Haryana Warehousing Corporation v. Chief Commissioner Of Income Tax, Haryana Region& Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH C.W.P. No.3652 of 2006 (O&M)Date of decision:18.01.2010 Haryana Warehousing Corporation ............Petitioner Versus Chief Commissioner of Income Tax, Haryana Region& another..........Respondents CORAM:HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE ALOK SINGH -.- Present:Mr. Rajesh Garg, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondent. ADARSH KUMAR GOEL, J.(ORAL) 1.This petition seeks quashing of order dated 2.3.2006(Annexure P-9) whereby claim of the petitioner for waiver of interestin terms of circular dated 23.05.1996 (Annexure P-6) has beenrejected. 2.Case of the petitioner is that it was exempted fromliability to pay tax under Section 10(29) of the Income Tax Act, 1961by the assessing officer in the assessment year 1991-92 in view of thejudgment of this Court in (1978) 112 ITR 374. The said view wasreversed by the Hon'ble Supreme Court in the judgment reported in Orissa Warehousing Corporation, 237 ITR 589. This led toassessment of the income of the assessee and also levy of interest onthe tax due. The petitioner sought waiver thereof relying uponcircular dated 23.05.1996. The relevant part of the said circular beingclause (d) reads as under:- "Where any income which was notchargeable to income-tax on the basis of any orderpassed in the case of an assessee by the High Courtwithin whose jurisdiction he is assessable toincome-tax, and as a result, he did not pay income-tax in relation to such income in any previous yearand subsequently, in consequence of anyretrospective amendment of law or as the case maybe, the decision of Supreme Court in his own case,which even has taken place after the end of anysuch previous year, in any assessment or re-assessment proceedings the advance tax paid bythe assessee during the financial year immediatelypreceding the relevant assessment year is found tobe less than the amount of advance tax payable onhis current income, the assessee is chargeable tointerest under section 234B or section 234C andthe Chief Commissioner or Director General issatisfied that this is a fit case for reduction orwaiver of such interest." 3.The Chief Commissioner rejected the claim with thefollowing reasons:- "Firstly, it must be placed on record that thequestion of what sources of income received by awarehousing corporation are exempt u/s 10(29) hasbeen spelt out clearly in MP WarehousingCorporation Vs. CIT (M.P. High Court 133 ITR 158). The decision was rendered on 28[th] Jan, 1981which is a date anterior to the previous yearsrelevant to the asstt. years 1995-96 and 1996-97.The head notes are reproduced hereunder: Exemption – State warehousing corporation– income from letting of godowns or warehousesfor storage, processing or facilitating marketing ofcommodities alone is exempt – if letting ofgodowns or warehouses is for any other purpose orif income is derived from any other source, suchincome is not exempt – commission charges forloading and unloading of agricultural commoditiesand interest on fixed deposits with banks are notexempt – Income Tax Act, 1961, 10(20A), (21),(22), (29). Thus there is an authoritative pronouncementof a High Court as early as in 1981 to say thatincomes not derived from letting out warehousesand godowns are not exempt under the provisionsof Section 10(29) and are therefore taxable. TheAssessee cannot therefore say that it was under thebonafide belief that its income was wholly taxexempt for asstt. years 1994-95. Thus there is an authoritative pronouncementof a High Court as early as in 1981 to say thatincomes not derived from letting out warehousesand godowns are not exempt under the provisionsof Section 10(29) and are therefore taxable. TheAssessee cannot therefore say that it was under thebonafide belief that its income was wholly taxexempt for asstt. years 1994-95. Secondly, the decision of the Hon'bleAllahabad High Court reported in 195 ITR 273 onwhich the assessee relies for claiming exemptionu/s 10(29) relates to an entirely different issuenamely whether the UP State WarehousingCorporation was an authority constituted for themarketing of commodities, and whether certainmiscellaneous incomes were liable to tax, which isnot an issue in the assessee's own case. In myconsidered opinion the assessee has derived anunintended advantage by claiming exemption u/s 10(29) and being given that benefit, upto asstt. year1991-92 by relying on a case law that is on atotally different issue, and ignoring the judgmentdelivered on 28.1.1981 reported in 133 ITR 158which is relevant and conclusive. Thirdly, the provisions of clause (d) of para 2of Board's circular dated 23.05.1996 refer to caseswhere income was not chargeable to tax "on thebasis of any order passed in the case of an assesseeby the High Court within whose jurisdiction he isassessable.........". The decision of the Hon'bleP & H High Court dated 22.12.1976 and reportedin 112 ITR 374 in the assessee's own case onlyrefers to the status of the Assessee as an authoritywithin the meaning of section 10(29) and does notdwell on the question of whether its income fromsources other than letting of godowns orwarehouses for storage, processing or facilitatingthe marketing of commodities is taxable. Thisdecision does not help the assessee in the matter athand and therefore, the provisions in para-2 ofBoard's Circular dated 23.05.1996 will not apply. It is therefore clear that based on the M.P.High Court's decision given on 28.01.1981reported in 133 ITR 158, the assessee had aliability to pay advance tax during the accountingyear relevant to Asstt. Year 1994-95 (and indeed,even prior to that) on all incomes other thanincome from letting of godowns or warehouses forstorage, processing or facilitating marketing ofcommodities which were exempt. This was theundisputed legal position. Interest u/s 234B isclearly chargeable for Asstt. Year 1994-95 anddoes not admit of waiver as the circumstances do not come within the ambit of any of the clausesmentioned in Board's Circular No.400/234/95-IT(B) dated 23.09.1996." 4.We have heard learned counsel for the parties. 5.Learned counsel for the petitioner submits that reasonsgiven for rejecting the claim of the assessee under clause (d) of thecircular are patently erroneous. It is submitted that once income wastreated as not chargeable to tax by the department itself in view of thejudgment of this Court to that effect, different view on liability takenby a different High Court did not exclude the case of the assesseefrom clause (d), above. not come within the ambit of any of the clausesmentioned in Board's Circular No.400/234/95-IT(B) dated 23.09.1996." 4.We have heard learned counsel for the parties. 5.Learned counsel for the petitioner submits that reasonsgiven for rejecting the claim of the assessee under clause (d) of thecircular are patently erroneous. It is submitted that once income wastreated as not chargeable to tax by the department itself in view of thejudgment of this Court to that effect, different view on liability takenby a different High Court did not exclude the case of the assesseefrom clause (d), above. 6.Learned counsel for the respondents could not disputethat the department did not proceed to levy tax against the assessee,till judgment of the Hon'ble Supreme Court in Orissa WarehousingCorporation (supra) and thus held the view that income of the assesseewas not chargeable to tax, in view of the judgment of this Court in 112ITR (supra). This being the position, mere fact that the assessee maybe liable to pay tax as per view of another High Court did not excludeapplicability as clause (d) of the circular. Further contention raised onbehalf of the respondents that in view of circular dated 30.01.1997(Annexure P-7), clause (d) of the earlier circular was not applicablecannot be accepted. Neither this reason has been given in theimpugned order nor this reason is sound. Circular dated 30.01.1997has been filed by the petitioner to support its contention that the laterjudgment of the Hon'ble Supreme Court whereby assessee is held tobe liable to pay tax need not to be in the case of the assessee. 7.We are thus of the opinion, the reasons given in theimpugned order, Annexure P-9, dated 2.3.2006 cannot be sustained.Accordingly, the impugned order is quashed and the matter is remittedback to Chief Commissioner of Income-tax for passing fresh order inaccordance with law. 8.The petition is disposed of. (ADARSH KUMAR GOEL) JUDGE (ALOK SINGH)JUDGE