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Issues involved: Interpretation of Section 234B of the Income-tax Act regarding waiver of interest on advance tax payments due to change in law based on a Supreme Court decision.
Summary: The petitioners, income-tax assessees and partners of a firm, had been claiming carrying forward of unabsorbed depreciation for computing income tax payable by them. Following a Supreme Court decision in Garden Silk Weaving Factory v. Commissioner of Income-tax, which disallowed carrying forward of unabsorbed depreciation for partners of a firm, the petitioners' assessments were revised, and they were directed to pay advance tax. The petitioners paid the advance tax but were also directed to pay interest under Section 234B. They sought waiver of the interest, citing the change in law due to the Supreme Court decision. The Income-tax Department opposed the waiver, arguing that the notification allowing waiver applied only when income increased due to a court decision. Upon considering the contentions, the court held that the petitioners became disentitled to carry forward unabsorbed depreciation due to the Supreme Court decision, resulting in their income becoming higher and liability for advance tax. The court disagreed with the Income-tax Department's interpretation, stating that the notification allowing waiver covered the petitioners' case. Consequently, the court quashed the orders directing payment of interest under Section 234B for the assessment years 1991-92 and 1992-93, granting the relief sought by the petitioners.
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