2017 (9) TMI 1529 - HC - Income Tax

Applications for grant of waiver of the interest, levied under Section 234 (B) & (C) - certain subsequent developments, which have taken place during the pendency of the Writ Petitions - Held that - If there is any reduction in the tax liability, obviously, it will also impact the quantum of interest, which is to be levied. Therefore, it would be appropriate to remand the matter back to the respondent for fresh consideration and take note of the subsequent developments in the matter, and take a fresh decision. In pure and simple terms, the petitioner s case is that, they were not in a position to anticipate whether they will be assessable under Section 115-JA /115 JB. An endeavour was required in this regard as a finding of fact had to be recorded while either accepting or rejecting the application for waiver. However, in the instant case, the Authority appears to have been solely guided by the decision, which was relied upon by the petitioner, and had taken a stand that the decision rendered by the Karnataka High Court, being a decision not by the territorial High Court, cannot be made applicable to the facts of the petitioner s case. Writ Petitions are allowed and the impugned orders are set aside and the matters are remanded to the respondent for fresh consideration.

Summary

Issues:
Challenge to orders rejecting waiver of interest under Section 234 (B) & (C) of the Income Tax Act, 1961 for assessment years 2001-02 and 2002-03 due to subsequent developments.

Analysis:
The petitioner, a Government-owned company, challenged orders rejecting waiver of interest under Section 234 (B) & (C) of the Income Tax Act, 1961 for assessment years 2001-02 and 2002-03. The High Court noted that subsequent developments occurred during the pendency of the Writ Petitions. Assessments were completed under Section 143(3) by orders dated 30.03.2005, and the Tribunal remanded the matters to the Assessing Officer for fresh consideration after allowing the Appeals filed by the petitioner. The Court emphasized that any reduction in tax liability would impact the interest levied, necessitating a fresh decision. The petitioner raised contentions regarding advance tax provisions and the computation of book-profits under Section 115-JA/115-JB. The Court observed that these contentions were not considered by the respondent while passing the impugned orders, as no findings were rendered on the factual aspects presented.

The petitioner contended that they were unable to anticipate their assessability under Section 115-JA/115-JB. The Court highlighted that a factual finding was crucial for accepting or rejecting the waiver application. The Authority appeared to have solely relied on a decision not by the territorial High Court, disregarding the petitioner's contentions. The Court acknowledged the petitioner's reliance on decisions by other High Courts and the Supreme Court but refrained from delving into this aspect due to the need for reconsideration based on subsequent developments.

Consequently, the High Court allowed the Writ Petitions, set aside the impugned orders, and remanded the matters to the respondent for fresh consideration. The petitioner was directed to file a fresh Application for waiver with supportive records to account for the subsequent developments during the Writ Petitions' pendency. The respondent was instructed to provide a personal hearing to the petitioner's authorized representative and pass orders on merits and in accordance with the law. No costs were awarded in this judgment.