Interest chargeable u/s 215 and 217 of Income Tax Act,1961 can be reduced/waived in accordance u/r 40. - Income Tax - 1101/CBDT

INSTRUCTION NO. 1101/CBDT Dated : September 27, 1977 Section(s) Referred: Rule 40 Statute: Income - Tax Act, 1961 Interest chargeable under section 215 and 217 of the Income-tax Act, 1961 can be reduced/waived in accordance with the provisions of rule 40 of the Income-tax Rules, 1962. The Income tax officer is empowered to reduce/waive the interest in the cases and under the circumstances mentioned in sub-rules (1) to (4) of the said Rule. Under sub-rule (5) of the said rule, such interest may be reduced or waived in any case in which the Inspecting Assistant Commissioner considers that the circumstances are such that the reduction or waiver of the interest payable under section 215 or 217 is justified. 2. With a view to securing uniformity of treatment in regard to reduction or waiver of interest under rule 40, it was laid down in paragraph 13 (xiii) of Chapter XIV of the Office Manual Vol.II, Section II, that:- (1) Where the reduction or waiver of interest in the cases falling under clauses (1) to (4) of the Rule 40 is in excess of Rs.500/-, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner for approval; (2) any case, in which interest to be reduced or to be waived exceeds Rs.2,000/- shall be referred by the Inspecting Assistant Commissioner to the commissioner; and (3) The Commissioner may dispose of all cases referred to him unless he desires to have Board's instruction in any particular case. 3. The Board have had occasion to review the instructions reproduced above in the light of the experience gained since the issue of the above instructions. It has been decided to amend the said instructions so as to bring them broadly in line with the proviso to rule 117A, namely, that the Income-tax Officers should be required to refer to their Inspecting Assistant Commissioners cases for waiver falling under sub-rules (1) to (4) only where the amount of interest chargeable exceeds Rs.1000/- and the Inspecting Assistant Commissioner need not refer to the Commissioner of Income -tax any case where he has to approve the proposal of the Income-tax Officers or he has to exercise his own discretion. These instruction would come into force with immediate effect. The instruction in the Office Manual referred to above should be regarded as having been amended accordingly.