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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 ..... dispute that the tax liability of Rs.29,09,800/- was discharged on 25.9.2007 nevertheless during the period from 1.4.2006 to 31.3.2007 and upto the Finance Act, 2007, receiving the assent of the President of India, petitioner was under the bonafide belief that he would be entitled to exemption from payment of capital gains tax under Section 54EC of the 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. Decision in Bhanuben Panchal And Chandrikaben Panchal Versus Chief Commissioner Of Income-Tax. [2004 (3) TMI 35 - GUJARAT High Court] followed wherein it was held that, when the circumstances leading to delay in filing of return of income are also the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 01.03.2006. 3. Petitioner addressed a letter dated 30.8.2007 Annexure-H to the Commissioner of Income Tax setting forth the aforesaid facts and sought a remedy over the next course of action. According to the petitioner he was advised by the department to apply in the next issue of bonds and accordingly during January of 2007 petitioner made an application to the National Highways Authority for investment of Rs.50 lakhs in the Capital Gain Bonds . According to the petitioner he had no intention of evading tax, being a hon ble citizen, and having served the Nation in the Defence and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exemption over and above Rs.50 lakhs investment in Capital gain bonds under Section 54EC of the Act, though was available to the petitioner, having not invested the said sum within the extended period from 16.3.2006 the date of sale of the asset, is disentitled to waiver of interest. In addition it is submitted that the decision in Bhanuben s case (supra), as well as the opinion of this court were on different factual matrix, hence inapplicable to the facts of this case and that clauses (a), (b) and (c) of the notification Annexure-N have justifiably no application, and seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 specified asset means any bond, redeemable after three years and issued on or after the 1st day of April, 2006, - (i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988), and notified by the Central Government in the Official Gazette for the purposes of this section; or (ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (I of 1956), and notified by the Central Government in the Official Gazette for the purposes of this section. This explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exercise of powers under Sub clause (ii) of Clause (b) of the explanation to Sec.54EC of the Act, states that (i) a person who has made an investment of more than Rs. 50 lakhs in the bonds notified as long-term specified Asset for the purpose of Sec. 54EC of the Act under the notifications dated 29.06.2006, shall not be allotted any bonds under the notification and (ii) that a person not covered by (i) shall not be allotted the bonds notified as long-term specified asset by the notification for an amount of exceeding Rs. 50 lakhs as reduced by the aggregate of the investment, if any, made in similar bonds under the notifications dated 29.06.2006. 10. Applying the aforesaid statutory provisions and the notifications to the facts of the case, petitioner ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.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 liable to pay simple interest at the rate of one percent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of Section 143 and where a regular assessment is made to the date of such regular assessment on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. 13. There is no dispute that in order to obviate hardship to the assessees, the CBDT issued the order Annexure N under Section 119(2)(a) of the Income Tax Act, 1961 permitting waiver of interest under Section 234(a), 234(b) and 234(c) of the Act on 26.6.2006 Annexure-N. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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 assessee so as to claim the benefit of waiver of interest under Section 234B and 234C. In paragraph 2(a) the waiver or reduction of interest if there is delay on the part of the assessee in filing the return due to seizure of books of accounts and other documents during search or seizure under Section 132 of the Act. While under Section 2(b) if any income chargeable to income tax under any head of income other than capital gains received or accrued after the due date of payment of the first or subsequent instalment of advance tax, neither anticipated nor in the contemplation of the assessee, while paragraph (c) refers to any income not chargeable to income tax in the case of an assessee on the basis of the order passed by the High Court within whose jurisdiction he is assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 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 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 AO, waiver of interest can be considered. It appears to the Court that when the circumstances leading to delay in filing of return of income are also the circumstances resulting into late payment of taxes and when the same set of circumstances are considered to be unavoidable circumstances responsible for the delay in filing of the return of income, ordinarily, such circumstances would also qualify to be considered as unavoidable circumstances responsible for the delay in late payment of taxes. 18. Following the very same reasoning of the Gujarat High Court and keeping in mind that clauses (a) to (d) of the Notification Annexure-N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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