THE FERTILIZERS & CHEMICALS TRAVANCORE LTD V. THE DEPUTY COMMISSIONER OF INCOME TAX

WA/972/2015

AI Insights

The case involves The Fertilizers & Chemicals Travancore Ltd., which appealed against the judgment dismissing their writ petition challenging the order of the Chief Commissioner of Income Tax, Kochi. The appellant sought to set aside an order demanding interest under section 234C of the Income Tax Act, 1961, claiming that advance tax on book profit could not be paid in time as it could only be determined after closing the accounts of the previous years. The Single Judge's dismissal was based on the appellant's failure to meet the conditions for waiver of interest as per the 2006 notification. The Division Bench upheld this decision, agreeing that the appellant did not fall within the specified classes of cases in the notification.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 755528 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-07-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: M NAMBIAR; P GOPINATH; P THOMAS; K MATHAI; JOSON MANAVALAN; KURYAN THOMAS
• Keywords: Advance tax; Assessment Order; Book profit; Interest demand; Waiver of interest
• Section: 234C; 115J

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN & THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE MONDAY , THE 11TH DAY OF JULY 2016/20TH ASHADHA, 1938 WA.No. 972 of 2015 -------------------------------- AGAINST THE JUDGMENT IN W.P(C).NO. 2791/2007, DATED 16-01-2015 ------------------ APPELLANT(S)/PETITIONER IN THE W.P(C) : ------------------------------------------------------------------ THE FERTILIZERS & CHEMICALS TRAVANCORE LTD., UDYOGAMANDAL, COCHIN 683 501, REPRESENTED BY ITS DEPUTY CHIEF MANAGER(FINANCE), A.R.GEORGE SATISH. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS RESPONDENT(S)/RESPONDENTS IN W.P(C) : ------------------------------------------------------------------- 1. THE DEPUTY COMMISSIONER OF INCOME TAX (ASSMT.). SPECIAL RANGE 2, ERNAKULAM 682 015. 2. THE CHIEF COMMISSIONER OF INCOME TAX, KOCHI- 682 018. BY SRI.P.K.R.MENON (SENIOR ADVOCATE) ADV. SRI.JOSE JOSEPH, S.C THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 11-07-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Msd. P.N.RAVINDRAN & A.MUHAMED MUSTAQUE, JJ. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ W.A.No.972 of 2015 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Dated this the 11th day of July, 2016 J U D G M E N T P.N.Ravindran, J. The appellant is the petitioner in W.P.(C).No.2791 of 2007. The appellant had in the writ petition prayed for setting aside Ext.P4 order passed by the Chief Commissioner of Income Tax, Kochi. Such a relief was sought on the averment that while issuing the impugned order, the second respondent failed to take note of the fact that advance tax on a book profit under section 115J of the Income Tax Act, 1961 can never be paid in time as book profit can be determined only after the accounts of the previous years are closed. It was contended that such being the situation, demand of interest under section 234C of the Income Tax Act, 1961 was beyond the scope of the Income Tax Act. 2. The learned Single Judge after considering the rival contentions held that as the appellant does not satisfy the three conditions stipulated in the notification dated 26.6.2006 issued by the Central Board of Direct Taxes, the appellant cannot W.A.No.972 of 2015 -:2:- successfully challenge Ext.P4 order. The writ petition was accordingly dismissed. Hence, this writ appeal. 3. We heard Sri. Kuryan Thomas, learned counsel appearing for the appellant and Sri.Jose Joseph, learned Standing Counsel appearing for the respondents. We have also gone through the impugned orders as also the impugned judgment. It is not in dispute that the order of assessment for the assessment year 1990-91 has attained finality. The first respondent, the assessing authority had while completing the assessment levied interest under section 234C of the Income Tax Act, 1961 on the ground that there was shortfall in payment of advance tax. Though the appellant challenged the said assessment order before the appellate authority, levy of interest was upheld by the appellate authority. The said order was confirmed by the Income Tax Appellate Tribunal. It was thereafter that the appellant filed a petition before the second respondent seeking waiver of the interest levied under section 234C of the Income Tax Act, 1961. The second respondent rejected the said application on the ground that the requisite conditions for grant of waiver stipulated W.A.No.972 of 2015 -:3:- in the notification dated 26.6.2006 issued by the Central Board of Direct Taxes are not satisfied in the case in hand. The learned single Judge after considering the rival contentions held that the appellant does not fall within the two classes of cases referred to in the circular dated 26.6.2006. The appellant has no case that it will fall within the clauses (b) and (c) of the aforesaid circular which alone are relevant in the case on hand. Its contention is that levy of interest under section 234C of the Income Tax Act, 1961 is beyond the scope of the Act in the sense that it was not practically possible to determine the book profit in the course of the financial year. That is an issue which did not find favour with the appellate authority or the Income Tax Appellate Tribunal which upheld the order levying interest under section 234C of the Income Tax Act, 1961. Though it was contended before us that the appellant’s case will fall within clause (b) of the notification dated 26.6.2006, we find no merit in the said contention as well. Even assuming for the sake of arguments that income other than under the head capital gains was received or it had accrued after the due date of payment of the first or subsequent instalment of W.A.No.972 of 2015 -:4:- advance tax, and it was neither anticipated nor contemplated in the assessment, as the advance tax on such income was not paid in the remaining instalment or instalments, the appellant cannot claim the benefit of clause (b). For invoking clause (b) of the said notification the appellant has to satisfy two conditions. Satisfying one of the conditions alone will not enable the appellant to claim the benefit of the said notification. The learned single Judge was therefore perfectly right in repelling the challenge to Ext.P4. For the reasons stated above, we hold that there is no merit in the instant appeal. It fails and is accordingly dismissed. No costs. Sd/- P.N.RAVINDRAN, JUDGE Sd/- A.MUHAMED MUSTAQUE, JUDGE ms "