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TMI Blog2019 (8) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... d be taken over by Samruddhi Cement Ltd. A scheme for such purpose, therefore, was framed. The appointed date provided in the scheme was 1.10.2009. The scheme provided that (i) Grasim Industries Ltd. will carry on the cement business from the appointed date to the effective date in trust on behalf of Samruddhi Cement Ltd. (ii) the advance tax payment made by Grasim Industries Ltd. in respect of the profits of the cement business from the appointed date and onwards shall be deemed to be paid by Samruddhi Cement Ltd. It is not in dispute that pursuant to such clause, Grasim Industries Ltd. paid advance tax of Rs. 184 crores on its profits of the cement business for the period from 1.10.2009 and 31.3.2010 in the following manner: "Advance tax payment made by Grasim in respect of profits of the Cement Business on profits pertaining to profits from the appointed date and onwards shall be deemed to be paid by the Company. ... Date of Payment Rs. 15.12.09 124,00,00,000 15.03.10 60,00,00,000 Total 184,00,00,000 3. The scheme of demerger was presented before the Madhya Pradesh High Court as well as Gujarat High Court for approval. The Madhya Pradesh High Court approved the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess activity was carried on. It was further pointed out that the income was received after the due date for payment of first and second installments of advance tax. Such income was neither anticipated nor in contemplation on such dates. The request was, therefore, made to waive interest in terms of CBDT Circular dated 26.6.2006 since the case of the company fell squarely within the parameters of the said Circular. 6. The Principal Commissioner passed the impugned order dated 30.11.2018 and rejected the application of the petitioner. His principal ground was that in view of clear provisions contained in the scheme of demerger, it cannot be stated that the income was neither anticipated nor contemplated. Necessary conditions for waiver of the interest provided in the CBDT Circular dated 26.6.2006 were, therefore, not fulfilled. He also pressed in service yet another ground, namely, that the company ought to have paid all its installments which requirement in the present case according to him was not fulfilled. The relevant portion of his order reads as under: "5. I have carefully considered the facts of case the request of the assessee. Para 2(b) of the Board's instructions dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid the advance tax and there was a shortfall in the payments made in the earlier installments. Thus, the basic ingredient of payment of advance tax by the assessee, as contemplated in the Board's instructions is missing in this case. The assessee has only taken credit for the 3rd and 4th installment of advance tax paid by Grasim Industries Limited. However, the fact remains that no advance tax was paid by the assessee though its separate PAN was available. Therefore, the assessee is not eligible for any wavier of interest in accordance with Board's instructions as no payment of advance tax was made by the assessee company at all during the year." 7. Appearing for the petitioner, the learned Counsel Mr.Mistri submitted that the impugned order suffers from gross illegality. Samruddhi Cement Ltd., was not in existence when the first installment of 15.6.2009 had fallen due. By the time of second installment of 15.9.2009, the company had just come into existence. The proposal for acquiring the cement business from Grasim had not yet been finalised. In any case, the scheme of demerger was subject to approval by two High Courts. Till such approvals were granted, the scheme would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax may also impose any other conditions as deemed fit for the said reduction or waiver of interest. The class of incomes or class of cases in which the reduction or waiver of interest under section 234A of section 234B or, as the case may be section 234C can be considered, are as follows: (a) .... (b) 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 he advance tax on such income is paid in the remaining instalment or instalments, and the Chief Commissioner/Director-General is satisfied on the fact and circumstances of the case that this is a fit case for reduction or waiver of the interest chargeable under section 234C of the Income-tax Act. .... ... 4. Earlier Orders under section 119(2)(a) dt. 23rd May, 1996 and 30th January, 1997 on the subject stand superceded 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cement Ltd. cannot be stated to be either anticipated or under contemplation. One must draw a distinction between anticipation or contemplation of demerger of the business from anticipation or contemplation of income. Obviously, since it was Grasim Industries and Samruddhi Cement Ltd. who had applied to the High Court for approval of the demerger scheme, the scheme was under contemplation and, therefore, approval anticipated. This does not mean that approval by the High Court was a certainty. Till the approval was granted, Samruddhi Cement Ltd. could not have anticipated or contemplated flowing of the income in its coffers. Any other view would act extremely harshly in a situation as the present one and defeat the very purpose for which the Circular has been issued by the CBDT. We can think of a reverse situation. Let us assume Samruddhi Cement Ltd. had paid advance tax. Grasim Industries obviously, therefore, would not. Or the scheme of demerger was not approved by the High Court or not approved till the completion of the financial year. Samruddhi Cement Ltd. may be able to claim refund, surely Grasim Industries would be charged interest for not depositing advance tax. 13. We m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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