Wa/3640/2013 Of The Chief Commissioner Of Income Tax v. M/S Ub Global Corporation

IN THE HIGH COURT OF KARNATAKA AT BANGALORE. DATED THIS THE 71 DAY OF OCTOBER 7014 PRESENT THE HON‘'BLE MR. JUSTICE N. KUMA AND| THE HON'BLE MR. JUSTICE B. MANOHAR W A.NO.3640/2013(T,IT) BETWEEN THE CHIEF COMMISSIONER OFINCOME TAX, BANGALORE-II,C.R.BUILDING, QUEENS ROAD, BANGALORE-560 OOL1. ... APPELLAN | | (BY SRI K.V.ARAVIND, ADV.,). AND M/S. UB GLOBAL CORPORATION LTD.(AMALGAMATED WITH M/S.UNITEDBREWERIES (HOLDINGS) LTD.LEVEL 12, 14 &®15)UB CITY, 24, VITTAL MALLYA ROAD,BANGALORE-560 OOLREP. BY ITS EXECUTIVE VICE PRESIDENTGROUP TAXATION SRI S. RAMANUJAMAGE 59 YEARS|S/O LATE SRI R. SRINIVASAN. RESPONDENT| (BY SMT.S.R.ANURADHA, ADV.,) THIS W.A. IS FILED U/S 4 OF THE KARNATAKA HIGH COURT|ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRITPETITION NO.16136/2011(T-IT) DATED 11.03.2013. THIS W.A. COMING ON FOR HEARING, THIS -~ DAY,N.J,DELIVERED THE FOLLOWING: JUDGMENT Revenue preferred this writ appeal against the orderdated 11.03.2013 passed by the learned Single Judge.extending the benefit of the Board Circular, in particular,|Clause 2(c) in the case of assessee and granting relief tohim for waiver of interest payable under Section 234B of.tne Income Tax Act, 1961 (for snort ‘the Act’). | 2).The learned Single Judge has set out in hisorder the facts of the case in detail and therefore, there is)no need to reproduce the same. He nas formulated the.point for consideration at paragraph-7. Then, he hasextracted paragraph 2(c) on which reliance is placed.Thereafter, at paragraph-14, he has observed as under: “Viewed in this perspective the decisionof the High Court or Supreme Court need notbe in the case of the assessee. In other words|the decision of incidence and applicability ofIncome.Taxunder|theact,need|not necessarily be in the case of the assessee butcould be in any other case i.e. of any otherassessee or otnerwise. As long as the!decision covers the field of Income Tax'legisiation, aS may be applicable to anyASSESSEEC,WOUIC|peadcircumstancefor.reduction or waiver of interest under Sec.734 Ato C’ as the case may be.” In coming to that conclusion, he has relied on the decision|of the Kerala High Court in|A.V. TnomasWHhICnN wasfollowed by the Tribunal in granting relief to the assessee.under Section 8Q0HHC of the Act. Now, the said judgmentis not accepted by the Supreme Court in the case of IPCALaboratory Limited. Following the said judgment whichimpliedly overrules the judgment of the Kerala High Court|inA.V. Thomascase, the assessee is held liable to pay tax.under Section S8SQHHC. Therefore, the question forconsideration is whether the assessee’s bonafide belief that|the decision of the High Court of Kerala inA.V. ThomasIS applicable to his case is correct. In fact, the asessesse’scase is, the Tribunal following the said judgment only gave. him the benefit and it is only when the Apex Court in IPCA.Laboratory's case impliedly overruled the said decision, theliability arose for payment of interest as the assessee isnot entitied to the benefit of the said Board Circular. It Is!well settled that the exemption Notifications and the Boardcirculars, which are issued from time to time would Dind|the revenue to the fullest extent but those Notifications|and the circulars nave to be strictly construed. If so)construed, the Board Circular categorically states at Clause 2(c) that, wnere any income was not chargeable to income|tax in the case of an assessee on the Dasis of any order.passed by the High Court within whose jurisdiction ne is)assessable to income-tax, and as a result he did not pay.income tax in relation to such income in any previous year|and subsequently, in consequence of any retrospective|amendment of law or the decision of the Supreme Court of.India, or as the case may be, a decision of a larger Bench|of the jurisdictional High Court in any assessment or |re-assessment proceedings the advance tax paid by the)assessee during such financial year is found to be less than. the amount of advance tax payable on his current incomeand the assessee is cnargeable to interest under Section|234BOT|Section.2 34Canc|the.Chief|Commissioner/Director General is satisfied that this Is a fit.case for reduction or waiver of such interest, he can.exercise his power and grant the relief to the assessee. As)is clear from the aforesaid Clause, if any order is passed on.the basis of any order passed by the High Court within|whose jurisdiction the assessee is not assessable to.income tax, then the benefit of the Circular is not available to the assessee. The said circular is carefully worded.making it clear that it is only when a judgment of the HighCourt within whose jurisdiction the assessee is assessable|is not liable to pay tax or if the Supreme Court of Indiadeclares the law, it is the law for the whole country and)then only the assessee would be entitled to have such)benefit. Therefore, the observations of the learned Single|Judge, the decision of the High Court or the Supreme|Court|need not be in tne case of assessee is not a correct'statement of law having regard to the wordings of the circular. It is only the decision of the High Court within—whose Jurisdiction tne assessee is assessable is InNVOKedwhich is reversed by the Supreme Court or if the SupremeCourt lays down the law in a case arising from any.jurisdiction in the entire country, the assessee would be)entitled to the benefit. Therefore drawing analogy and)giving a particular interpretation would not be in)accordance with law. In this view, the learned Single)Judge was not justified in extending the benefit of the said|Circular when it was not applicable to the case of assessee.In this view, we pass the following order: Tne appeal is allowed. Tne impugned order dated 11.03.2013 passed by the learned Single| Judge ts set aside. Parties to pear their own costs. TL| Sd/- JUDGE| Sd/- JUDGE|