Wa/2462/2009 Of Chief Commissioner Of Income Tax v. K.g. Kumar

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 17TH DECEMBER 2009 / 26TH AGRAHAYANA 1931 WA.No. 2462 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.13139/2006 Dated 10/07/2009 .................... APPELLANT(S): RESPONDENTS ------------------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, KOCHI. 2. THE INCOME TAX OFFICER, WARD-1, THODUPUZHA. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): PETITIONER ------------------------- DR.K.G.KUMAR, RESIDING AT 880, SOUTH LAKE SHORE DRIVE, VALDOSTHA GEORGIA,U.S.A., REPRESENTED BY POWER OF ATTORNEY AND AGENT, V.K.NAIR, MUNDAMATTOM HOUSE, THODUPUZHA, IDUKKI DISTRICT. BY ADV. SRI. S. VIJAYAN NAIR. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 17/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR &V.K. MOHANAN, JJ. -------------------------------------------- -------------------------------------------- Dated this the 17th day of December, 2009 JUDGMENT Ramachandran Nair, J. Appeal is filed against the judgment of the learned single Judgeholding that respondent-assessee who was granted waiver of interestunder Section 234A of the I.T. Act by the Chief Commissioner ofIncome-tax is entitled to waiver of interest payable under Section 234Band 234C as well on the same ground that is clause (e) in NotificationNo. 400/234/95/IT dated 23.5.1996. We have heard standing counselappearing for the department and Sri. S. Vijayan Nair, counselappearing for the respondent-assessee. After hearing both sides, we areunable to uphold the finding of the learned single Judge with regard toentitlement of the respondent-assessee for waiver of interest payableunder Section 234B and 234C of the Act, merely because assessee hasvoluntarily filed returns and paid tax. In our view, clauses (a) and (e)of the Notification deals with the same subject, that is circumstancesfor waiver of interest under Section 234A. However, for considering waiver of interest under Sections 234B and 234C, application has to beconsidered with specific reference to clauses (b), (c) and (d) of theNotification. While clause (a) refers to disability of an assessee fromfiling a return on account of search and seizure and retention of booksof accounts, clause (e) deals with other cases where parties weredisabled from filing of returns for unavoidable reasons, may be partyhappens to be out of India, happens to be sick and laid up, etc.However, the finding of the learned single Judge that clause (e) is acondition, satisfaction of which, entitles the assessee to claim waiver ofinterest under Sections 234B and 234C of the Act, in our view, is nottenable, because it only lays down a condition for waiver of interestunder Section 234A of the Act. We therefore allow the appeal byreversing the judgment of the learned single Judge and by holding thatsatisfaction of the condition under clause (e) does not entitle theassessee for waiver of interest under Section 234B and Section 234C ofthe Act. 2. Sri. Vijayan Nair, counsel appearing for the respondent-assessee, pointed out the peculiar circumstances in which the assessee 2. Sri. Vijayan Nair, counsel appearing for the respondent-assessee, pointed out the peculiar circumstances in which the assessee was placed and the nature of income on which tax and interest are paid,that too based on returns filed voluntarily by the assessee. Assessee anon resident Indian made payment to a builder for construction of abuilding for him. However, the builder did not honour the commitmentand consequently the assessee had to approach the Consumer Forumwhich awarded compensation including interest. After several yearsassessee got a total interest of around Rs. 9.9 lakhs, which was returnedby the assessee for the purpose of tax by spreading over the interest forseveral years reckoned by the Consumer Forum while grantingcompensation. Department appears to have accepted the spreadingover of interest income for several years and completed assessments.In fact it is seen that assessee has along with payment of tax remittedinterest under Sections 234A, 234B and 234C of the Act, total of whichis around Rs. 2.41 lakhs as against total tax libility of Rs. 1.75 lakhs.Considering the unique features of this case where the default is notattributable to the assessee, though not strictly covered by the circular,in exercise of extra-ordinary powers under Art. 226 of the Constitutionof India, we direct the department to limit the interest demand under Sections 234B and 234C to Rs. 50,000/- and grant refund of the excess after rckoning the waiver of Section 234A interest also granted by theChief Commissioner of Income tax. W.A. is allowed by reversing impugned judgment and WPC isdisposed of granting relief as above. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk