Telangana High Court
M/S. Electronics Corporation Of India ... vs Central Board Of Direct Taxes, Ministry ... on 29 January, 2024
Author: P.Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
WRIT PETITION No.14951 of 2005
ORDER:(per Hon'ble Sri Justice P.SAM KOSHY) The present writ petition has been filed seeking the following relief:
"...to issue a writ, direction or order especially in the nature of writ of mandamus directing the Respondents 1 and 2 to reconsider the case of the Petitioner for waiver of interest levied under Sections 234B and 234C in the sum of Rs. 61,38,142/- and Rs. 1,25,77,012/- respectively for the Assessment Year 2003-04, if necessary by appropriate special order relaxing the rigor of the said sections to the peculiar class of income as in the case of the Petitioner..."
2. Heard Mr. M. Naga Deepak, learned counsel representing Mr. S. Ravi, learned Senior Counsel for the petitioner and Mr. J. V. Prasad, learned Senior Standing Counsel for Income Tax appearing for the respondents.
3. The necessity for filing of the present writ petition came up after the application filed by the petitioner seeking for waiver of interest stood first rejected by the respondent No.2/Chief Commissioner of Income Tax (1) vide order dated 26.10.2004.
4. Subsequent to the rejection of application for waiver of interest by the respondent No.2, the petitioner had approached respondent No.1/Central Board of Direct Taxes(for short 'CBDT'). However, the 2 respondent No.1 also vide its order dated 19.01.2005 rejected the matter holding that they were not empowered to review an order passed by the respondent No.2 on the issue of waiver of interest.
5. The relevant facts which need to be considered are that the petitioner is a Central Public Sector Undertaking which is under the administrative control of the Department of Atomic Energy. The petitioner is engaged in the business of manufacture and sale of electronic goods and components. For the assessment year 2003- 2004, the petitioner filed a return of income on 01.12.2003. The petitioner had returned a total income of Rs.62,94,82,443/- and the tax thereon was determined at Rs.23,13,34,798/-. The petitioner also had to its credit, tax deduction at source under various provisions of the Act, in the gross sum of Rs.83,32,598/-. The petitioner further paid a sum of Rs.10 crores on 30.04.2003 and a further sum of Rs.2,65,20,129/- by way of self-assessment on 28.11.2003.
6. As per the audited accounts, the turnover and profit is Rs.926.88 crores and Rs.80.58 crores respectively. Thus, the increase in profit from the revised estimates prepared in August, 2002, is more than 10 fold from Rs.8 crores to 80.58 crores. The tax liability for the first three installments was made on the revised budget estimates. However, because of certain unprecedented transactions that dropped 3 up in the turnover of the fourth quarter, the payment of interest also has arisen.
7. It was the contention of the learned counsel for the petitioner that since it is a public sector undertaking, it needs to prepare and submit budget to the administrative ministry i.e. the department of atomic energy and upon submission of the said budget, the income and expenditure is made according to the budget approved by the concerned department. The budget is submitted before the commencement of the financial year and the revised budget is also submitted in September for the same financial year. According to the learned counsel for the petitioner because of the administrative and procedural requirements in the department, where necessary approvals have to be obtained from the concerned administrative ministry, there was some delay that arose in the payment of tax in respect of the turnover that took place in the last quarter.
8. According to the learned counsel for the petitioner, the tax liability was to be cleared by 31.03.2003, however, because of administrative reasons it could only be cleared by 29.04.2003. Thus, there was a delay of only 29 days in clearing of dues which was primarily because of unprecedented rise in the turnover in the last quarter for the financial year 2002-03 and also on account of the procedural requirements that is required to be met before the 4 payment could be made so far as the excess tax that was required to be paid by 31.03.2003 which in fact could be paid only by 29.04.2003.
9. Immediately, thereafter the petitioner had approached respondent No.2 for waiver of interest charged under Section 234B and 234C for the assessment year 2003-04. The respondent No.2 vide its order dated 26.10.2004 considered the same and rejected the application seeking waver of interest. Thereafter, the petitioner approached the respondent No.1 which again refused to entertain the said application on the ground that it was not empowered to review an order passed by the respondent No.2 which led to filing of the present writ petition.
10. It has been contended that the petitioner on an earlier occasion filed a Writ Petition No.2395 of 2005 which stood disposed of on 05.04.2005 whereby the petitioner was directed to approach the "Committee on Disputes" for necessary decision on the same. The Committee on Disputes vide its order dated 20.05.2005 disposed the said proceedings giving clearance to the petitioner to pursue the appeal in view of the questions of fact of law involved in the matter.
11. Learned counsel for the petitioner referred to the provision of para 2(c) of the CBDT notification dated 30.01.1997 whereby there was power conferred upon the Chief Commissioner or Director 5 General upon being satisfied with the facts and circumstances of the case for reduction of waiver of interest chargeable under Section 234C of the Income Tax Act. The relevant provision of the said circular is reproduced herein under:
"Where any income chargeable to income-tax under any head of income, other than 'Capital gains' is received or accrues after the due date of payment of the first or subsequent installments of advance tax which neither anticipated nor was in the contemplation of the assessee and the advance tax on such income is paid in the remaining installments and the Chief Commissioner or Director General is satisfied on the facts and circumstances of the case that this is a fit case for reduction of waiver of interest chargeable under section 234C of the Income Tax Act."
12. It was relying upon the said circular by which the respondent No.2 had rejected the same vide order dated 26.10.2004. On 26.06.2006 there was yet another order issued by the CBDT whereby the Chief Commissioner of Income Tax or Director General of Income Tax were again empowered to consider the applications for reduction of waiver of interest under Section 234C of the Income Tax. Clause (b) of the said order reads as under:
"Any income chargeable to income-tax under any head of income, other than "Capital gains" is received or accrued after due date of payment of the first or subsequent instalments of advance tax which was neither anticipated nor was in the contemplation of the assessee, and the advance tax on such income is paid in the remaining instalment or instalments, and the Chief Commissioner/Director General is satisfied on the facts and circumstances of the case that it is a fit case for 6 reduction or waiver of the interest chargeable under section 234C of the Income-Tax Act."
13. Further, paragraph 4 of the said order would also give an indication that the authorities concerned were also given the power to even reconsider the matters which stood rejected or decided. For ready reference, paragraph 4 is also reproduced herein under:
"Earlier Orders under section 119(2)(a) dated 23-5-1996 and 30-1-1997 on the subject stand superseded by this Order. If any petition in the past has been rejected because the Board had not issued this direction earlier, such petition may be reconsidered and decided in accordance with this Order. If any petition in the past was allowed in accordance with the Orders under section 119(2)(a) dated 23-5-1996 and 30-1-1997, such Orders allowing waiver should not be reopened/revised as per the guidelines contained in this Order."
14. In the light of the aforesaid revised circular issued by the CBDT dated 20.06.2006 empowering the Chief Commissioner and the Director General of Income Tax to consider and decide reduction of waiver of interest under Section 234A, B and C, what is necessary at this juncture to consider is that admittedly the petitioner is a central public sector undertaking exclusively owned by the Government of India which comes directly under the ministry of atomic energy. From perusal of the order of rejection of the application for waiver of interest by the respondent No.2, it stands established that the said increase in turnover arose only in the last quarter of the financial year 2002-03. The required tax was to be paid by the petitioner by 7 31.03.2003. The entire excess tax liability of Rs.10 crores was to be paid before 31.03.2003 however the remaining tax liability was paid on 29.04.2003 i.e. only with a delay of just around 29 days.
15. The reason assigned by the petitioner was that since it was directly under the ministry of atomic energy, administrative approvals and sanctions were required to be obtained from the concerned ministry. On account of certain administrative reasons, certain delays arose in clearing the balance of payment of Rs.10 crores which was immediately cleared within a short span of time of less than a month from the last date by which it was to be paid. Apparently there does not seem to be any case of mala fide on the part of the petitioner for not clearing the said outstanding dues, nor is the case of the respondents that the act on the part of the petitioner was with a deliberate intention of avoiding payment of tax or evasion of tax.
16. Further, admittedly the Chief Commissioner as also the Director General were empowered to consider the factual aspects of the case which led to delayed payment of tax. The reasons assigned by petitioner does not seem to be in dispute by the learned Senior Standing Counsel for Income Tax. Except for the fact that the learned Senior Standing Counsel submits that these relevant facts were in fact duly considered by the respondent No.1 on an earlier occasion 8 when the order dated 20.06.2004 was passed and there was as such no scope of any further indulgence in this writ petition.
17. In the factual backdrop narrated in the preceding paragraphs and also taking note of the subsequent order of the CBDT issued on 26.06.2006, we are of the considered opinion that particularly taking into consideration the fact that the petitioner being an public sector undertaking, the reasons assigned by the learned counsel for the petitioner which led to delayed clearing of the outstanding payment of Rs.10 crores and also considering the fact that payment of Rs.10 crores was in fact made in less than a month's time from the last date on which it fell due. It is a fit case where in the opinion of this Bench, the matter needs reconsideration by the respondent No.2 and the order to the aforesaid extent stands set aside and the matter stands remitted back to the respondent No.2 for passing of fresh order keeping in view the subsequent order of the CBDT dated 20.06.2006.
18. Considering the long lapse that has lapsed in between, it is expected that respondent No.2 shall give an opportunity of hearing to the petitioner before passing of a fresh order. Further, taking into consideration that the issue involves payment of tax liability so far as the financial year 2002-03, the respondent No.2 should take an appropriate decision within an outer limit of four (04) months from the date of receipt of a copy of this order.
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19. With the above observations, the present writ petition stands allowed. However, there shall no order as to costs. Consequently, miscellaneous petitions pending if any, shall stand closed.
__________________ P.SAM KOSHY, J __________________ N.TUKARAMJI, J Date: 29.01.2024 GSD