2013 (3) TMI 439 - HC - Income Tax

Court dismisses petition challenging Chief Commissioner's order on interest waiver under Income Tax Act.

GANGADHAR N AGRAWAL (HUF) Versus CHIEF COMMISSIONER OF INCOME TAX, ACIT & UNION OF INDIA

The court dismissed the writ petition challenging the Chief Commissioner's order regarding waiver of interest under the Income Tax Act. The petitioner's ... Interest for defaults in payment of advance tax - Application for waiver of interest levied u/s 234B rejected - Petitioner filed returns of income tax for the AY 1997-98 declaring loss of Rs. 13,32,280/- whereas respondent no. 3 assessed petitioner's income at Rs.54,49,180/- thus raising a demand for tax with interest as the petitioner has not actually spent any amount - Held that:- The assessee had not spent entire amount which was claimed by him and, as such, since the entire amount was not spent the question of any allowable expenses being deducted in computing the income from the profits and gains of the appellant does not arise. The ratio of the judgment in the case of Gogte Minerals (1995 (9) TMI 20 - KARNATAKA HIGH COURT) as relied on by assessee will not apply to the facts of the present case in the said case it was concluded that there was no obligation on the part of the assessee to fill up the pit at the end of the contract and in that context Karnataka High Court observed that the expression “undertake”means to make a promise to do something at future date, according to the Tribunal, but what the rule provides for, is to perform in a phased manner the restoration, reclamation and rehabilitation within the time stipulated under the rule. In the said case on facts whether actual amount has been spent during the assessment year was not considered by the Court and as such ratio of the said judgment will not apply to the facts of the present case. Therefore no reason to interfere with the impugned order passed by respondent no.1 levying interest - against assessee. Issues:Challenge to order passed by Chief Commissioner of India, waiver of interest under Section 234B of the Income Tax Act, refund of interest amount, interpretation of CBDT notification No. 4000/234/95-IT(B) dated 23.5.1996, reliance on judgments of other courts, applicability of judgments to the present case.Analysis:The petitioner challenged the order passed by the Chief Commissioner of India and sought a writ to withdraw and cancel the order dated October 2005, waive interest amounting to Rs.13,60,762, and restrain the recovery of the balance interest amount of Rs.43,078. The petitioner filed income tax returns for the Assessment Year 1997-98, declaring a loss of Rs.13,32,280. An order was passed assessing the income at Rs.54,49,180, with a tax demand of Rs.21,52,672 and interest of Rs.13,60,762. The petitioner applied for waiver of interest, which was rejected by the Chief Commissioner, leading to this writ petition.The petitioner argued that they fulfilled all conditions of the CBDT notification dated 23.5.1996. Reference was made to judgments of the Karnataka High Court and the Apex Court to support the claim for excluding certain expenses. The respondent relied on a judgment of the Apex Court in a different case. The court observed that the petitioner did not actually spend the claimed amount, and thus, the question of deducting allowable expenses does not arise.The court held that the judgment of the Karnataka High Court cited by the petitioner did not apply to the present case as it did not consider whether the actual amount was spent during the assessment year. Therefore, the court found no reason to interfere with the Chief Commissioner's order and dismissed the writ petition. The petition was disposed of with no order as to costs.