Wa/2470/2009 Of The Chief Commissioner Of Income Tax v. M/S.chola Huts

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. 2470 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.30038/2006 Dated 10/07/2009 .................... 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): --------------- M/S CHOLA HUTS, C/O. K.V. JOSE, KAKKANATTU HOUSE, MUVATTUPUZHA, REP BYITS MANAGING PARTNER, K.V. JOSE. 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: -------------------------------------------- -------------------------------------------- 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 consideringwaiver of interest under Sections 234B and 234C, application has to beconsidered with specific reference to clauses (b),(c) and (d) of the Notification. 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 features of this case wherein afterraid, assessments on capital gains were made at the hands of thepartners for the transfer of a running bar hotel. However, when theassessees approached the Settlement Commission, Commissiondirected assessment in the hands of the firm which is accepted by the 2. Sri. Vijayan Nair, counsel appearing for the respondent-assessee, pointed out the peculiar features of this case wherein afterraid, assessments on capital gains were made at the hands of thepartners for the transfer of a running bar hotel. However, when theassessees approached the Settlement Commission, Commissiondirected assessment in the hands of the firm which is accepted by the department. It is seen that as against tax assessed at Rs. 2 lakhs andodd, the total interest demanded is over Rs. 4.25 lakhs out of which theChief Commissioner waived around Rs. 1.5 lakhs towards interestpayable under Section 234A. Considering the peculiar features of thiscase, and considering the nature of controversy, that is ultimatelysettled by the Settlement Commission, we feel leniency is called for.We therefore limit the liability under Section 234B and 234C to Rs.75,000/-. Balance if any paid will be refunded and if not paid orrecovery under Sections 234B and 234C will be limited to Rs. 75,000/-.The relief granted by us is in addition to the waiver of interest grantedby the Chief Commissioner under Section 234A of the Act. Writ Appeal is allowed by cancelling the impugned judgment andand WPC is disposed of by granting above relief to the assessee. (C.N.RAMACHANDRAN NAIR)Judge.Judge. (V.K. MOHANAN) Judge. kk