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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-58, Mumbai, passed u/s. 143(1) and 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal;
“1. The Ld. CIT(A) ought to have appreciated that levy of interest u/s 234B and 234C is not permitted to be adjusted as per the Sec. 143(1) of the Act. 2. The Ld. CIT(A) erred in holding that the appellant is liable for payment of advance tax and the provisions of Sec. 207 and 208 are applicable to the appellant.
Neeta Rohit Patel, Mumbai - 2 -
The Ld. CIT(A) ought to have appreciated that the age of the appellant being more than sixty years and have not earned any income chargeable to tax under the head profit and gains of business or profession, advance tax provisions of Sec. 207 and 208 are not applicable.
The Ld. CIT(A) erred n confirming the levy of interest u/s 234B and 234C on the amount of advance tax liability.
The brief facts of the case are that, the assessee is a senior citizen above 60 years of age and is a partner in the partnership firm. The share of profit from the partnership firm is claimed as exempt u/s 10(2A) of the Act. Further the assessee has not earned any income chargeable under the head income and gains from business or profession. The assessee has filed the return of income electronically on 2.08.2016 for the A.Y 2016-17 with total income of Rs.7,60,29,050/-,which includes income from capital gains and income from other sources. The return of income was processed u/s 143(1) of the Act on 23.11.2016 by the CPC Bangalore. In the processing of the return of income, the assessee was levied interest u/sec 234B of the Act Rs.1,48,504/- and U/sec234C of the Act Rs.1,61,008/- for nonpayment/short payment of advance tax liability.
2. Aggrieved by the intimation u/s 143(1) of the Act, the assessee has filed a rectification petition u/s 154 of the Act and the same was not rectified by order dated Neeta Rohit Patel, Mumbai - 3 - 14.03.2017. Due to opting of the alternate remedy of filing rectification petition u/sec154 of the Act, there was a delay of 60 days in filing the appeal against intimation U/sec143(1) of the Act with the CIT(A) on 23.03.2017. In the appellate proceedings, the CIT(A) has condoned the delay considering the fact that the assessee is a senior citizen and the reasons submitted are acceptable and the appeal was admitted.
2.1.The CIT(A) on perusal of the grounds of appeal found that the assessee is challenging the levy of interest u/s 234B and 234C of the Act. The contentions of the Ld.AR that the assessee is a senior citizen being more than 60 years of age and has not earned any income chargeable under the head profit and gains of business or profession and the provisions of advance tax liability u/s 207 of the Act is not applicable. The CIT(A) having accepted the fact of senior citizen based on the PAN Card, where the date of birth of the assessee is 02.04.1944. The CIT(A) find that the assessee has disclosed Rs Nil income under the head profit and gains of business or profession. The CIT(A) is of the opinion that as per section 208 of the Act, the assessee is liable to pay advance tax where the tax payable liability exceeds Rs. 10,000/.The final observations of the CIT(A) are that, both the provisions of sec.207 and 208 of the Act should be fulfilled and the Neeta Rohit Patel, Mumbai - 4 - assessee has not complied the requirements under u/s 208 of the Act and dismissed the assessee appeal. Aggrieved with the CIT(A) order, the assessee has filed an appeal with the Honble Tribunal.
3. At the time of hearing none appeared on behalf of the assessee. The Ld.DR made submissions on the applicability of provisions of Sec. 207 and 208 of the Act and supported the orders of the authorities below and prayed for dismissal of assessee appeal.
4. We heard the Ld.DR and perused the material on record. The sole disputed issue envisaged by the Ld.DR that the CIT(A) has rightly confirmed the action of the A.O on levy of interest u/s 234B and 234C of the Act. The contentions of the Ld. DR that the provisions of Sec. 207 and 208 of the Act cannot applied independently. We perused the provisions of Sec. 207 of the Act, which is read as under; “207. (1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as "current income". (2) The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head "Profits and gains of business or profession"; and Neeta Rohit Patel, Mumbai - 5 -
(b) is of the age of sixty years or more at any time during the previous year”. 4.1. We find the provisions of Sec. 207(2)(a)&(b) are applicable to the assessee. We understand that the liability to pay the advance tax does not apply to an individual who is resident in India and such individual does not have any income chargeable to tax under the head profit and gains of business or profession and further the age of the individual is more than 60 years during the previous year.
4.2 The provisions of section 208 of the Act lays the conditions of liability to pay the advance tax ,which is read as under:
Advance tax shall be payable during an financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter is ten thousand rupees or more..
We on applying the second proviso to Sec. 207(2) of the Act find that the assessee is a senior citizen, more than 60 years of age as confirmed by the CIT(A) on referring to the date of birth of the assessee in the pan card at Page 3 Para 7 of the order as 02.04.1944. In the F.Y 2015-16 relevant to A.Y 2016-17 the assessee is 71 years old.
The assessee has filed the return of income ITR Form no.3 for the A.Y 2016-17 applicable to individuals and Neeta Rohit Patel, Mumbai - 6 - HUF being partners in firm and not carrying on business or profession under any proprietorship. We find that the assessee has filed the return of income on 02.08.2016 disclosing the income under income from business or profession as Rs.Nil. As per the provisions of Sec. 10(2A) of the Act, the share of profit of the partnership firm is exempted in the hands of the partner. We shall refer to the provisions of Sec. 10(2A) of the Act which is read as under:
Incomes not included in total income. “10(2A) of the Income Tax Act, 1961 – in the case of a person being a partner of a firm which is separately assessed as such , his share in the total income of the firm. Explanation – For the purpose of this clause, the share of a partner in the total income of a firm separately assessed as such shall not withstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profit”
We find in this relevant F.Y 2015-16, the assessee has claimed exemption of share of profit from partnership firm u/s 10(2A) of the Act, therefore no income is chargeable to tax under the head profit and gains of business or profession. Further, on perusal of intimation u/s 143(1) of the Act page 1 of Income tax computation Col –4 “As provided by the tax payer in the return of Neeta Rohit Patel, Mumbai - 7 - income” and Col-5 ‘As computed under section 143(1)’’ Income from Business or Profession is indicated Rs.‘0’ in both the columns of intimation u/s 143(1) of the Act.
The provisions of Sec. 207(2) of the Act shall not apply to the individual as per first limb, being who do not have income chargeable under the head profits and gains of business or profession and applying the same analogy to the facts of present case, the assessee has claimed exemption of share of profit from partnership firm as a partner u/s 10(2A) of the Act and hence there is no other income chargeable under the head profit and gains of business or profession and was disclosed as ‘zero’. On applicability of second Limb of sec 207(2)(b) of the Act, the assessee is a senior citizen over 60 years of age during the previous year which is not disputed.
Whereas, the provisions of Sec. 208 of the Act interpreted by the CIT(A) that it is a general provision applicable for all the individual where the tax liability exceeds more than Rs. 10,000/- is not acceptable. We find both the provisions u/Sec 207 & Sec 208 are not inclusive and are independently applicable. The assessee case falls within the purview of provisions of section 207(2) of the Act which cannot be disputed. Considering the facts and the information on record, we do not find Neeta Rohit Patel, Mumbai - 8 - merits in the submissions of the Ld. DR and accordingly set aside the CIT(A) order and direct the assessing officer to delete the interest levied u/s 234B and 234C of the act and allow the grounds of appeal in favour of the assessee.
In the result, the appeal filed by the assessee is allowed.