TMI Blog2020 (2) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner and therefore the petitioner was liable to that extent. The assessments for the assessment years 1988-89 to 1990-91 were reopened/rectified as the petitioner had wrongly claimed business loss and depreciation loss. The re-assessments were completed for the assessment years 1991-92 and 1992-93 on 22.11.1996 and on 22.3.1999 which resulted in the increase of the positive income of the petitioner. The petitioner had however failed to pay advance tax by wrongly claiming business loss/depreciation loss during the assessment years 1988-89 to 1990-91. Therefore it cannot be stated that the petitioner was entitled to the benefit of the above notification issued under section 119 (2) (a) of the Income Tax Act, 1961. None of the situation contemplated under the attracted the CBDT Notification dated 23.05.1996 As a passing reference it may also be relevant to refer to the decision cited by the learned counsel for the respondent in Chief Commissioner of Income Tax Versus Ranjinikant and Sons [ 2017 (6) TMI 922 - MADRAS HIGH COURT] . A division bench of this court held that since the tax was paid only after the revenue had passed the reassessment order, waiver from payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation loss and business loss. 5. Meanwhile, for the assessment years 1990-91, 1991-92 and 1992- 93 regular returns were filed and scrutiny assessment orders were passed under section 143 (3) on 31.3.1990, 31.3.1994 and on 22.3.1999 respectively. 6. The completed assessment for the assessment years 1988-89 and 1989-90 were reopened and reassessment orders dated 27.3.1995 came to be passed by treating a sum of ₹ 31,22,667/-as the income earned from the joint-venture on accrual basis for each of these assessment years. 7. Thus, the carry forward loss of the petitioner was reduced to ₹ 25,29,324/-and ₹ 15,99,523/- in the respective assessment years which impacted the assessment for the assessment years 1990-91, 1991-92 and 1992- 93. 8. For the assessment year 1990-91 and assessment year 1991-92, rectification petitions were filed by the 2nd respondent under Section 154 of the Income Tax Act, 1961. Rectification orders dated 22.11.1996 were passed. 9. For the assessment year 1991-92, the assessment was completed on 31.03.1994 under Section 143 (3) of the Income Tax Act, 1961 determining the profit receivable at ₹ 41,41,790/- and compensation rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of Explanation 4 to Section 234A which has since been deleted by Finance Act, 2001 with restropective effect from 01.04.1989. Therefore, the decisions cited by the assessee-company cannot be considered to decide the waiver petitions in its favour. 9. In view of the discussion made in the foregoing paragraphs, the two petitions for waiver of interest filed by M/s.Rayala Corporation Pvt.Ltd., for the two assessment years 1991-92 and 1992-93 are hereby rejected. 15. It is the contention of the petitioner that the petitioner had not deliberately avoided payment of tax for the respective assessment years. The tax liability for the relevant assessment years namely 1991-92 and 1992-93 was due to the cascading effect in the reopening of the assessments for the Assessment Years 1988-89 to 1990-91. The petitioner therefore submits that, petitioner s request for waiver of interest under the above said provisions should be allowed. 16. It is further submitted that JV agreement dated 30.08.1987 was not acted upon and the petitioner did not receive instalments, share of profits and interest on delayed payment specified in the aforesaid agreement. Therefore, it is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified date to the owner (petitioner herein) irrespective of whether the commercial complex is put up and/or completed as scheduled and programmed above . 23. I have considered the arguments advanced on behalf of the petitioner and the respondent. I have also considered the case of submitted by the learned counsel for the petitioner and the records of the case. 24. The question to be examined in the present petition is whether the petitioner is entitled for waiver of interest under section payable under section 234 B of the Income Tax Act, 1961. 25. The petitioner seeks to assail the impugned order in the light of the Notification No.400/234/95-IT (B) dated 23.5.1996 issued under section 119 (2)(a) of the Income Tax Act, 1961. The said notification has given guidelines to be followed for reduction or waiver of penal interest. Paragraph 2 of the said notification reads as under:- The class of incomes or class of cases in which the reduction or waiver of interest under Section 234A or Section 234B or, as the case may be, section 234C can be considered, are as follows: (a) Where during the course of proceedings for search and seizure under Section 132 of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner or Director-General is satisfied that this is a fit case for reduction or waiver of such interest. (e) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the AO. 26. It is a contention of the petitioner that the petitioner was entitled for waiver in terms of the situation contemplated in clause (e). According to the learned counsel for the petitioner, the petitioner could not pay tax due to uncertainty in the implementation of the JV agreement dated 30.8.1987 and therefore claimed higher depreciation loss and business loss during the assessment years 1988-89 to 1990-91. Not only the assessments were completed but also scrutiny assessment were completed as well. As a ongoing requirement under the Act the petitioner had declared loss during the assessment year 1991-92 and 1992-93. 27. In this case, the petitioner had accepted the assessment which were revised pursuant to proceedings initiated under section 154/148 of the Income Tax Act, 1961 for the assessment years 1988-89, 1989-90, 1990-91. The petitioner has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins of business or professional or Income from other sources shall be subject to the provisions of sub-section (2) and be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. 34. For the aforesaid purpose, the Central Government may also notify in the Official Gazette from time to time accounting standards to be followed by any class of assessee or in respect of any class of income. The petitioner has followed mercantile system of accountancy. 35. The Honourable Supreme Court in CIT versus Ashok Bhai Chimanbhai (1965) 1 SCR 758:(1965) 56 ITR 42 has held that under the Income Tax Act, 1961 income is taxable when it accrues or arises or is received or when it is by fixation, deemed to accrue, arise or is deemed to be received. The Court held that receipt is not the only test of chargeability of tax. If income accrues or arises it may become liable to tax. After referring to In Re The Spanish Prospecting Co. Ltd [(1911) 1Ch 92], the Honourable Supreme Court observed For the purpose of this case it is unnecessary to dilate upon the distinction between income accruing and arising . But there is no doubt that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versus The Asst Commissioner of Income Tax (2011) 333 ITR 464 cited on behalf of the petitioner deals with the situation where the assessee could not anticipate increase. There the assessee had paid advance tax but had estimated the same wrongly. Whereas in this case, the petitioner had wrongly claimed business loss and depreciation loss and therefore failed to pay advance tax during 1991-92 and 1992-93. Therefore, the said decision of the Division Bench of the Hon'ble Bombay High Court cannot be applied to the facts of the case. 42. Similarly the decision of the Karnataka High Court in Shriram Chits (Bangalore) Ltd versus Joint Commissioner of Income Tax (2010) 325 ITR 0219 and that of this court in Commissioner of Income Tax Versus Revathi Equipment Ltd (2008)298 ITR 67 cited on behalf of the petitioner are not applicable to the facts of the present case. There the liability to pay interest arose on account of amendment to the provision whereas the levy of interest in the present case is not account of these factors. 43 . Therefore, these decisions cited are of no relevance to the facts of the case. As a passing reference it may also be relevant to refer to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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