9911796707
TMI Blog1979 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ole contention raised by the learned counsel for the petitioner before us is that the aforesaid provision in so far as it requires a registered firm to pay interest on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm, is discriminatory and offends art. 14 of the Constitution. Learned counsel, in support of this submission, relies upon the case of M. Nagappa v. ITO [1975] 99 ITR 32 (Kar). This case no doubt supports the contention of the learned counsel for the petitioner, but with respect we are unable to accept the view taken in it. Section 139, in so far as is relevant, reads as follows : "139. Return of income.--(1) Every person, if his total income or the total income of any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arging any interest; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest; and (iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at six per cent. per annum shall be payable from the 1st day of October, or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return-- (a) in the case of a registered firm or an unregistered firm which has been assessed under clause (b) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of interest in the case of a registered firm on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm, and in the case of other assessees on the amount of tax payable by them. Under the I.T. Act, if the firm is unregistered, the tax payable by the firm itself is determined as in the case of any of her distinct entity and the levy is made on the firm itself. But where the firm is registered, each partner's share in the firm's income is added in the partner's income and the tax is payable by each partner on the basis of his total income (including his share in the firm's income) and the levy is made on the partners individually. After, the year 1956, a registered firm also pays tax on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in aggregate 50% of the tax payable by the assessee; whereas in the case of a registered firm the maximum penalty is not made to depend upon the tax assessed on or payable by such firm. On the contrary, the registered firm will have to pay the same penalty as an unregistered firm which may far exceed the maximum limit of 50% prescribed by the above provision. This, according to the appellants, constitutes discrimination under article 14 of the Constitution. Now a firm when registered is treated as a separate entity liable to tax. After 1956, it has to pay tax at a special reduced rate . If a firm got itself registered the partners were entitled to certain benefits and advantages. It was, however, open to the Legislature to say that once a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. The case of M. Nagappa v. ITO [1975] 99 ITR 32 (Kar) which proceeds upon the distinction that the interest payable under sub-cl. (a) of cl. (iii) of the proviso to s. 139(1) is compensatory in nature and, therefore, Jain Brothers' case [1970] 77 ITR 107 (SC) is not applicable, does not appeal to us. The validity of the impugned provision was upheld by the Gauhati High Court in Ganesh Das Sreeram v. ITO [1974] 93 ITR 19, the Madras High Court in Mahendrakumar Iswarlal Co. v. Union of India [1974] 94 ITR 65 and the Gujarat High Court in Chhotalal Co. v. ITO [1976] 105 ITR 230. These cases, except the Gujarat case, were noticed and distinguished by the Karnataka High Court in M. Nagappas' case [1975] 99 ITR 32 (Kar) on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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