Wp(C)/15456/2011 Of C.v.jayachandran v. The Chief Commissioner Of Incometax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE WEDNESDAY, THE 1ST DAY OF NOVEMBER 2017/10TH KARTHIKA, 1939 WP(C).No. 15456 of 2011 (F) ------------------------------------------ PETITIONER(S) : ------------------------- C.V.JAYACHANDRAN, M/S.VAHINI SALES & SERVICES, PALLIMUKKU, KOLLAM. BY ADV. SRI.P.BALAKRISHNAN (E) RESPONDENT(S) : ----------------------------- THE CHIEF COMMISSIONER OF INCOME TAX, KAWDIAR P.O., TRIVANDRUM - 695 003. BY ADV. SRI.JOSE JOSEPH, S.C THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01-11-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Msd. ------------------------------------------ APPENDIX PETITIONER(S)' EXHIBITS : EXHIBIT P1:TRUE COPY OF THE ORDER DATED 29.06.2010 OF THE ASSESSINGOFFICER.OFFICER. EXHIBIT P2:TRUE COPY OF PETITIONER DATED 12.08.2010 ADDRESSED TO THE RESPONDENT FOR ASST. YEARS 1989-90.THE RESPONDENT FOR ASST. YEARS 1989-90. EXHIBIT P3:TRUE COPY OF ORDER UNDER SECTION 119(2)(A) OF THE INCOME TAX ACT, 1961 DATED 31.01.2011 OF THE RESPONDENT.THE INCOME TAX ACT, 1961 DATED 31.01.2011 OF THE RESPONDENT. EXHIBIT P4:TRUE COPY OF BOARD'S F.NO.400/29/2002 IT(B). RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// P.S.TO JUDGE. Msd. A. MUHAMED MUSTAQUE, J. ------------------------------------ W.P. (C) No.15456 of 2011 ------------------------------------ Dated this the 1[st] day of November, 2017 J U D G M E N T The petitioner in this writ petition impugns the order of theChief Commissioner of Income Tax, Trivandrum produced asExt.P3 under Section 119(2)(a) of the Income Tax Act, 1961.The present dispute is with regard to rejection of the request forwaiver of interest made by the assessee consequent upon the re-opening of assessment. The assessment was completed andintimation was issued under Section 143(1)(a) of the Act.Thereafter a notice under Section 147 of the Act was issuednoting the fact that the assessee received compensation for theland acquired and the assessee did not disclose any income byway of capital gains. The re-assessment was completed. 2. There was a challenge against re-opening of assessment.Ultimately, by the order of this Court, re-opening of theassessment was affirmed. Apart from the demand for capitalgains, interest was levied. The petitioner filed an application for W.P.(C) No.15456/2011 waiver of interest. This lead to the impugned order. 3. Learned counsel for the petitioner, relying upon thejudgment of the Supreme Court in Life Insurance Corporation of Indiavs.Commissioner of Income Tax((1996) 219 ITR410), argued that only in the year 1991, by virtue of anamendment to the Income Tax Act introduced by the Finance Act,income tax was levied on capital gains arising out of theacquisition of land on the basis of the date of receipt ofcompensation and therefore, the capital gains accrued in the year1987 cannot be saddled with the liability to pay interest.According to the learned counsel for the petitioner, the actualdemand could be raised only by way of order by this Court andtherefore, the petitioner is entitled for waiver of interest.Learned counsel particularly relied upon Ext.P4 circular. Ext.P4circular is in fact a continuation of the previous circular. 4. Learned Standing Counsel appearing for the respondentplaced before me the previous circular. Both circulars appear tobe more or less the same except to certain other provision.Anyhow, the petitioner's claim is based on clause 2(c) of thecircular which reads as follows: 4. Learned Standing Counsel appearing for the respondentplaced before me the previous circular. Both circulars appear tobe more or less the same except to certain other provision.Anyhow, the petitioner's claim is based on clause 2(c) of thecircular which reads as follows: “Where any income was not chargeable toincome tax in the case of an assessee on the basis ofany order passed by the High Court within whosejurisdiction he is assessable to income tax, and as aresult, he did not pay income tax in relation to suchincome in any previous year, and subsequently, inconsequence of any retrospective amendment of lawor the decision of the Supreme Court of India, or asthe case may be, a decision of a larger Bench of thejurisdictional High Court (which was not challengedbefore the Supreme Court and has become final), inany assessment or re-assessment proceedings theadvance tax paid by the assessee during suchfinancial year is found to be less than the amount ofadvance tax payable on his current income, and theassessee is chargeable to interest under Section234B or section 234C, and the ChiefCommissioner/Director General is satisfied that thisis a fit case for reduction or waiver of such interest”. 5. This Court finds that the above clause would not apply to the facts of this case. The petitioner disputed his liability to payincome tax on capital gains. The interest levied giving effect tocapital gains based on receipt of compensation would not absolvethe petitioner from paying tax on capital gains. Further, thecircular is only a guideline and it cannot have an overriding effecton the statutory provision. In such situation, this Court is of the view that there is no merit in the writ petition. The Chief Commissioner of Income Taxhas rightly rejected the petitioner's request for waiver of interest.This writ petition is therefore dismissed. No costs. Sd/- A. MUHAMED MUSTAQUEJUDGE smp