2014 (8) TMI 1193 - HC - Income Tax

Waiver of 20% of the interest demanded u/s 234B - delay in payment of the capital gain tax - assessee is a retired Scientist from the Indian Defence Organisation - Learned single Judge directed the assessee to pay 20% of the interest demanded as against 100% claimed by the Revenue - HELD THAT - Assessee claimed exemption of payment from Capital Gains Exemption Bonds by investment in the Government bonds. Though the amount was acknowledged, for want of Pan number, bonds were not issued. Though, he rectified the mistake, still he could not get the benefit. In the meanwhile, law was amended imposing limitation to the extent of only ₹ 50 Lakhs notified by way of a Notification, subsequently, by way of amendment about which the assessee was completely ignorant. After coming to know of the same, he hasdeposited ₹ 50 Lakhs and thereafter he has paid capital gain tax of the balance amount. The demand of interest is for the delay in payment of the capital gain tax. The learned single Judge has carefully taken note of the facts and circumstances of the case, the statutory provisions, the Circulars issued and also the orders passed by the Authorities and was of the view that there was no intention to evade payment of tax. The delay is on account of bona fide mistake and therefore, he reduced the interest to 20%, thus, waiving 80% of the interest payable. No justification to interfere with a well considered order passed by the learned single Judge. In that view of the matter, we do not see any merits in this appeal.

Summary

Issues:
1. Reduction of interest demanded under Section 234B of the Income Tax Act, 1961.
2. Claim of exemption from 'Capital Gains Exemption Bonds' by investment in Government bonds.
3. Imposition of limitation on exemption amount.
4. Bona fide mistake leading to delay in payment of capital gain tax.
5. Justification for reducing interest to 20%.

Analysis:
1. The appeal was filed by the Revenue against the order directing the assessee to pay 20% of the interest demanded under Section 234B of the Income Tax Act, as opposed to the 100% claimed by the Revenue, resulting in a waiver of 20% of the interest demanded. The court noted the reduction was due to the delay in payment of capital gain tax and the circumstances surrounding the case.

2. The assessee, a retired Scientist, sold an immovable property and claimed exemption from 'Capital Gains Exemption Bonds' by investing in Government bonds. Despite rectifying a mistake in providing the Pan number, the bonds were not issued, and the law was subsequently amended, limiting the exemption to Rs. 50 Lakhs. The assessee, unaware of the amendment, deposited Rs. 50 Lakhs and paid the capital gain tax on the remaining amount, leading to the demand for interest on the delayed payment.

3. The learned single Judge considered the facts, statutory provisions, Circulars, and the absence of intent to evade tax. The Judge concluded that the delay was due to a bona fide mistake and reduced the interest to 20%, waiving 80% of the interest payable. The court upheld the Judge's decision, emphasizing the absence of justification to interfere with the well-considered order.

4. After hearing arguments from both sides, the court found no merit in the Revenue's appeal and dismissed it accordingly. The court maintained that the order passed by the learned single Judge was carefully considered and saw no reason to intervene. Consequently, the appeal and the related application were both dismissed.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive overview of the court's decision and the reasoning behind it.