Wp(C)/34672/2007 Of Travancore Sugars And Chemicals Ltd v. The Addl.commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE TUESDAY, THE 13TH DAY OF MARCH 2018 / 22ND PHALGUNA, 1939 WP(C).No. 34672 of 2007 PETITIONER: TRAVANCORE SUGARS AND CHEMICALS LTD., VALANJAVATTOM, THIRUVALLA-689 104, REPRESENTED BY ITS MANAGING DIRECTOR, MR.GEORGE ALEXANDER. BY ADVS.SRI.E.K.NANDAKUMAR SRI.ANIL D.NAIR RESPONDENT(S): 1. THE ADDITIONAL COMMISSIONER OF INCOME TAX, TIRUVALLA RANGE, TIRUVALLA-689 101. TIRUVALLA RANGE, TIRUVALLA-689 101. 2. THE CHIEF COMMISSIONER OF INCOME TAX, KERALA, AYAKHAR BHAVAN, KAWDIAR,, THIRUVANANTHAPURAM-695 003. BY SRI.P.K.R.MENON,SR.COUNSEL, SRI.JOSE JOSEPH, SC, SRI.GEORGE K. GEORGE, SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts28/3/2018 APPENDIX PETITIONER'S EXHIBITS: EXT.P1COPY OF THE ORDER DATED 28/12/2005 PASSED BY THE 1ST RESPONDENT TO THE PETITIONER.RESPONDENT TO THE PETITIONER. EXT.P2COPY OF THE WAIVER PETITION DATED 14/6/2006 FILED BY THE PETITIONER ALONG WITH ANNEXURES BEFORE THE 2ND RESPONDENTPETITIONER ALONG WITH ANNEXURES BEFORE THE 2ND RESPONDENTEXT.P3COPY OF THE ORDER DATED 23/10/2006 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.RESPONDENT TO THE PETITIONER. EXT.P4COPY OF THE NOTIFICATION DATED 26/6/2006 ISSUED BY THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE.GOVERNMENT OF INDIA, MINISTRY OF FINANCE. EXT.P5COPY OF THE INVOICE NO.49 DATED 31/7/2001 EXT.P6COPY OF THE INVOICE NO.50 DATED 31/7/2001 EXT.P7COPY OF THE ORDER DATED 23/11/2005 ALONG WITH THE MODIFIED SANCTIONED SCHEME APPROVED BY BIFR IN FAVOUR OF THE PETITIONER.SANCTIONED SCHEME APPROVED BY BIFR IN FAVOUR OF THE PETITIONER. RESPONDENT'S EXHIBITS: EXT.R1(A)COPY OF THE ORDER OF BIFR DATED 22/01/2001 /TRUE COPY/ P.S.TO JUDGE A.MUHAMED MUSTAQUE, J. =========================W.P.(C).No.34672/2007 ~~~~~~~~~~~~~~~~~~~~~~~~~ Dated this the 13[th] day of March, 2018 J U D G M E N T The petitioner is a Government of Keralaundertaking. It impugn an order passed by the ChiefCommissioner of Income Tax rejecting claim forwaiver or reduction of interest charged underSection 234B of the Income Tax Act, 1961. ExhibitP3 is the said order. As seen from Exhibit P4notification issued by the Central Board of DirectTaxes, certain classes of income can be consideredfor reduction of waiver under Section 234A orSection 234B. Among the above categories of classesof income, the petitioner invoked category (d)which states as follows: “(d) Where a return of income could not be filedby the assessee due to unavoidable circumstancesand such return of income is filed voluntarily bythe assessee or his legal heirs without detectionby the assessing officer.” 2.The brief facts of the case is as follows: The petitioner undertook sale of capital assets WPC 34672/2007 -:2:- during the year 2001-02. The said transactionattracted Capital Gains. The sale proceeds weredeposited in a 'No Lien' account with the StateBank of India as per the direction of the Board forIndustrial and Financial Reconstruction (“BIFR” forshort). It is appropriate to refer the relevantportion of the direction issued by the BIFR in thisregard, as evident from Exhibit-P2, which reads asfollows: “12. The Board has given the further followingdirections:-i)SBI (OA) should keep the sale proceeds in aninterest bearing 'No Lean Account' (including anyamount either received in the shape of earnestmoney/security/advance or otherwise in thisregard). In case, such amount received was kept bythe promoter/company or by any other authority,the same should be deposited within a week withinterest at the rate the KSBC or the State Govt.charges for their dues. OA should also send areport within 15 days to seek approval of theBench.” “12. The Board has given the further followingdirections:-i)SBI (OA) should keep the sale proceeds in aninterest bearing 'No Lean Account' (including anyamount either received in the shape of earnestmoney/security/advance or otherwise in thisregard). In case, such amount received was kept bythe promoter/company or by any other authority,the same should be deposited within a week withinterest at the rate the KSBC or the State Govt.charges for their dues. OA should also send areport within 15 days to seek approval of theBench.” The petitioner could not remit tax within time asthe amount received from sale proceeds were lyingwith the State Bank of India. The above directionin Exhibit P2 was lifted and funds were released by BIFR on 23/11/2005. The petitioner immediatelyremitted tax on 1/12/2005. Interest under Section220(2) of the Income Tax Act was waived by theChief Commissioner of Income Tax. However, thepetitioner's claim for waiver of interest underSection 234B was rejected. This is how thepetitioner approached this Court. 3.As seen from Exhibit-P3 impugned order,the claim of the petitioner for reduction ofinterest was not considered on merits for thesimple reason that according to Chief Commissionerof Income Tax, the petitioner's case is notreferable to any of the categories referred inExhibit P4 notification, dated 26/6/2006, issued bythe Central Board of Direct Taxes. Having advertedto the notification, this Court is of the view thatthe petitioner could not remit tax within time onaccount of Exhibit-P2 order passed by the BIFR. Itis to be noted that the petitioner remitted taximmediately after the direction was lifted.Category (d) referred in Exhibit P4 notificationclearly refers to the case that “where an assessee WPC 34672/2007 fails to file a return of income due to unavoidablecircumstances”. If that be so, this Court is of theview that the petitioner's case falls squarelywithin category (d). It is for the ChiefCommissioner of Income Tax to decide whether fullwaiver in interest or reduction in interest can begranted to the petitioner. However, certainly, thepetitioner's case would fall within category (d).Therefore, the impugned order is set aside forpaving way for reconsideration of the matter by theChief Commissioner of Income Tax. The petitionershall place the order of BIFR (Exhibit-P2) beforethe Chief Commissioner of Income Tax. Appropriateorders shall be passed in this matter within aperiod of three months. The writ petition is disposed of as above. Sd/- ms A.MUHAMED MUSTAQUE, JUDGE