2003 (12) TMI 33 - HC - Income Tax

Petitioner filed petitions under section 119(2)(a) seeking for waiver of interest charged under section 234B of the Act before the Chief Commissioner of Income-tax, Bangalore. A common order was passed on February 20, 2003. In the order, the Chief Commissioner waived interest till April 30, 1999. Thereafter, he directed the assessee to pay interest and confirmed the demand of the Assessing Officer. Board has issued an order on May 23, 1996, providing for reduction or waiver of interest for late filing of the return of income, etc. - Held that Commissioner was justified in exercising his power under section 119 (2) (a) in the light of the Board s order and has rightly chosen to waive interest up to April 30, 1999, i.e., till the date of the judgment of the Supreme Court

Summary

Issues:
1. Waiver of interest under section 234B of the Income-tax Act.
2. Applicability of judgments by jurisdictional High Court and Supreme Court on deductions.
3. Power of waiver of interest under section 119(2)(a) of the Income-tax Act.

Analysis:
1. Waiver of Interest under Section 234B:
The petitioner, a private limited company, filed a petition seeking waiver of interest under section 234B of the Income-tax Act. The Chief Commissioner of Income-tax, Bangalore, passed an order on February 20, 2003, waiving interest till April 30, 1999, and directing the assessee to pay interest thereafter. The petitioner challenged this order, arguing for a complete waiver of interest. The court considered the facts, including the reversal of a jurisdictional High Court judgment by the Supreme Court, and upheld the Chief Commissioner's order, stating that the waiver up to April 30, 1999, was reasonable given the circumstances.

2. Applicability of Judgments on Deductions:
The petitioner had claimed deductions based on a jurisdictional High Court judgment, which was later reversed by the Supreme Court in the case of Venkateswara Hatcheries (P.) Ltd. The Supreme Court ruled that special deductions were not available for units engaged in poultry farming or hatcheries. Subsequently, assessments were reopened, and interest was levied. The Chief Commissioner, considering the facts, ruled that interest up to April 30, 1999, should be waived. The court upheld this decision, emphasizing the binding nature of Supreme Court judgments and the petitioner's obligation to pay interest post the judgment date.

3. Power of Waiver under Section 119(2)(a):
The court referred to Section 119(2)(a) of the Income-tax Act, which provides for the waiver of interest. It noted that the power to waive interest lies under this provision, and the Board has issued orders specifying conditions for reduction or waiver of interest. The Commissioner, in line with the Board's order, waived interest up to April 30, 1999. The court held that the waiver was reasonable and acceptable, rejecting the petitioner's argument for a complete waiver and affirming the Commissioner's decision.

In conclusion, the court upheld the Chief Commissioner's order, emphasizing the binding effect of Supreme Court judgments, the statutory obligation to pay interest, and the reasonable nature of the waiver granted. The petitioner's plea for a complete waiver was dismissed, and the order was confirmed without costs.