INCOME TAX APPELLATE TRIBUNAL
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N.R.S.Ganesan, Member (J) -
(1.) ALL the appeals of the assessees relate to three independent assessees. ITA No. 164/Coch/2013 is against the levy of interest u/s. 201(1) & 201(1A) for the assessment year 2009 -10. All other appeals are with regard to levy of penalty u/s. 271C for non deduction of tax at source on the interest payment to partnership firm.
(2.) LET us first take the appeal pertaining to levy of interest u/s. 201(1) & 201(1A) in appeal No. 164/Coch/2013 in the case of Shri Thomas John Muthoot. Shri R Srinivasan, the ld. representative for the assessee submitted that the assessee is a partner in two firms, viz. M/s. Muthoot Estate & Investments, Trivandrum and M/s. Muthoot Bankers, Punnel Road, Trivandrum. The assessing officer levied interest u/s. 201(1) & 201(1A) on the ground that the assessee has not deducted tax and the surcharge while making payment to the firms. On appeal by the assessee, the CIT(A) found that the decision of this Tribunal in the assessee's own case dated 12 -10 -2012 is not applicable. According to the ld. representative, this Tribunal in assessee's own case in ITA 383 to 384 & 386/Coch/2011 order dated 11 -01 -2013 found that it is to be verified whether the recipient of the income is liable to pay tax on the interest income. According to the ld. representative, in view of the decision of this Tribunal in assessee's own case, the Commissioner (Appeals) is not justified in confirming the order of interest u/s. 201(1) & 201(1A) of the Act. The ld. representative further submitted that there was a reasonable cause for non deduction of tax. The ld. representative also submitted that the recipient of the income has already paid the tax and surcharge, therefore, the assessee cannot be treated as assessee in default. Moreover, the income of the recipient has not exceeded Rs. 1 crore, therefore, assessee need not deduct tax on surcharge.
(3.) ON the contrary, Smt. Latha V Kumar, the ld. DR submitted that admittedly, the assessee is a partner in two partnership firms. Under the Income -tax Act, partners and partnership firms are two separate and independent assessable units, therefore, any transaction between the partners and partnership firm is taxable under the Income -tax Act. According to the ld. DR, when the assessee pays interest to the partnership firm, the assessee is liable to deduct tax u/s. 194A of the Act. The non deduction of tax, according to the ld. DR, results in levy of penalty u/s. 271C and interest u/s. 201(1A) of the Act. On a query from the bench, how section 194A is applicable for individual assessees, the ld. DR, after reading the provisions of section 194A submitted that she would leave the matter to the discretion of the Court.;
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