Law:

Section:

[2008] 303 ITR 122 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Viswapriya Financial Services & Securities Ltd. P.D. DINAKARAN AND P. P. S. JANARTHANA RAJA, JJ. TAX CASE (APPEAL) NOS. 821 AND 822 OF 2007 JUNE 22, 2007 Section 271C of the Income-tax Act, 1961 - Penalty - For failure to deduct tax at source Where assessee did not deduct tax at source from payments made to investors under an investment scheme on basis of advice of a senior counsel, there was reasonable cause for not deducting tax at source and thus penalty was not leviable on assessee [A.Y. 1994-95 & 1995-96] The assessee was engaged in retail financial services, corporate advisory services and securities trading. An advertisement was given in the newspaper in the name of the assessee-company stating that return on the investments made with the company would not attract the tax deducted at source. Later, the Income-tax Officer investigated the matter and rejected the contention of the assessee that it was only acting as an agent of investors and was merely a trustee for the investors. The Income-tax Officer proceeded to treat the assessee as a defaulter as per the provisions of section 194A. The High Court also held that the assessee was required to comply with section 194A. Thereafter, the Assessing Officer imposed penalty on the assessee under section 271C which was deleted by the Commissioner (Appeals). The Tribunal upheld the order of the Commissioner (Appeals). Held that the mere fact that the bona fide claim stands disallowed did not by itself lead to the inference that the company consciously and deliberately flouted the provisions of the Act. Also, an opinion was also obtained from the senior counsel before devising the scheme to the effect that no tax needed be deducted at source on the payments made to the investors who had invested the money in the fund organized by the assessee. Hence, there was bona fide action by the assessee and its bona fides had also been accepted by the lower authorities. Further, the assessee thought that there was no relationship of debtor and creditor or borrower and lender and therefore, sections 194A, 201(1), 201(1A) read with section…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492