Madras High Court
M/S. Tamilnadu Newsprint And Papers ... vs The Chief Commissioner Of Income Tax on 18 September, 2017
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 18.09.2017 Coram The Hon'ble Mr.Justice T.S.Sivagnanam Writ Petition Nos.9080 and 9090 of 2007 M/s. Tamilnadu Newsprint and Papers Limited 67, Mount Road, Guindy, Chennai 600 032. ...Petitioner in both the W.Ps Versus The Chief Commissioner of Income Tax, Chennai 600 034. ...Respondent in both the W.Ps Writ Petitions, filed under Article 226 of the Constitution of India, for issuance of Writ of Certiorarified Mandamus, to call for the records of the respondent in CCA/Co.Ord/106 (W-24)1/2003-04, and to quash the impugned order, dated 30.11.2004, relating to the petitioner for the assessment years 2001-02 and 2002-03 respectively, and to direct the respondent to grant waiver of interest. For Petitioner : Mr. R. Venkatanarayanan for M/s. Subbaraya Aiyar For Respondent : Mr. J. Narayanaswamy COMMON ORDER
Heard Mr. R. Venkatanarayanan, the learned counsel for M/s. Subbaraya Aiyar, the learned counsel for the petitioner and Mr.J.Narayanaswamy, the learned Government Advocate for the respondent.
2. The petitioner is wholly a Government owned Company, registered under the provisions of the Indian Companies Act, and they are before this Court, challenging the orders passed by the Chief Commissioner of Income Tax, rejecting their applications for grant of waiver of the interest, levied under Section 234 (B) & (C) of the Income Tax Act, 1961 (hereinafter, referred to as 'the Act') for the assessment years 2001-02 and 2002-03, on account of certain subsequent developments, which have taken place during the pendency of the Writ Petitions.
3. It may not be necessary for this Court to endeavour to test the correctness of the impugned orders. This is so, because, after the impugned orders were passed, assessments were completed under Section 143 (3) by orders, dated 30.03.2005, and as against such orders, the petitioner had preferred Appeals before the Income Tax Appellate Tribunal. It appears that the Tribunal has allowed the Appeals and remanded the matters to the Assessing Officer for fresh consideration. The learned counsel for the petitioner is not in a position to readily inform the Court as to the subsequent developments on such remand.
4. Be that as it may, if there is any reduction in the tax liability, obviously, it will also impact the quantum of interest, which is to be levied. Therefore, it would be appropriate to remand the matter back to the respondent for fresh consideration and take note of the subsequent developments in the matter, and take a fresh decision. The petitioner, while filing an Application for waiver of interest under Section 234 (B) & (C) of the Act, dated 13.12.2004, raised the following contentions:-
The scheme of advance tax as contained in provisions of 207- 210, refer to 'income' and 'total income' as defied in Section 2 (24) and 2 (45). The deemed income, which is computed under Section 115-JA/115-JB does not fall within the above definition.
The liability of the assessee for payment of tax under Section 115-JA/115-JB arises if the total income as computed under the provisions of the Act is less than 30% of its book-profits. This exercises for determining the total income in accordance with the provisions of the Act and that of the book-profit can be only after the end of the relevant assessment year, since the entire exercise of computing the income or that of the book-profit could be only at the end of the financial year, the provisions of Section 209 and 2010 cannot be made applicable, until and unless, the accounts are audited and the balance-sheet is prepared even the assessee may not know whether the provisions of Section 115-JA/115-JB are applicable or not.
The explanation to the section which prescribes the adjustments for arriving at the ''book-profit'' makes it very clear that the computation of the book-profit is only for the purpose of this Section. The words ''for the purposes of this Section '', in the explanation are relevant and cannot be construed to extend beyond the computation of liability of tax.
It is the contention of the petitioner that there is no tax liability on the assessee to pay advance tax. The Bangalore High Court decision in the case of Kwality Biscuits Ltd. Vs. CIT, 243 ITR 527 holding that, interest under Section 234 B is not leviable, is not because other provisions of the Act is not applicable, but because, the book-profits could not be computed before the finalisation of accounts.
The petitioner, therefore, submits that it was not in a position to anticipate the whether they will be assessable under 115-JA/115-JB.
The petitioner was under the bona fide belief that it shall not be liable to pay any tax, including advance tax.
5. Though the aforesaid contentions have been raised, and presumably taken note of, by the respondent, the same were not considered while passing the impugned orders, as there is no finding rendered by the respondent on the factual aspect placed before it.
6. In pure and simple terms, the petitioner's case is that, they were not in a position to anticipate whether they will be assessable under Section 115 -JA / 115 JB. An endeavour was required in this regard as a finding of fact had to be recorded while either accepting or rejecting the application for waiver. However, in the instant case, the Authority appears to have been solely guided by the decision, which was relied upon by the petitioner, and had taken a stand that the decision rendered by the Karnataka High Court, being a decision not by the territorial High Court, cannot be made applicable to the facts of the petitioner's case. The respondent placed reliance on the decision of this Court, in the case of (C.I.T. Vs. Holiday Travels Pvt. Ltd.,) reported in (2003) Vol 263 ITR 307 (Mad). It is pointed out by the learned counsel appearing for the petitioner that, this decision was rendered much after filing of the return of income for the relevant assessment years. The learned counsel for the petitioner further pointed out that the decision rendered by the Karnataka High Court in the case of (Kwality Biscuits Ltd. Vs. CIT) 243 ITR 527 has been upheld by the Hon'ble Supreme Court reported in (2006) 284 ITR 434 (SC). However, this Court does not propose of dwell any further on this aspect, as it is satisfied that the matter requires re-consideration, more particularly, on account of the subsequent developments.
7. For the above reasons, these Writ Petitions are allowed and the impugned orders are set aside and the matters are remanded to the respondent for fresh consideration. The petitioner is directed to file a fresh Application for waiver along with supportive records to bring on record the subsequent developments, which have taken place during the pendency of the Writ Petitions. On such Petition being filed, the respondent shall afford an opportunity of personal hearing to the authorized representative of the petitioner and pass orders on merits and in accordance with law. No costs.
18.09.2017 sd/mrr Index : yes/no To The Chief Commissioner of Income Tax, Chennai 600 034 T.S.Sivagnanam, J.
sd/mrr Writ Petition Nos.9080 and 9090 of 2007 18.09.2017