2024 (11) TMI 505 - HC - Income Tax

Rejection of waiver of interest u/s 234-B and 234-C - exemption under Section 80(P) (2) (a) (iii) disallowed - HELD THAT - The order passed rejecting petitions for waiver of interest on the ground that the petitioner should have paid advance tax for three assessment years on the basis of Supreme Court Judgment in Assam Cooperative Apex Marketing Society Limited s case 1993 (2) TMI 8 - SUPREME COURT Since the same stands overruled, the order dated 15.07.2002 passed by the respondents is not sustainable. As on today, it is settled that the Cooperative Society like the petitioner would be exempted from payment of tax, and therefore, there was no occasion for depositing advance tax. Hence, the waiver of interest under Section 234-B and 234-C of the Act for the assessment years 1996-97, 199798 and 1998-99 was wrongly rejected. Accordingly, the order dated 15.07.2002 is quashed and set aside. The petitioner society is entitled to claim the waiver of interest for the aforesaid period. Assessee appeal allowed.

Summary

Issues:
Petition seeking direction to allow waiver petition and quash order rejecting waiver of interest under Sections 234-B and 234-C of the Income Tax Act, 1961 for assessment years 1996-97, 1997-98, and 1998-99.

Analysis:
The petitioner, a cooperative society, sought waiver of interest after the Assessing Officer disallowed deduction claimed under the amended Section 80(P) (2) (a) (iii) of the Act, applicable retrospectively. The petitioner argued that interest was wrongly charged due to retrospective law amendment. They relied on a circular allowing waiver of interest in such cases. Previous judgments favored the petitioner's exemption claim under Section 80(P) (2) (a) (iii) of the Act. The respondents contended that exemption was disallowed based on a Supreme Court judgment, which was later overruled, but retrospectively amended. The High Court emphasized the benevolent nature of Section 80P, favoring cooperative societies and held that the petitioner was entitled to exemption, quashing the order rejecting waiver of interest.

The High Court referred to principles from previous judgments emphasizing liberal interpretation of Section 80P to promote cooperative sector growth. It noted that the impugned order was based on a judgment that had been overruled, making it unsustainable. The Court clarified that the petitioner, being a cooperative society, was exempt from tax, eliminating the need for advance tax payment. Consequently, the rejection of interest waiver for the assessment years in question was deemed incorrect. The Court quashed the order and allowed the petitioner's claim for interest waiver for the specified period.

In conclusion, the High Court allowed the writ petition, quashed the order rejecting interest waiver, and affirmed the petitioner's entitlement to claim the waiver for the relevant assessment years. All pending applications were disposed of, and no costs were awarded in the matter.