TMI Blog2019 (8) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 paid by Grasim Industries as deemed to have been paid by Samruddhi Cement Ltd. The Commissioner, therefore, was in error in pressing in service this clause of the Circular. Under the circumstances, we find that the Commissioner committed a serious error in rejecting the application for waiver of interest. The impugned order dated 30.11.2018 is, therefore, quashed. It is directed that the respondents shall waive interest payable u/s 234C of the Act in terms of CBDT Circular dated 26.6.2006 for the period in question. Consequently, if such interest is already recovered, the same would become refundable. - WRIT PETITION NO.544 OF 2019 - - - Dated:- 5-8-2019 - AKIL KURESHI S.J. KATHAWALLA, JJ. Mr. J.D. Mistri, Senior Advocate with Mr. M. Agarwal i/b Mr. Atul Jasani for the Petitioner Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tax of two installments, therefore, would arise. It is not even the case of the Samruddhi Cement Ltd. that interest u/s 234C of the Act, ordinarily would not be leviable. Samruddhi Cement Ltd., however, contends that such advance tax was not deposited on account of impossibility. Citing Circular of CBDT dated 26.6.2006, Samruddhi Cement Ltd., therefore, filed application dated 11.5.2012 to the Chief Commissioner of Income Tax seeking waiver of interest. In such application, Samruddhi Cement Ltd. pointed out that the scheme of demerger envisaged the appointed date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 contemplation of the assessee. In the instant case, the cement business of Grasim Industries was contemplated to be transferred to the assessee w.e.f. 01.10.2009 under a well thought out and deliberate plan by the Scheme of arrangement. The assessee company being 100% subsidiary of GIL was an integral part of Grasim Industries who was carrying on the cement business. Therefore, it cannot be said that the income was not anticipated or not under contemplation. The benefit of this clause for waiver of interest is available only in a case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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. In the present case, both the conditions were not satisfied. The scheme of demerger was already framed which envisaged transfer of cement business of Grasim to Samruddhi. The Commissioner, therefore, had correctly come to the conclusion that the petitioner was not entitled to the benefit of Circular. 9. In exercise of powers under section 119(2) of the Act, CBDT has issued order/circular dated 26.6.2006 regarding waiver of interest under section 234A, 234B and 234C of the Act. Relevant portion of this Circular reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appointed date. The scheme was approved by the Madhya Pradesh and Gujarat High Courts on 31.3.2010 and 6.5.2010, and the effective date being 18.5.2010. Till these orders were passed, the scheme would not be effective. The demerger as envisaged in the scheme, would not come into existence. It was, therefore, that the scheme itself provided that post 1.10.2009, Grasim Industries would continue to operate its cement business in trust for and on behalf of the Samruddhi Cement Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 well as the Assessing Officer treated the advance tax installments paid by Grasim Industries as deemed to have been paid by Samruddhi Cement Ltd. The Commissioner, therefore, was in error in pressing in service this clause of the Circular. 14. Under the circumstances, we find that the Commissioner committed a serious error in rejecting the application for waiver of interest. The impugned order dated 30.11.2018 is, therefore, quashed. It is directed that the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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