Waiver of income-tax interest may apply where liability arises only from a retrospective amendment.

Interest under section 139(8) and section 217 of the Income-tax Act may be waived where the tax liability arises only because of a retrospective amendment that newly brings the income to tax. The statutory waiver provisions under rule 117A and rule 40 allow relief on sufficient cause or justified grounds, and a liability that becomes ascertainable only after retrospective change can satisfy that standard. The stated effect is waiver of interest on income taxed solely by reason of the retrospective amendment.

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Issues: Whether interest under section 139(8) of the Income-tax Act, 1961, and interest under section 217 of the Income-tax Act, 1961, could be waived where the tax liability arose only because of a retrospective amendment.

Analysis: The assessment to which the interest related was affected by a retrospective amendment that newly brought the relevant income to tax. The statutory scheme under section 139(8) read with rule 117A permits waiver where sufficient cause is shown, and the statutory scheme under section 217 read with rule 40 similarly permits reduction or waiver where the circumstances justify it. Since the liability itself became clear only because of the retrospective amendment, the case was treated as one where sufficient cause existed for not imposing the interest. The same reasoning applied to the interest charged under section 217.

Conclusion: Interest under section 139(8) was required to be waived, and interest under section 217 was also liable to be waived in respect of the income made taxable by the retrospective amendment.

Final Conclusion: The petitions succeeded and the assessee was granted waiver of interest on the income taxed only by reason of the retrospective amendment.

Ratio Decidendi: Where tax liability arises only due to a retrospective amendment that creates a fresh liability, that circumstance can constitute sufficient cause or a justified ground for waiver of statutory interest.

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