2017 (7) TMI 663 - HC - Income Tax

Denial of waiver of interest levied under Section 234(B)- Held that - When identical issue came up for consideration before the Division Bench in the case of M/s Upasana Finance Limited vs. Deputy Commissioner of Income Tax, Company Circle III (3) 2016 (7) TMI 1323 - MADRAS HIGH COURT remanded the matter for fresh consideration to decide the question as to whether Lease Equalisation Reserve and Special Depreciation Reserve would fall under clause (g) to the explanation to the second proviso of Section 115JA of the Income Tax Act. In the instant case also such procedure has to be adopted as the respondent has to take note of the legal position which holds the field as on date and in particular, when the amended provision was given retrospective effect. Writ petitions are allowed and the impugned orders are set aside and the matters are remanded to the respondent to decide the question of law which has been raised by the petitioner and as noticed above, after affording an opportunity of personal hearing to the petitioner and pass appropriate orders, on merits and in accordance with law.

Summary

Issues:
1. Writ petitions seeking to quash orders and refund interest amount.
2. Denial of waiver of interest under Income Tax Act for different assessment years.
3. Challenge of impugned orders as non-speaking orders.
4. Interpretation of legal provisions and retrospective amendments.
5. Remanding of the matters for fresh consideration.

Analysis:
The judgment by the High Court of Madras dealt with three writ petitions seeking to quash orders passed by the respondent for different assessment years and to direct the refund of interest amounts paid. The petitions were related to the denial of waiver of interest levied under Section 234(B) and 234 C of the Income Tax Act. The petitioner, engaged in leasing, buying, and financing operations, had filed appeals against additional interest under Section 147 but left other aspects of the assessment unchallenged. The impugned orders were contested on grounds of being non-speaking orders.

The court considered recent decisions, including the TVS Finance & Services Limited case, which discussed lease Equalisation charges. The Revenue argued that subsequent amendments and explanations impacted the legal position. It was noted that the legal position had been settled by previous decisions and retrospective amendments introduced after the impugned orders were passed. The court referred to a similar case where the matter was remanded for fresh consideration regarding certain provisions of the Income Tax Act.

Ultimately, the court allowed the writ petitions, setting aside the impugned orders and remanding the matters to the respondent for reconsideration based on the current legal position and the retrospective amendment. The respondent was directed to decide on the raised questions after providing the petitioner with a personal hearing and passing appropriate orders in accordance with the law. No costs were awarded in this judgment.