Sri. Thomas John Muthoot, Trivandrum V. The ACIT, Thiruvalla

ITA 2/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8662 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2016
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR

Judgement Text

I.T.A. NO.02/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM I.TA,. NO. 02/COCH/2016 (ASST YEAR: 2009-10 ) SHRI THOMAS JOHN MUTHOOT, MUTHOOT CENTRE, PUNNEN ROAD, TRIVANDRUM. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, THIRUVALLA. (ASSESSEE -APPELLANT) VS (REVENUE-RESPONDENT) PAN NO. ABNPT 4694B ASSESSEE BY SHRI R. SREENIVASAN, CA REVENUE BY SHRI K.P. GOPAKUMAR, SR. DR DATE OF HEARING 27/04/2016 DATE OF PRONOUNCEMENT 28/04/2016 ORDER PER B P JAIN, AM: THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRE CTED AGAINST THE ORDER OF THE CIT(A), KOTTAYAM DATED 09/12/2015. THE RELE VANT ASSESSMENT YEAR IS 2009-10. 2. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDER ATION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ASSESSING OFFICERS ACT ION IN MAKING THE DISALLOWANCE OF RS.46,78,807/-, BEING THE INTEREST PAID BY THE ASSESSEE TO THE FIRM, MUTHOOT ESTATE AND INVESTMENT, BY INVOKIN G THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. I.T.A. NO.02/COCH/2016 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS F OLLOWS: THE ASSESSEE IS AN INDIVIDUAL AND IS A PARTNER/DIRE CTOR IN THE COMPANIES OF THE MUTHOOT PAPPACHAN GROUP. THE MUTHOOT PAPPACHAN GROUP IS ENGAGED IN THE BUSINESS OF BANKING/FINANCING. FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE FILED RETURN OF INCOME ON 31/03/ 2010 DECLARING A TOTAL INCOME OF RS.43,29,110/-. THE ASSESSMENT U/S. 143( 3) WAS COMPLETED BY FIXING THE TOTAL INCOME AT RS.90,39,920/-. THE ASS ESSING OFFICER MADE AN ADDITION OF RS.46,78,807/-, BEING THE INTEREST PAID BY THE ASSESSEE TO THE FIRM MUTHOOT ESTATE & INVESTMENT IN WHICH HE IS A P ARTNER. THE ADDITION WAS MADE FOR THE REASON THAT WHEN NO TDS IS MADE FO R THE INTEREST PAYMENT, THE EXPENDITURE IS TO BE DISALLOWED U/S. 4 0(A)(IA) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL T O THE FIRST APPELLATE AUTHORITY. THE CIT(A), BY FOLLOWING THE JUDGMENT O F THE HONBLE HIGH COURT IN THE ASSESSEES OWN CASE IN I.T.A. NO. 288 OF 201 4 DATED 3 RD JULY, 2015, DECIDED THE ISSUE AGAINST THE ASSESSEE. THE RELEVA NT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER: ON VERIFICATION OF BOTH THE ARGUMENTS, IT IS SEEN THAT THE CRUX OF THE APPEAL IS THE APPLICABILITY OF PROVISIONS OF SEC. 40A(IA) ON THE PAYMENT OF INTEREST BY A PARTNER TO THE FIRM. IN THE LIGHT OF THE PROVISION S OF SEC. 194A(3)(IV) IT IS AMPLY CLEAR THAT UNDER INCOME TAX ACT THE FIRM AND ITS P ARTNERS ARE DEFINED AS VARIOUS ENTITIES. ACCORDINGLY, THE PAYMENT OF INTE REST BY A PARTNER TO THE FIRM COMES WITHIN THE PURVIEW OF SEC. 40A(IA) OF THE IN COME TAX ACT, 1961. IN THIS CASE, THERE IS AN APPARENT FAILURE ON THE PART OF T HE APPELLANT TO COMPLY WITH THE PROVISIONS OF SEC. 194A. THE APPLICATION OF PR OVISIONS OF SEC. 40AIIA ARISES I.T.A. NO.02/COCH/2016 3 ONLY BECAUSE OF THE FAILURE ON THE PART OF THE APPE LLANT TO DEDUCT TAX FROM THE PAYMENT OF INTEREST TO THE FIRM. THE REASONS PUT FO RWARD BY THE ASSESSING OFFICER TOWARDS THE DISALLOWANCE U/S. 40A(IA) HAD B EEN ADJUDICATED AND UPHELD BY THE HONBLE HIGH COURT IN APPELLANT VS. T HE COMMISSIONER OF INCOME TAX, KOTTAYAM VIDE I.T.A. NO. 288 OF 2014 DATED 3 RD JULY, 2015. 8. IN THE LIGHT OF THE ABOVE FACTS AND FINDINGS TH E APPEAL IS DISPOSED OF IN FAVOUR OF THE REVENUE. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US . THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ISSUE IN QUESTION IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HONBLE KERALA HIGH COURT (CITED SUPRA). THE LD. DR WAS PRESENT AND DULY HEARD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE INTEREST PAID BY THE ASSESSEE TO THE FIRM IN WH ICH THE ASSESSEE IS A PARTNER WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S. 194A OF THE ACT. HAVING NOT DEDUCTED TAX AT SOURCE ON SUCH PAYMENTS, THE EXPEND ITURE IS TO BE DISALLOWED BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. THIS VIEW WAS UPHELD BY THE HONBLE HIGH COURT OF KERALA IN THE ASSESSEES OWN CASE (CITED SUPRA). IN VIEW OF THE PROVISIONS OF LAW AND THE JUDGMENT OF T HE HONBLE HIGH COURT OF KERALA (CITED SUPRA), WE DISMISS THE APPEAL OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. I.T.A. NO.02/COCH/2016 4 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON 28 -04-2016 SD/- SD/- ( GEORGE GEORGE.K) (B P JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 28TH APRIL, 2016 GJ COPY TO: 1 THOMAS JOHN MUTHOOT, MUTHOOT CENTRE, PUNNEN RPAD, TRIVANDRUM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOTTAYA M. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. DR/ITAT, COCHIN 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN I.T.A. NO.02/COCH/2016 5 . DATE OF DICTATION : 27/04/2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED 27/04/2016 BEFORE THE DICTATING MEMBER OTHER MEMBER: 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS: 28/04/2016 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER : 28/04/2016 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. PS/PS : 28/04/2016 6. DATE ON WHICH THE FILE GOES TO BENCH CLERK: 28/ 04/2016 7. DATE ON WHICH THE FILE GOES TO HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO ASSISTANT REGISTR AR 9. DATE OF DISPATCH OF THE ORDER: