2015 (11) TMI 808 - HC - Income Tax

Court overturns rejection of deduction claim under Section 80 JJ, orders reevaluation.

M/s Shanthi Hatcheries Versus The Director General of Income Tax (INV)

The court set aside the orders rejecting the petitioner's claim for deduction under Section 80 JJ, leading to the levy of interest under Sections 234B and ... Waiver of interest under Sections 234B and 234C - Held that:- As decided in UB Global Corporation Limited Vs. Chief Commissioner of Income Tax [2013 (5) TMI 126 - KARNATAKA HIGH COURT] the decision of incidence and applicability of Income Tax under the Act, need not necessarily be in the case of the assessee, but could be in any other case i.e. of any other assessee or otherwise. As long as the decision covers the field of Income Tax legislation, as may be applicable to any assessee, 'would be a circumstance for reduction of waiver of interest under Section 234 A to C as the case may be A division bench of the High Court of Gujarat in Bhaneben’s case (2004 (3) TMI 35 - GUJARAT High Court) 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 - Waiver of interest can be considered. The Board, in exercise of powers conferred under clause (a) of sub-section (2) of Section 119 of the Act, has issued a Circular/Notification No. 400/234/95-IT/B dated 23-5-1996, empowering the Chief Commissioner and the Director General, Income Tax, to waive or reduce the interest chargeable under Section 234B and two other sections in the class of cases or class of incomes, specified in paragraph 2 thereof for the period and to the extent the Chief Commissioner/Director General deem fit, subject to fulfilment of the conditions enumerated therein. See Sita Holiday Resorts Ltd. Versus Chief Commissioner of Income-tax And Others [2002 (9) TMI 99 - DELHI High Court - Income Tax]. - Decided in favour of assessee. Issues:1. Claim for deduction under Section 80 IA of the Income Tax Act, 1961.2. Rejection of claim for deduction under Section 80 JJ.3. Levy of interest under Sections 234B and 234C.4. Petition for waiver of interest under Sections 234B and 234C.5. Interpretation of legal precedents regarding waiver of interest.Analysis:1. The petitioner, a Partnership Firm engaged in poultry farming, filed income tax returns for assessment years 1996-97 and 1997-98, claiming deductions under Section 80 IA. The deductions were initially accepted under Section 143(1)(a). However, the Assessing Officer later issued a show cause notice under Section 154, challenging the deductions granted.2. Subsequently, the petitioner claimed deduction under Section 80 JJ, which was rejected by the Assessing Officer based on a Supreme Court decision. The rejection led to the levy of interest under Sections 234B and 234C for both assessment years, amounting to significant sums.3. The petitioner filed a waiver petition to the Respondent, citing a Board Circular dated 23.5.1996, which the petitioner believed entitled them to a waiver of the interest levied. The Respondent, however, rejected the waiver petition, prompting the petitioner to file Writ Petitions seeking relief.4. The main contention raised by the petitioner was that the liability for interest arose due to a change in law following a Supreme Court decision, which was beyond their control. The petitioner argued that they should not be penalized for a subsequent legal development that affected their tax liability.5. The court considered various legal precedents on the issue of waiver of interest, citing judgments from different High Courts and the Supreme Court. The court emphasized that a decision by the Supreme Court impacting tax legislation applied universally, not just to the specific assessee involved in the case. Relying on established legal principles, the court set aside the impugned orders and remanded the matters to the Respondent for fresh consideration in light of the legal precedents cited.6. The court directed the Respondent to reevaluate the petitioner's request for waiver of interest within four weeks, ensuring a fair opportunity for the petitioner to present their case. The Writ Petition was disposed of with no costs, and the connected Miscellaneous Petitions were closed accordingly.