Wa/2469/2009 Of The Chief Commissioner Of Income Tax v. Jimmichan

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. 2469 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.14322/2006 .................... APPELLANT(S): -------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, KOCHI. 2. THE INCOME TAX OFFICER, WARD-I, THODUPUZHA. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- JIMMICHAN M. VARICATT, VARICATT HOUSE, CHILAVU P.O., THODUPUZHA. 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: ON 17/12/2009, THE COURT ON THE SAME DAY DELIVERED THE -------------------------------------------- -------------------------------------------- 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 waiver ofinterest payable under Sections 234B and 234C, application has to be considered with specific reference to clauses (b),(c) and (d) of theNotification. While clause (a) refers to disability of an assessee fromfiling return on account of search and seizure and retention of books ofaccounts, clause (e) deals with other cases where parties were disabledfrom filing of returns for unavoidable reasons, may be party happensto be out of India, happens to be sick and laid up, etc. However, thefinding of the learned single Judge that clause (e) is a condition,satisfaction of which, entitles the assessee to claim waiver of interestunder Sections 234B and 234C of the Act, in our view, is not tenable,because it only lays down a condition for waiver of interest underSection 234A of the Act. We therefore allow the appeal by reversingthe 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 of the case and thenature of income assessed in this case. The amount assessed is thecompensation received by the assessee for surrendering tenancy rightsto the building owner. There was controversy as to whether income 2. Sri. Vijayan Nair, counsel appearing for the respondent-assessee, pointed out the peculiar circumstances of the case and thenature of income assessed in this case. The amount assessed is thecompensation received by the assessee for surrendering tenancy rightsto the building owner. There was controversy as to whether income itself is assessable and if so under what head. Ultimately total incomeof around Rs. 38 lakhs was subjected to tax on capital gains. The taxdemanded is Rs. 7,66,720/- and the demand of interest under variousprovisions of Section 234 is Rs. 4,72,174/-. The chief Commissionerhas already waived Rs. 2 lakhs payable under Section234A. Since theposition of tax liability was not clear to the assessee, naturally therewas non-payment of advance tax. We therefore feel some leniency iscalled for in this case. Accordingly we fix the interest liability underSections 234B and 234C at Rs. 1 lakh with direction to the departmentto refund excess if any collected or otherwise limit the recovery to Rs.1 lakh under Section 234B and 234C of the Act. The relief granted byus is in addition to the waiver of interest granted by the ChiefCommissioner of Income tax under Section 234A of the Act. Writ Appeal is allowed by reversing the impugned judgment andWPC is allowed granting the relief as above. (C.N.RAMACHANDRAN NAIR)Judge.Judge. (V.K. MOHANAN) Judge.