Sec 194-I: Deduction of tax at source – Failure to deposit deducted tax on time – Rent – Exception in the case of Individuals and HUF – Trust cannot be included within “Individuals and HUF” – Aseesee liable to Penalty.

Facts: The assessee was a trust registered under section 12A and ran educational institution. It paid rent for building occupied by it. The AO found that the tax deducted at source by the assessee was belatedly paid to the Central Government account for the assessment years in question and issued notice under section 271C and imposed a penalty equal to the amount of tax payable. The assessee contended that being a registered trust it came within the exception under section 194-I and 44AB there was no liability to deduct tax at source. The first appellate authority confirmed the order of AO. The Tribunal deleted the penalty on the ground that the assessee had reasonable cause within the meaning of section 273B and reversed the order.

Held: Allowing the appeal, that the second proviso to section 194-I was not applicable to the assessee because a trust could not be included within the definition of “Individual or HUF”. Section 44AB was referred to only specify the monetary limit. There was no reason why the assessee had refrained from depositing the deducted tax at source on time and there had been delay in making payment as was borne out from the records and the reasons supplied for such delay were not acceptable. There was deliberate laxity on the part of the assessee. The assessee having failed to deposit tax deducted at source on time was liable to penalty under section 271C.

CIT (TDS) Vs Eurotech Maritime Academy Pvt Ltd [2019] 415 ITR 463 (Ker).