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2019 (8) TMI 513

..... the profit by predecessor company and successor in return of income, claimed credit thereof, Commissioner rejecting the application for waiver of interest - HELD THAT:- 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. We may recall, Grasim Industries continued to discharge the tax liability on the profit of the cement business even after 1.10.2009. Consequently, Grasim had paid advance tax of ₹ 184 crores. On account of demerger, Grasim never claimed benefit of such advance tax, instead, Samruddhi Cement Ltd. in return of income, claimed credit thereof, which was also recognised by the Assessing Officer. Second ground pressed in service by the Commissioner is wholly untenable. The relevant parties, namely, Grasim Industries and Samruddhi Cement Ltd. as well as the Assessing Officer treated the advance tax installments .....

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..... 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 scheme by an order dated 31.3.2010 whereas the Gujarat High Court granted approval by an order dated 6.5.2010. The scheme was subsequently duly notified and became effective from 18.5.2010. 4. Samruddhi Cement Ltd. filed its return of income for the AY 2010-2011 declaring an income of ₹ 428.83 crores, which under section 115JB of the Act was assessed at ₹ 931.70 crores. The Assessment order was passed on 26.3.2013. This order took into account the advance tax of ₹ 184 crores paid by Grasim Industries Ltd. for the period between 1.10.2009 till 31.3.2010. This was adjusted against Grasim s tax liability giving rise to refund of ₹ 25.66 crores (rounded off). 5. Samruddhi Cement Ltd. had not paid advance tax installments falling due on 15.6.2009 and 15.9.2009. The question of charging interest on non-payment of advance .....

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..... lfilled. 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 26.6.2006, relied upon by the assessee company, reads as under: (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 installments of advance tax which was neither anticipated or was in the contemplation of the assessee, and the advance tax on such income is paid in the remaining installment or installments and the Chief Commissioner/Director-General is satisfied on the facts 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. Thus, as per the Board s guidelines the income should be received after the due date of payment of first or subsequent installment of advance tax, which was neither anticipated nor was in the co .....

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..... 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 come into existence. Various provisions made in the scheme would not be effective. It was, therefore, not correct to hold that the profit in question could have been anticipated or could have been under contemplation. He further pointed out that the advance tax of ₹ 184 crores paid by Grasim was not claimed by the said company but by Samruddhi Cement Ltd. and the Assessing Officer duly recognised the same while passing the order of assessment. The Commissioner was, therefore, not correct in recording that all the installments were not paid by Samruddhi Cement Ltd. 8. On the other hand, the learned Counsel Mr.Suresh Kumar opposed the petition. He supported the impugned order. He argued that the crucial requirement of applicability of the Circular was that the income in question should neither be anticipated nor in contemplation. I .....

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..... 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 this Order. If any petition in the past was allowed in accordance with the Orders under section 119(2)(a) dt. 23rd May, 1996 and 30th January, 1997, such Orders allowing waiver should not be reopened/revised as per the guidelines contained in this Order. 10. It can thus be seen that to obviate the difficulty arising out of strict compliance of the interest provision, the CBDT has issued the said Circular for waiver of interest in certain circumstances. Para 4 of the Circular provides that these guidelines would be applied even in cases, applications for waiver of interest have been rejected in the past. 11. The facts of the case are not seriously in dispute. Samruddhi Cement Ltd. was incorporated on 4.9.2009 as a subsidiary of Grasim Industries. The scheme of demerger of Grasim s business was framed which envisaged 1.10.2009 as the ap .....

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..... 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 may recall, Grasim Industries continued to discharge the tax liability on the profit of the cement business even after 1.10.2009. Consequently, Grasim had paid advance tax of ₹ 184 crores. On account of demerger, Grasim never claimed benefit of such advance tax, instead, Samruddhi Cement Ltd. in return of income, claimed credit thereof, which was also recognised by the Assessing Officer. Second ground pressed in service by the Commissioner is wholly untenable. We may recall, he was of the opinion that the Grasim Industries had not even paid all its installments and therefore also, waiver of interest could not be granted. This conclusion is based on a fallacious consideration that the installments were paid by Grasim Industries and not Samruddhi Cement Ltd. The relevant parties, namely, Grasim Industries and Samruddhi Cement Ltd. as wel .....

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