The Chief Commissioner of Income-tax, Bangalore- II v. M/s. UB Global Corporation Ltd
[Citation -2014-LL-1021-16]

Citation 2014-LL-1021-16
Appellant Name The Chief Commissioner of Income-tax, Bangalore- II
Respondent Name M/s. UB Global Corporation Ltd.
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 21/10/2014
Judgment View Judgment
Keyword Tags advance tax • current income • payment of interest • retrospective amendment • waiver of interest
Bot Summary: Thereafter, at paragraph-14, he has observed as under: Viewed in this perspective the decision of the High Court or Supreme Court need not be in the case of the assessee. In coming to that conclusion, he has relied on the decision of the Kerala High Court in A.V.Thomas, which was followed by the Tribunal in granting relief to the assessee under Section 80HHC of the Act. Following the said judgment which impliedly overrules the judgment of the Kerala High Court in A.V.Thomas case, the assessee is held liable to pay tax under Section 80HHC. Therefore, the question for consideration is whether the assessee s bonafide belief that the decision of the High Court of Kerala in A.V.Thomas is applicable to his case is correct. The asessesse s case is, the Tribunal following the said judgment only gave 4 him the benefit and it is only when the Apex Court in IPCA Laboratory s case impliedly overruled the said decision, the liability arose for payment of interest as the assessee is not entitled to the benefit of the said Board Circular. As is clear from the aforesaid Clause, if any order is passed on the basis of any order passed by the High Court within whose jurisdiction the assessee is not assessable to income tax, then the benefit of the Circular is not available to the assessee. The said circular is carefully worded making it clear that it is only when a judgment of the High Court within whose jurisdiction the assessee is assessable is not liable to pay tax or if the Supreme Court of India declares the law, it is the law for the whole country and then only the assessee would be entitled to have such benefit. The observations of the learned Single Judge, the decision of the High Court or the Supreme Court need not be in the case of assessee is not a correct statement of law having regard to the wordings of the 6 circular.


1 IN HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS 21ST DAY OF OCTOBER 2014 PRESENT HON BLE MR. JUSTICE N.KUMAR AND HON BLE MR. JUSTICE B. MANOHAR W.A.NO.3640/2013(T-IT) BETWEEN CHIEF COMMISSIONER OF INCOME TAX, BANGALORE-II, C.R.BUILDING, QUEENS ROAD, BANGALORE-560 001. ... APPELLANT (BY SRI K.V.ARAVIND, ADV.,) AND M/S. UB GLOBAL CORPORATION LTD. (AMALGAMATED WITH M/S.UNITED BREWERIES (HOLDINGS) LTD. LEVEL 12, 14 & 15 UB CITY, 24, VITTAL MALLYA ROAD, BANGALORE-560 001 REP. BY ITS EXECUTIVE VICE PRESIDENT GROUP TAXATION SRI S. RAMANUJAM AGE 59 YEARS S/O LATE SRI R. SRINIVASAN. RESPONDENT (BY SMT.S.R.ANURADHA, ADV.,) THIS W.A. IS FILED U/S 4 OF KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE ORDER PASSED IN WRIT PETITION NO.16136/2011(T-IT) DATED 11.03.2013. 2 THIS W.A. COMING ON FOR HEARING, THIS DAY, N.KUMAR J. DELIVERED FOLLOWING: JUDGMENT Revenue preferred this writ appeal against order dated 11.03.2013 passed by learned Single Judge extending benefit of Board Circular, in particular, Clause 2(c) in case of assessee and granting relief to him for waiver of interest payable under Section 234B of Income Tax Act, 1961 (for short Act ). 2. learned Single Judge has set out in his order facts of case in detail and therefore, there is no need to reproduce same. He has formulated point for consideration at paragraph-7. Then, he has extracted paragraph 2(c) on which reliance is placed. Thereafter, at paragraph-14, he has observed as under: Viewed in this perspective decision of High Court or Supreme Court need not be in case of assessee. In other words decision of incidence and applicability of Income Tax under act, need not 3 necessarily be in case of assessee but could be in any other case i.e. of any other assessee or otherwise. As long as decision covers field of Income Tax legislation, as may be applicable to any assessee, would be circumstance for reduction or waiver of interest under Sec.234 to C as case may be. In coming to that conclusion, he has relied on decision of Kerala High Court in A.V.Thomas, which was followed by Tribunal in granting relief to assessee under Section 80HHC of Act. Now, said judgment is not accepted by Supreme Court in case of IPCA Laboratory Limited. Following said judgment which impliedly overrules judgment of Kerala High Court in A.V.Thomas case, assessee is held liable to pay tax under Section 80HHC. Therefore, question for consideration is whether assessee s bonafide belief that decision of High Court of Kerala in A.V.Thomas is applicable to his case is correct. In fact, asessesse s case is, Tribunal following said judgment only gave 4 him benefit and it is only when Apex Court in IPCA Laboratory s case impliedly overruled said decision, liability arose for payment of interest as assessee is not entitled to benefit of said Board Circular. It is well settled that exemption Notifications and Board circulars, which are issued from time to time would bind revenue to fullest extent but those Notifications and circulars have to be strictly construed. If so construed, Board Circular categorically states at Clause 2(c) that, where any income was not chargeable to income tax in case of assessee on basis of any order passed by High Court within whose jurisdiction he is assessable to income-tax, and as result he did not pay income tax in relation to such income in any previous year and subsequently, in consequence of any retrospective amendment of law or decision of Supreme Court of India, or as case may be, decision of larger Bench of jurisdictional High Court in any assessment or re-assessment proceedings advance tax paid by assessee during such financial year is found to be less than 5 amount of advance tax payable on his current income and assessee is chargeable to interest under Section 234B or Section 234C and Chief Commissioner/Director General is satisfied that this is fit case for reduction or waiver of such interest, he can exercise his power and grant relief to assessee. As is clear from aforesaid Clause, if any order is passed on basis of any order passed by High Court within whose jurisdiction assessee is not assessable to income tax, then benefit of Circular is not available to assessee. said circular is carefully worded making it clear that it is only when judgment of High Court within whose jurisdiction assessee is assessable is not liable to pay tax or if Supreme Court of India declares law, it is law for whole country and then only assessee would be entitled to have such benefit. Therefore, observations of learned Single Judge, decision of High Court or Supreme Court need not be in case of assessee is not correct statement of law having regard to wordings of 6 circular. It is only decision of High Court within whose Jurisdiction assessee is assessable is invoked which is reversed by Supreme Court or if Supreme Court lays down law in case arising from any jurisdiction in entire country, assessee would be entitled to benefit. Therefore drawing analogy and giving particular interpretation would not be in accordance with law. In this view, learned Single Judge was not justified in extending benefit of said Circular when it was not applicable to case of assessee. In this view, we pass following order: appeal is allowed. impugned order dated 11.03.2013 passed by learned Single Judge is set aside. Parties to bear their own costs. Sd/- JUDGE Sd/- JUDGE TL Chief Commissioner of Income-tax, Bangalore- II v. M/s. UB Global Corporation Ltd
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