TRAVANCORE SUGARS AND CHEMICALS LTD. V. THE ADDL.COMMISSIONER OF INCOME TAX

WP(C)/34672/2007

AI Insights

The case involves Travancore Sugars and Chemicals Ltd., a government undertaking, which challenged an order by the Chief Commissioner of Income Tax rejecting their claim for a waiver or reduction of interest under Section 234B of the Income Tax Act, 1961. The petitioner argued that their inability to remit tax on time was due to funds being held in a 'No Lien' account as per directions from the Board for Industrial and Financial Reconstruction (BIFR). The court examined whether the petitioner's situation qualified under the categories specified in the Central Board of Direct Taxes notification for a possible waiver or reduction of interest.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 755282 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 13-03-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH; GEORGE GEORGE
• Assessee Lawyers: E K NANDAKUMAR; ANIL NAIR
• Keywords: BIFR; Capital Gains; Income Tax; Waiver of interest
• Section: 234B; 220(2)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE TUESDAY, THE 13TH DAY OF MARCH 2018 / 22ND PHALGUNA, 1939 WP(C).No. 34672 of 2007 PETITIONER: TRAVANCORE SUGARS AND CHEMICALS LTD., VALANJAVATTOM, THIRUVALLA-689 104, REPRESENTED BY ITS MANAGING DIRECTOR, MR.GEORGE ALEXANDER. BY ADVS.SRI.E.K.NANDAKUMAR SRI.ANIL D.NAIR RESPONDENT(S): 1. THE ADDITIONAL COMMISSIONER OF INCOME TAX, TIRUVALLA RANGE, TIRUVALLA-689 101. 2. THE CHIEF COMMISSIONER OF INCOME TAX, KERALA, AYAKHAR BHAVAN, KAWDIAR,, THIRUVANANTHAPURAM-695 003. BY SRI.P.K.R.MENON,SR.COUNSEL, SRI.JOSE JOSEPH, SC, SRI.GEORGE K. GEORGE, SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts 28/3/2018 WP(C).No. 34672 of 2007 APPENDIX PETITIONER'S EXHIBITS: EXT.P1 COPY OF THE ORDER DATED 28/12/2005 PASSED BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.P2 COPY OF THE WAIVER PETITION DATED 14/6/2006 FILED BY THE PETITIONER ALONG WITH ANNEXURES BEFORE THE 2ND RESPONDENT EXT.P3 COPY OF THE ORDER DATED 23/10/2006 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXT.P4 COPY OF THE NOTIFICATION DATED 26/6/2006 ISSUED BY THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE. EXT.P5 COPY OF THE INVOICE NO.49 DATED 31/7/2001 EXT.P6 COPY OF THE INVOICE NO.50 DATED 31/7/2001 EXT.P7 COPY OF THE ORDER DATED 23/11/2005 ALONG WITH THE MODIFIED SANCTIONED SCHEME APPROVED BY BIFR IN FAVOUR OF THE PETITIONER. RESPONDENT'S EXHIBITS: EXT.R1(A) COPY OF THE ORDER OF BIFR DATED 22/01/2001 /TRUE COPY/ P.S.TO JUDGE sts 28/3/2018 A.MUHAMED MUSTAQUE, J. ========================= W.P.(C).No.34672/2007 ~~~~~~~~~~~~~~~~~~~~~~~~~ Dated this the 13th day of March, 2018 J U D G M E N T The petitioner is a Government of Kerala undertaking. It impugn an order passed by the Chief Commissioner of Income Tax rejecting claim for waiver or reduction of interest charged under Section 234B of the Income Tax Act, 1961. Exhibit P3 is the said order. As seen from Exhibit P4 notification issued by the Central Board of Direct Taxes, certain classes of income can be considered for reduction of waiver under Section 234A or Section 234B. Among the above categories of classes of income, the petitioner invoked category (d) which states as follows: “(d) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the assessing officer.” 2. The brief facts of the case is as follows: The petitioner undertook sale of capital assets WPC 34672/2007 -:2:- during the year 2001-02. The said transaction attracted Capital Gains. The sale proceeds were deposited in a 'No Lien' account with the State Bank of India as per the direction of the Board for Industrial and Financial Reconstruction (“BIFR” for short). It is appropriate to refer the relevant portion of the direction issued by the BIFR in this regard, as evident from Exhibit-P2, which reads as follows: “12. The Board has given the further following directions:- i) SBI (OA) should keep the sale proceeds in an interest bearing 'No Lean Account' (including any amount either received in the shape of earnest money/security/advance or otherwise in this regard). In case, such amount received was kept by the promoter/company or by any other authority, the same should be deposited within a week with interest at the rate the KSBC or the State Govt. charges for their dues. OA should also send a report within 15 days to seek approval of the Bench.” The petitioner could not remit tax within time as the amount received from sale proceeds were lying with the State Bank of India. The above direction in Exhibit P2 was lifted and funds were released by WPC 34672/2007 -:3:- BIFR on 23/11/2005. The petitioner immediately remitted tax on 1/12/2005. Interest under Section 220(2) of the Income Tax Act was waived by the Chief Commissioner of Income Tax. However, the petitioner's claim for waiver of interest under Section 234B was rejected. This is how the petitioner approached this Court. 3. As seen from Exhibit-P3 impugned order, the claim of the petitioner for reduction of interest was not considered on merits for the simple reason that according to Chief Commissioner of Income Tax, the petitioner's case is not referable to any of the categories referred in Exhibit P4 notification, dated 26/6/2006, issued by the Central Board of Direct Taxes. Having adverted to the notification, this Court is of the view that the petitioner could not remit tax within time on account of Exhibit-P2 order passed by the BIFR. It is to be noted that the petitioner remitted tax immediately after the direction was lifted. Category (d) referred in Exhibit P4 notification clearly refers to the case that “where an assessee WPC 34672/2007 -:4:- fails to file a return of income due to unavoidable circumstances”. If that be so, this Court is of the view that the petitioner's case falls squarely within category (d). It is for the Chief Commissioner of Income Tax to decide whether full waiver in interest or reduction in interest can be granted to the petitioner. However, certainly, the petitioner's case would fall within category (d). Therefore, the impugned order is set aside for paving way for reconsideration of the matter by the Chief Commissioner of Income Tax. The petitioner shall place the order of BIFR (Exhibit-P2) before the Chief Commissioner of Income Tax. Appropriate orders shall be passed in this matter within a period of three months. The writ petition is disposed of as above. Sd/- A.MUHAMED MUSTAQUE, JUDGE ms "