M/S.RAJESWARI HOSPITAL V. THE CHIEF COMMISSIONER OF INCOME TAX

WP(C)/1465/2006

AI Insights

M/s. Rajeswari Hospital, represented by Dr. V.P. Devadas, filed a writ petition challenging the rejection of their application for waiver of interest on delayed tax payment for the assessment year 1996-97. The Income Tax Officer had rejected the waiver application, citing non-fulfillment of the conditions specified in the Central Board of Direct Taxes' notification. The hospital argued that their case fell under specific clauses of the notification, which the Income Tax Officer disagreed with, leading to the legal challenge. The High Court of Kerala, after reviewing the arguments and evidence, sided with the Income Tax Officer, affirming the rejection of the waiver application.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 755988 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 28-09-2011
• Assessment Year: misc
• Other Referred Cases: Micheal Joseph & Co. Vs. CIT, 269 ITR 167
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Assessment Year 1996-97; Income Tax; Unavoidable circumstances; Waiver of interest; Building tax deduction
• Section: 234B; 234A; 234C

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 28TH SEPTEMBER 2011 / 6TH ASWINA 1933 WP(C).No. 1465 of 2006(Y) ------------------------- PETITIONER(S): --------------- M/S.RAJESWARI HOSPITAL, TALAP, KANNUR REPRESENTED BY DR.V.P.DEVADAS, PARTNER. BY ADV. SRI.T.M.SREEDHARAN RESPONDENT(S): --------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, COCHIN-682 018. 2. THE INCOME TAX OFFICER, WARD-2(2), KANNUR. ADV. SRI.JOSE JOSEPH, THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28/09/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C).No. 1465/2006 APPENDIX PETITIONER(S)' EXHIBITS P1. COPY OF THE ORDER DTD.25.1.2000 PASSED BY THE INCOME TAX OFFICER, SPECIAL WARD, CANNANORE. P2. COPY OF THE APPLICATION FOR WAIVER OF INTEREST DTD.4.12.2002. P3. COPY OF THE ORDER DTD.23.6.2005. sdk+ ///True copy/// P.A. to Judge S.SIRI JAGAN, J. ================== W.P.(C).No. 1465 of 2006 ================== Dated this the 28th day of September, 2011 J U D G M E N T In respect of assessment year 1996-97 the petitioner filed a return under the Income Tax Act. Assessment was completed and the petitioner was directed to pay assessed tax with interest, under Sections 234A, 234B and 234C of the Income Tax Act by Ext.P1 order, amounting to ` 34,467/-. The petitioner submitted an application for waiver of interest in accordance with the Government orders on the subject. The same was rejected by Ext.P3 order. The petitioner challenges the same on the ground that the petitioner has satisfied the conditions for wavier of interest and, therefore, the rejection of the claim for waiver of interest is unsustainable. 2. The learned standing counsel for the Income Tax Department supports Ext.P3 order on the same reasons mentioned in Ext.P3. 3. I have considered the rival contentions in detail. 4. The reasons stated in Ext.P3 for rejecting the claim of the petitioner are contained in paragraphs 9 and 10 of Ext.P3, which read thus: “9. The assessee's contention in the waiver petition is that its case is covered by clauses (d) and (e) of para 2 of the Board's notification dated 23.5.1996. For invoking clause (d) the assessee states that the building tax claimed by the assessee as a deduction w.p.c.1465/06 2 was allowable u/s 30 and it was only because of the subsequent decision of the High Court reported in 225 ITR 786 that it was disallowed. The contention of the assessee is not correct. Clause (d) of para 2 refers to a situation where an income is treated as non-taxable because of a decision of the jurisdictional High Court and hence is not taken into account for the purpose of payment of advance tax. Subsequently as a result of a retrospective amendment of law or a decision of the Supreme Court such income become taxable with the result the advance tax paid falls short of the advance tax payable. In the assessee's case there is no question of any income being treated as non taxable on the basis of any jurisdictional High Court's decision while estimating the advance tax liability. Further the decision of the Kerala High Court in the case of Micheal Joseph & Co. Vs. CIT 225 ITR 786 was reported as early as on 4.7.1996 holding that building tax is not deductible either u/s 30 or section 37. When the assessee filed the return in September 1997 the legal position was that building tax was not allowable as a deduction but the assessee still claimed it in the return as a deduction. For these reasons clause (d) of para 2 of the Board's notification does not apply. 10. The second contention of the assessee is that the delay in filing the return was due to unavoidable circumstances and the return was filed voluntarily and hence clause (e) of para 2 will apply. It is submitted that the return for the assessment year 1996-97 was the first return of the assessee and there were several problems faced by the assessee at the commencement of the business like several objections raised by the local authorities, illness of one of the partners and engagement of outside persons to look after the accounting work and all these factors combined together caused the delay in filing the return. The assessee also refers to the decision of the Gujarat High Court reported in 269 ITR 167 to the effect that interest levied u/s 234B and 234C can also be waived in a case covered by clause (e) of para 2 of the Board's notification. The assessee has made certain general statements like objections raised by the local authorities, illness of one of the partners, engagement of outside persons to look after the accounting matters etc. to argue that the delay in filing the return was due to unavoidable circumstance. However, he has not produced any evidence to substantiate these contentions. Moreover, I find from the records that the audit report u/s 44AB for the relevant period was prepared and signed on 30.10.1996 itself. In other words the accounts of the assessee were finalised much before the due date for filing the return for the assessment year 1996-97. Hence the assessee cannot say that the delay in filing the return was due to unavoidable circumstances. Under these circumstances the assessee's argument that its case is covered by clause (e) of para 2 of the Board's notification dated 23.5.1996 is totally incorrect.” The petitioner does not dispute the facts that the decision of the Kerala High Court is dated 4.7.1996 and the petitioner submitted return in w.p.c.1465/06 3 September 1997. That being so, I do not think that the petitioner satisfied clause (d) of the relevant notification issued by the Central Board of Direct Taxes. In respect of clause (c) of the notification also, I do not find any infirmity in the reasons in Ext.P3 order. Therefore, I do not find any grounds for the petitioner to challenge Ext.P3 order. Accordingly, the writ petition is dismissed. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge "