TMI Blog2017 (11) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 18 of the Acquisition Act. The Assessing Officer as well as the Department was well aware with the said provision and this presumption can safely be drawn on account of the conduct of the Department in not enforcing any of the demands issued and for the first time interest demand was issued on 12.12.2000 much after the Club was handed over to the Committee of Management. From 1985 onwards till 2003 the assessment was not completed. As noticed above, there were three computations with regard to carry forward loss. The petitioner cannot be stated to be wholly incorrect for claiming a carry forward loss, while they filed the return atleast they were partially right since the Department rectified the mistake suo motu and arrived at the carried forward business loss at ₹ 12.82 lakhs as against the initial quantification of ₹ 35,435/-. Thus, these factors should enure to the benefit of the petitioner. Thus, in the light of the factual position referred above, payment of interest would cause undue hardship to the petitioner. With regard to the second aspect regarding Circumstances beyond the control of the assessee the petitioner having been received interest s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be essential to decide as to whether the CIT was justified in rejecting the application for waiver. 3.For the assessment year 1985-1986, the petitioner filed a return of income on 30.09.1985 declaring taxable income of ₹ 8,19,088/- after setting off of the carried forward loss amounting to ₹ 32,14,404/-. 4.The Government of Tamil Nadu enacted The Madras Race Club (Acquisition and Transfer of undertaking) Act, 26 of 1986 [hereinafter referred to as Acquisition Act ], to provide for the acquisition, for a public purpose, and transfer of undertaking of the petitioner and for matters connected therewith or incidental thereto. In terms of Section 4 of the Acquisition Act, on the appointed date, i.e. 09.04.1986, the undertaking of the petitioner Club and the right, title and interest of the Club in relation to its undertaking shall, by virtue of the Acquisition Act, stood transferred to, and vested in, the Government. In terms of Section 3(e) of the Acquisition Act, Government means the State Government and Section 3(f) defines Government Company to mean a Corporation or a Company wholly owned by the State. The payments to be made, were effected by a Commissioner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and took up the assessment for the year 1985-1986 which was completed under Section 143(3) of the Act, by order dated 15.03.1988 for certain rectification and computed the interest at ₹ 15,35,104/- as against earlier computation of ₹ 24.61 lakhs. So far as the carried forward loss for the assessment year 1984-1985 which was determined at ₹ 35,433/- was re-determined by the Assessing Officer, by order dated 31.10.1996 as ₹ 11.92 lakhs. Once again, the Assessing Officer exercised his powers under Section 154 and passed a rectification order dated 25.08.2003 for assessment year 1984-1985 arrived at the carried forward business loss at ₹ 12.82 lakhs as against the earlier determination of ₹ 11.92 lakhs. This rectified order dated 25.08.2003 was given effect to by way of revision of assessment under Section 154, by order dated 29.08.2003 allowing a carried forward loss of ₹ 12.82 lakhs for the assessment year 1984-1985 and arrived at the total income of ₹ 26,88,790/- after adjustment for tax arrived at NIL tax payable. By separate order dated 29.08.2003, interest was demanded at ₹ 24.65 lakhs. 6.As noticed above, from 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment has given interest under Section 244(1A) of the Act with regard to the revision of assessment for the assessment year 1977-1978 and when the petitioner has received that interest amount, they cannot claim that the interest payable by them should be waived. In other words, it was stated that the interest, which was granted under Section 244(1A), being a substantial amount, the petitioner cannot claim any hardship; (ii) for being entitled for waiver of interest under Section 220(2), three Conditions have to be satisfied cumulatively and the petitioner has not satisfying Condition Nos.(i) and (ii) regarding genuine hardship and circumstances beyond their control. Therefore, the petitioner is not entitled for waiver of interest; (iii) the petitioner could have paid advance tax or self assessment tax much before the takeover of the Club on 10.04.1986 and the liability could have been easily settled and that question of 'waiver of interest' will not arise. 10.The correctness of this reasons is being tested in this writ petition. 11.Heard Mr.M.P.Senthilumar, learned counsel for the petitioner and Mr.Naveen Durai Babu, learned Junior standing counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an impact on the present issue which pertains to the assessment for the year 1985-1986 for which the petitioner filed return of income during September, 1985. For ten long years, the administration of the undertaking vested with the Government and the petitioner had no control over the payments to be made. As mentioned above, taxes fell in Category V of Schedule II to the Acquisition Act and the last among the priority of debts as stipulated under Section 18 of the Acquisition Act. The Assessing Officer as well as the Department was well aware with the said provision and this presumption can safely be drawn on account of the conduct of the Department in not enforcing any of the demands issued and for the first time interest demand was issued on 12.12.2000 much after the Club was handed over to the Committee of Management. 15.One more important fact to be seen in the instant case is the assessment for the year 1985-1986 in which the petitioner claimed a carried forward loss for the assessment year 1984-1985 was finalised only on 25.08.2003. The Assessing Officer suo motu rectified the order for the year 1984-1985 with regard to the carried forward business loss and this rectifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 was passed on 28.02.1989, the assessment was completed and order was passed under Section 154 only on 29.08.2003. Therefore, to state that in the interregnum tax could have been paid is a wrong conclusion without due regard to the fact that the undertaking vested with the Government from 1986 to 1996 and even during the period when it vested with the Government, the respondent Department had no priority over their claims and they were the last among the list of priorities, the respondent Department did not challenge the provisions of the Acquisition Act. Therefore, to now pin down the petitioner/assessee and direct them to pay interest will be harsh especially when the circumstances stated above clearly shows that they were beyond the control of the petitioner. 18.The learned counsel for the Revenue relied on the decision of the High Court of Delhi in the case of Girnar Investment Limited V. Commissioner of Income Tax, [2012] 17 taxmann.com 69 (Delhi). Firstly, the said case is clearly distinguishable facts as the assessee therein contended that the demand for interest should not be made from the date on which the assessee had committed default in payment but should be fixed a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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