Estate Investments. They had drawn funds from the firm over and above their respective capital and paid inte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, ₹ 15,69,664/- and ₹ 70,49,302/- were levied as penalty on the respondents in ITA Nos.139/13 and 177/13, respectively. The penalty orders were confirmed by the Commissioner (Appeals). The further appeals filed before the Tribunal were allowed and the impugned order was passed holding that the relief entertained by the assessees that they were not liable to deduct tax at source on the interest paid by them to the partnership firm can be considered as a reasonable cause as contemplate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of law formulated are: 1. Whether, on the facts and in the circumstances of the case, the tribunal is right in law and fact in cancelling the penalty levied under Sec.271C? 2. Whether, on the facts and in the circumstances of the case and also in the light of the specific exemption provided in section 194A (3)(iv) to such income credited or paid by a firm to a partner of the firm, the assessee is reasonably entitled to entertain the belief that payment of interest by the partners to the firm is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y person, not being an individual who is exempted, and responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall deduct income tax thereon at the rates in force, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by cheque or draft or by any other mode. Section 271C of the Act provides that if any person fails to deduct the whole or any part of the tax as required to be d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ay be, for any failure referred to in the Section, if he proves that there was reasonable cause for such failure. 5.A survey of the above statutory provisions show that if an individual who is liable to deduct tax at source under Section 194A commits default in doing so, automatically, Section 271C is attracted and he is liable to be levied penalty as provided therein. However, that absolute liability to be penalised is softened by section 273B by providing such person an opportunity to prove th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me to the same conclusion or acted in the same way given the totality of the circumstances. 6.In this context, it is also relevant to note that in Commissioner of Income Tax v. Sri Jagdish Prasad Choudhary [(211) ITR 472], a Full Bench of the Patna High Court has interpreted the expression "reasonable cause", as follows: "The word "reasonable cause" has not been defined under the Act but it could receive the same interpretation which is given to the expression "suff .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssioner of Income-Tax v. Adinath Industries [(252) ITR 471] held thus: "Reasonable cause, as applied to human actions is that which would constrain a person of average intelligence and ordinary prudence. The expression "reasonable" is not susceptible of a clear and precise definition; for an attempt to give a specific mean ing to the word "reasonable" is trying to count what is not number and measure what is not space. It can be described as rational according to the dic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

; 8.The same Division Bench of the Delhi High Court in its judgment in Woodward Governor India P. Ltd. v. Commissioner of Income-Tax and Others [(253) ITR 745] held thus: "Reasonable cause" as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reaso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ef that under Section 194A, they were not liable to deduct tax at source on the interest paid by a partner to the firm. In other words, the substance of the plea of the assessees was that they were ignorant of their statutory liability to deduct tax at source on the interest paid by them to the firm of which they are partners. While Section 194A provided for deduction of tax on interest, by virtue of the provisions contained in sub section (3), only such income credited or paid by a firm to a pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce on the interest paid to the firm. This, therefore, means that the alleged belief of the assessees is certainly not one a reasonable person would have entertained nor such persons would have acted in the same way given the totality of circumstances. 10.Therefore, we cannot accept the plea that the belief allegedly entertained by the assessees was a bonafide one or could be accepted as a reasonable cause as provided under Section 273B. 11.In effect, the defence put forward by the assessees is o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssees is untenable. We are unable to accept this contention. First of all, this contention was not raised before any one of the authorities, including the Tribunal and the parties proceeded thus far, on the conceded basis that the assesees had the liability under Section 194A. That apart, unless the assessees establish by evidence that they are entitled to the coverage of the proviso to Section 194A(1), they cannot claim the benefit of exclusion. This proviso reads thus: "Provided that an i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

proviso are made out, such a claim of exclusion cannot be entertained. In this case, such facts are not established and therefore, we are not in a position to entertain this plea raised for the first time before us. True the counsel contended that the question raised being one of the law can be raised before this Court, in our view, the question raised is not a pure question of law but is a mixed question of law and facts. 14.Learned counsel for the assessee relied on the judgment in Hindustan C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: GST rates on mobile recharge business

Forum: Cess paid instead of SGST

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Forum: Input credit of gst paid on urd

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector reg.

Forum: transfer of shares

Forum: Input tax credit

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version