2021 (8) TMI 5 - AT - Income Tax

Levy of interest u/s 234B and 234C - Liability of advance tax - income from partnership firm in the hands of partner - contentions of the Ld. DR that the provisions of Sec. 207 and 208 of the Act cannot applied independently - HELD THAT - 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. 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. 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 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. 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 ₹ 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 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.

Summary

Issues:
1. Applicability of interest under sections 234B and 234C of the Income Tax Act, 1961.
2. Interpretation of provisions of sections 207 and 208 regarding advance tax liability for a senior citizen partner in a partnership firm.
3. Consideration of exemption under section 10(2A) for share of profit from a partnership firm.
4. Admissibility of appeal against the order of the Commissioner of Income Tax (Appeals).

Issue 1: Applicability of interest under sections 234B and 234C:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the levy of interest under sections 234B and 234C of the Income Tax Act, 1961. The appellant contended that the interest could not be adjusted as per section 143(1) of the Act. The CIT(A) upheld the levy of interest, leading to the appeal before the Tribunal. The Tribunal analyzed the provisions of sections 234B and 234C and concluded that the appellant, being a senior citizen above 60 years of age and not earning income chargeable under the head of profit and gains of business or profession, was not liable for the payment of advance tax as per sections 207 and 208. Consequently, the Tribunal set aside the CIT(A) order and directed the assessing officer to delete the interest levied under sections 234B and 234C.

Issue 2: Interpretation of sections 207 and 208 for advance tax liability:
The Tribunal examined the provisions of sections 207 and 208 concerning the advance tax liability of an individual. Section 207(2)(a) exempts individuals above 60 years of age who do not have income chargeable under the head of profit and gains of business or profession. Section 208 specifies the conditions for the liability to pay advance tax. In this case, the appellant, a senior citizen partner in a partnership firm, claimed exemption under section 10(2A) for the share of profit, resulting in no income chargeable under the head of business or profession. The Tribunal determined that the appellant met the criteria under sections 207 and 208, thereby not requiring the payment of advance tax.

Issue 3: Consideration of exemption under section 10(2A):
The appellant, a senior citizen partner in a partnership firm, claimed exemption under section 10(2A) for the share of profit from the firm. The Tribunal noted that for the relevant financial year, the appellant did not have any income chargeable to tax under the head of profit and gains of business or profession. This exemption played a crucial role in determining the appellant's advance tax liability under sections 207 and 208.

Issue 4: Admissibility of appeal against CIT(A) order:
The Tribunal addressed the delay in filing the appeal against the intimation under section 143(1) due to the appellant opting for a rectification petition under section 154. The CIT(A) had condoned the delay considering the appellant's senior citizen status and admitted the appeal. Despite the absence of the appellant during the hearing, the Tribunal analyzed the submissions made by the Departmental Representative and ultimately allowed the appeal in favor of the appellant, setting aside the CIT(A) order.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal concerning the appellant's tax liability, exemption claims, and the interpretation of relevant provisions of the Income Tax Act, 1961.