TMI Blog2016 (1) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner to be exercised judiciously, based on facts and circumstances, since not circumscribed by any fetters. If as noticed supra, and at the cost of repetition petitioner suffered decrease in current income in the three consecutive previous years, coupled with global recession in automotive industry, an admitted fact, it was imminent for the Chief Commissioner to have exercised judicious discretion in petitioner's favour. In considered opinion, in the facts and circumstances, petitioner's explanation is acceptable, calling for exercise of discretion by the Chief Commissioner under paragraph 2(b) of the notification dated 26.06.2006, Annexure-B, over the extent of interest waiver. In the result, petition is allowed. The order impugned is quashed and the proceeding remitted for consideration by the Chief Commissioner, insofar as it relates to the extent of waiver of interest charged under Section 234C in terms of paragraph 2(b) of the notification dated 26.06.2006, Annexure-B. Compliance within four weeks from the date of receipt of a copy of this order. - WRIT PETITIONER NO. 27405 OF 2015 (T-IT) - - - Dated:- 15-10-2015 - MR. RAM MOHAN REDDY, J. FOR THE PETITIONER : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 2,14,81,953/-. (ii) Petitioner's application dated 11.04.2011 for waiver of interest charged under Section 234C of the 'Act', when rejected, at the first instance, was set-aside by order dated 20.08.2014 in W.P.No.48496/2013 and the proceeding remanded for consideration afresh. (iii) Petitioner's claim for waiver of interest is said to be based upon the notification dated 23.05.1996 said to be on par with paragraph 2(b) of the notification dated 26.06.2006, Annexure-B, on the premise that it had paid advance tax on the basis of anticipated current income during the first quarter of the year and there was no contemplation that its current income would exceed the current income for the previous year i.e., assessment year 2009-10 (financial year 2008-09). According to the petitioner, current income for the financial years 2006-07 was ₹ 761 crores, while, ₹ 753 crores for the year 2007-08 and ₹ 620 crores the for year 2008-09, hence a decrease in the current income, leading to anticipated decrease in the current income for the financial year 2009-10. In the circumstances, during the first quarter of the year 2009-10, petitioner, it is said did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is court in Dr. S.Reddappa and another vs. Uion of India and others reported in 232 ITR 62 that the nature of interest charged under the aforesaid provisions is compensatory and not penal and that Section 234C regulates payment of simple interest at the rate of 18% per annum in case an assessee liable to pay advance tax under Section 208 of the Act, either fails to pay the tax or pays the same which is less than 30% by September 15, or 60% by December 15, of the tax due on the returned income; and (iii) observations of the Apex Court in several reported opinions that interest charged under Section 234A, B and C cannot but be compensatory in character. 9. The authority while addressing the question of waiver of interest under Section 234A, B and C of the Act extracted the observations of this Court in M/s Union Land and Buildig Society Pvt. Ltd. Vs. Union of India reported in 215 ITR 758, rejecting the submission that imperfection and legitimate expose of the provisions to criticism or challenge to its vires, on the premise, that validity of legislation, otherwise valid, could not be struck down simply because, in some extreme or freak case, it would operate so unfairly as to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, the authority rejected petitioner's plea that for the assessment year 2010-11, a forecast of the increase in profits during the last quarter of the year was unavailable, since, such increase in profits may be due to various internal and external conditions. 13. Sri K.P. Kumar, learned senior counsel submits that there being no dispute over applicability of notification dated 26.06.2006, Annexure-B to petitioner, an individual assessee, for waiver of interest under Section 234C of the 'Act' as noticed by the Chief Commissioner at paragraph IV.8, the question for consideration was, whether petitioner had putforth satisfactory explanation for exercise of discretion to waive interest under Section 234C in terms of clause 2(b) of the notification dated 26.06.2006? 14. Learned Senior counsel points to the year wise sales and current income demonstrating fluctuating and reduction in income during the financial year 2006-07 to ₹ 761 crores; 2007-08 ₹ 753 crores; 2008-09 ₹ 620 crores, hence unable to predict current income of ₹ 901 crores for the financial year 2009-10 not at least during the first quarter of the financial year 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have anticipated current income of ₹ 901 crores by a mechanism of details of sales, consumption and production over the previous 3 years is far from acceptance. Learned senior counsel is correct in his submission that during the financial years 2006-07, the current income was ₹ 761 crores, while for the year 2007-08, was reduced to ₹ 753 crores and for the year 2008-09 further reduced to ₹ 620 crores and therefore, it was reasonable for the assessee to anticipate a further reduction in the current income for the financial year 2009-10, atleast during the first quarter of the said year, and the advance tax paid on the basis of anticipated reduction of current income for the said year cannot be said to be figment of wild imagination, more so, since assessee is admittedly a global manufacturer of automotive parts for over six decades and more. It is common knowledge that there was a global recession during the financial years 2008-09 as noticed by the Chief Commissioner on the basis of economic survey of 2009-10 presented in the Parliament and Statistics of periodical review conducted by the Centre for monitoring Indian economy on the outlook of Indian Econom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in rejecting the explanation of the petitioner over its anticipated low current income for the financial year 2009-10, at least in the 1st quarter of that year, for payment of Advance Tax. 22. Admittedly the Chief Commissioner without making reference to any material over manufacture, sales, production of automotive parts by the petitioner during the 1st quarter of the financial year 2009-10, was not justified in concluding that petitioner could have by an internal mechanism, anticipated the spurt in increase in profit in the last quarter of the year, for payment of Advance Tax. 23. It is no doubt true that petitioner did not experience a windfall during the last quarter of the financial year 2009-10, but did have an increase business income. Paragraph 2(b) of the notification cannot be read restrictively, to mean that waiver of interest under Section 234 'C' is available only to cases of windfall, since that would be too myopic. In fact discretion is invested in the Chief Commissioner to be exercised judiciously, based on facts and circumstances, since not circumscribed by any fetters. If as noticed supra, and at the cost of repetition petitioner suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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