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TMI Blog2013 (9) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/- and thereafter on 09.10.2006 filed a revised return of income disclosing sale of property at Chennai claiming exemption of investment under the 'capital gain bonds,' which out of inadvertence was not set out in the original return of income filed on 25.9.2006. The National Highways Authority having noticed that the petitioner had not mentioned the PAN number issued a letter which was responded to by letter dated 15.8.2006 furnishing the PAN number. That application when rejected by the National Highways Authority of India, the application was returned with the Demand Drafts for Rs.1,82,00,000/- by letter dated 5.10.2006 Annexure-F. Petitioner claiming to be under the bonafide belief that he would be allotted the capital gain bonds made the application for investment and seek exemption from paying long term capital gains tax. 2. The Central Board of Direct Taxes (CBDT) issued a circular dated 30.6.2006 Annexure-G under Section 119(2)(c) of the Act extending the time limit for investment in the 'Capital Gains bonds' upto 31.12.2006 without a ceiling limit and thereafter upto 31.3.2007 however imposing a maximum ceiling limit of Rs.50 lakhs, with retrospective effect from 01.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have weighed in the mind of the Chief Commissioner of Income-tax, to extend the benefit of waiver of interest under Section 234B, by placing reliance upon the observations of the Gujarat High Court in Bhanuben Panchal and Chandrikaben Panchal -v- Chief Commissioner of Income Tax (2004) 269 ITR 27 as also on the unreported opinion of this court in M/s UB Global Corporation Limited -v- Chief Commissioner of Income tax in W.P.No.16136/2011 DD 11.3.2013. Learned counsel hastens to add that the Chief Commissioner of Income tax while rejecting the applications for exemption of interest under Section 234B fell in error in observing that Clauses (a), (b) and (c) of the Notification dated 26.6.2006 Annexure-N does not take into its fold circumstances as made out by the petitioner. 7. Learned Sr.counsel for the respondent-revenue seeks to sustain the order as being well merited, fully justified and not calling for interference. According to the learned Sr.counsel the amendment to the proviso to Sec. 54EC(1) w.e.f. from 1.4.2007 is over investments made on or after 01.04.2007 in the long term specified assets by an assessee during any financial year does not exceed Rs.50 lakhs. However ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for making investment under Section 54EC was extended upto 31.3.2007 by letter dated 7.11.2007 enclosed to Annexure-J. 9. In order to appreciate the rival contentions it is useful to refer to relevant provisions of the statute as well as the notifications. Clause (b) of sub-sec. (1) of Sec. 54 EC of the Act as it stood before insertion of the Proviso by Finance Act 2007 w.e.f. 01.04.2007, provides that if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long term specified asset bears to the whole of the capital gain, shall not be charged under Sec. 45. However the proviso inserted by Finance Act 2007 w.e.f. 1.4.2007 reads thus :- "Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial years does not exceed fifty lakh rupees." Explanation (b) under subsection (3) of Section 54EC of the Act as it stood prior to its amendment reads thus: "(b) "long-term speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of rupees one thousand five hundred crores (redeemable after three years) to be issued by the National Highways Authority of India constituted under section 3of the National Highways Authority of India Act, 1988 (68 of 1988) during the financial year 2006-07 as "long-term specified asset" for the purpose of the said section." "Notification No.S.O.964(E), dated 29th June 2006 In exercise of the powers conferred by sub-clause (ii) of clause (b) of the Explanation to section 54EC of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the bonds for an amount of rupees four thousand five hundred crores (redeemable after three years) to be issued by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), during the financial year 2006-07 as "long-term specified asset" for the purpose of the said section" Even according to the learned counsel for the parties, the notification No.380/2006 dt. 22.12.2006 issued by the Central Government for Bonds for Rs.3,500/- crores to be issued by the Rural Electrification Corporation Limited, in exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation by the Finance Act of 2007 obviously cannot be within the knowledge of the petitioner. In fact the Govt. of India in its order 119(2)(c) of the Act on 30.6.2006 Annexure- 'G' extended the period for investment from six months to 30.6.2006 and thereafterwards upto 31.3.2007 without an indication over the limit of the investment. Therefore the petitioner was under the bonafide belief that he could make an investment of the capital gain in 'bonds' permitted under Section 54EC of the Act. Be that as it may, petitioner invested Rs.50 lakhs in terms of the notification dt. 22.12.2006, in the capital gains band, being the limit set out in the said notifications. 11. It is in this backdrop of facts that petitioner claims to have not paid the tax of Rs.29,09,800/- and did so only on 25.09.2007 Annexure - K after the amendment to explanation (b) to subsection 3 to section 54EC of the Act by Finance Act, 2007. 12. Section 234B provides for interest for default in payment of advance tax by an assessee who is liable to pay advance tax under Section 208 or when the advance tax paid by such assessee under Section 210 is less than 90% of the assessed tax. In such cases assessee is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court of India, or as the case may be, a decision of a larger Bench of the jurisdictional High Court (which was not challenged before the Supreme Court and has become final), in any assessment or re- assessment proceedings the advance tax paid by the assessee during such financial year is found to be less than the amount of advance tax payable on his current income, and the assessee is chargeable to interest under section 234B or section 234C, and the Chief Commissioner / Director General is satisfied that this is a fit case for reduction or waiver of such interest. d) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the assessing officer." 14. The preamble to the order dated 26.6.2006 makes reference to the words 'class of cases or class of incomes' as specified in paragraph 2 thereunder'. A bare reading of paragraph 2(a), (b), (c) and (d) it is possible to infer that they are instances which are illustrative though not exhaustive. Obviously because it is not possible to enumerate all kinds of hardships that would befall an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on Rs.1,82,00,000/-. In the circumstances, it would be incongruous to hold that paragraph 2(c) of the notification Annexure-N applies to cases where orders are passed by the High Court and are subsequently set-aside by a larger Bench of the Supreme Court or where there is retro activity of an amendment to the statutory provision. The very fact that the words 'retrospective amendment of law' used in paragraph 2(c) to establishes that it is one of the unavoidable circumstance by which an assessee would stand to benefit the waiver of interest under Section 234(b) of the Act. 17. The division bench of the High Court of Gujarat in Bhanuben's case (Supra4) regard being had to the facts obtaining therein over delay in filing the return of income resulting in late payment of taxes, an unavoidable circumstance, observed thus: "7. It is thus clear that Clause (a) to (d) all state the circumstances beyond the control of the assessee and they may be considered as the species or illustrations of unavoidable circumstances or circumstances beyond the control of the assessee which is the genus contained in Clause (e) providing that where a return of income could not be filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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