The Tax Publishers2020 TaxPub(DT) 1174 (Mad-HC)

INCOME TAX ACT, 1961

Article 226 Section 234B Section 119(2)(a)

Where petitioner had failed to pay advance tax by wrongly claiming business loss/depreciation loss during the assessment years 1988-89 to 1990-91. It cannot be stated that the petitioner was entitled to the benefit of Notification 400/234/95-IT(B), dt. 23-5-1996 issued under section 119 (2) (a) of the IT Act, 1961 none of the situation contemplated under the said notification attracted. no waiver of interest under section 234B would therefore, be made.

Writ - Waiver of interest under section 234B - Wrong claim for business loss and depreciation loss - Applicability of notification issued under section 119(2)(a), dt. 23-5-1996

It was a contention of the petitioner that levy of interest on the petitioner under section 234B was purely on account of recasting of the taxable income for the assessment years 1988-89 and 1989-90 and not because of any fresh income being assessed to tax which the petitioner had failed to return. Under these circumstances the petitioner filed an application for waiver of interest on 16-2-2001 before the 1st respondent which came to be rejected by an Order, dated 13-9-2002 by the CCIT. The petitioner had earlier filed WP Nos.2439-2442 of 2003 to direct the 1st respondent herein to consider the petitioner's application for waiver of interest under section 234 A and 234B. These writ petitions were disposed on 28-1-2003 with the direction to pass orders in accordance with law after giving an opportunity to the petitioner. By the impugned order CCIT had rejected application filed by the petitioner. It was furter submitted that but for the reassessment/rectification for the assessemnt years 1988-89 to 1990-91, the petitioner would not have been exposed to huge interest liability under section 234B. It was submitted therefore, that while filing returns, the petitioner did not anticipate that the assessment would be reopened or rectified for the preceding three assessment years. It was therefore, submitted that the petitioner's request for waiver of interest under section 234B had been wrongly denied. Held: In the present case, it was not as if amounts were not paid under the JV agreement or amounts due were written off by the petitioner. The petitioner however claimed higher business loss and the depreciation loss during the assessment years 1988-89 to 1990-91 as the amount was not paid by the developer in time as per the JV agreement dated 30-8-1986. However, the JV agreement dated 30-8-1986 was not frustrated as was projected. The project was delayed and during the course of time there were further payments made by the developer to the petitioner and therefore, there was accrual of income in the books of account of the petitioner and therefore the petitioner was liable to that extent. The petitioner had however failed to pay advance tax by wrongly claiming business loss/depreciation loss during the assessment years 1988-89 to 1990-91. Therefore, it cannot be stated that the petitioner was entitled to the benefit of Notification No. 400/234/95-IT(B), dt. 23-5-1996 issued under section 119 (2) (a) of the IT Act, 1961. None of the situation contemplated under the said notification attracted. Court does not therefore, found no reasons to interfere with the impugned order passed by the CCIT while rejecting application filed by petitioner for waiver of interest under section 234B of the IT Act, 1961 in terms of Notification No. 400/234/95-IT(B), dt. 23-5-1996.

Relied:Chief CIT v. Ranjinikant & Sons 92017) 396 ITR 171 (Mad) : 2017 TAxPub(DT) 19062 (Mad-HC). Distinguished:Prime Securities Ltd. v. Asstt. CIT (2011) 333 ITR 464 (Bom) : 2011 TaxPub(DT) 1048 (Bom-HC), Shriram Chits (Bangalore) Ltd. v. Jt. CIT (2010) 325 ITR 219 (Karn) : 2010 TaxPub(DT) 1515 (Karn-HC) and that of this court in CIT v. Revathi Equipment Ltd. (2008)298 ITR 67 (Mad) : 2008 TaxPub(DT) 0736 (Mad-HC)

REFERRED : CIT v. Ashok Bhai Chimanbhai (1965) 56 ITR 42 (SC) : 1965 TaxPub(DT) 199 (SC) and In Re The Spanish Prospecting Co. Ltd. (1911) 1Ch 92 and United Nilgiri Tea Estates Co. v. Dy. CIT (2012) 210 Taxman 62 (Mad) : 2012 TaxPub(DT) 3161 (Mad-HC).

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