IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT: HONOURABLE MR. JUSTICE P.B.SURESH KUMAR FRIDAY, 16TH DAY OF JANUARY 2015/26TH POUSHA, 1936 WP(C).No. 2791 of 2007 (G) --------------------------- PETITIONER(S): ------------- FERTILIZERS AND CHEMICALS TRAVANCORE LTD., UDYOGAMANDAL, COCHIN REPRESENTED BY ITS DEPUTY CHIEF MANAGER (FINANCE) PLACID LOPEZ. BY ADVS. SRI.P.GOPINATH MENON. SRI.ANIL D. NAIR RESPONDENT(S): ---------------- 1. DEPUTY COMMISSIONER OF INCOME TAX (ASSMT) SPECIAL RANGE 2, ERNAKULAM. 2. CHIEF COMMISSIONER OF INCOME TAX, KOCHI. BY ADV.SRI.JOSE JOSEPH, STANDING COUNSEL. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24.11.2014, COURT ON16.1.2015 DELIVERED FOLLOWING: WP(C).No. 2791 of 2007 (G) APPENDIX PETITIONER'S EXHIBITS : EXT.P1 : TRUE COPY OF ORDER OF FIRST DEPUTY COMMISSIONER OF INCOME TAX (ASSMT) DT. 11.11.1992. EXT.P2 : RUE COPY OF ORDER ISSUED BY FIRST RESPONDENT DT. 30.11.1993 TO PETITIONER. EXT.P3 : TRUE COPY OF ORDER OF TRIBUNAL TO PETITIONER DT. 9.2.1998. EXT.P4 : TRUE COPY OF ORDER OF SECOND RESPONDENT TO PETITIONER DT. 21.8.2006. TGS (TRUE COPY) P.B.SURESH KUMAR, J. ----------------------------------------------- W.P. (C) No.2791 of 2007 ----------------------------------------------- Dated 16th January, 2015. JUDGMENT Ext.P4 order passed by second respondent in exercise of powers conferred on him by Central Board of Direct Taxes under Clause (a) of sub-section (2) of Section 119 of Income Tax Act,1961, hereinafter referred to as `the Act' for short, is under challenge in this writ petition. 2. petitioner is public sector undertaking. It is assessee under Act on file of first respondent. For assessment year 1990-91, petitioner filed returns claiming benefit of carried forward loss of Rs.6,42,65,257/-, worked out its book profit at Rs.3,61,32,102/- and offered same for taxation under Section 115J of Act. first respondent while completing assessment levied interest under Section 234C of Act on ground that there was shortfall in payment of advance tax. petitioner had though challenged assessment order before first appellate authority, levy of interest under Section WPC 2791 of 2007 2 234C of Act was upheld by first appellate authority and said decision of first Appellate Authority was confirmed by Income Tax Appellate Tribunal. Thereafter, petitioner filed petition before second respondent seeking waiver of intererst levied under Section 234C of Act, invoking his powers under Section 119(2)(a) of Act and same was dismissed by second respondent holding that in so far as levy of interest under section 234C of Act was upheld by first appellate authority in appeal preferred against assessment order and since said decision of first appellate authority was confirmed by Tribunal, assessee is not entitled to invoke powers of second respondent under Section 119(2)(a) of Act, for waiver of interest payable under Section 234C of Act. Ext.P4 is order issued by second respondent dismissing petition filed by petitioner seeking waiver of interest. In Ext.P4, second respondent had also held that case of assessee would not fall under class of cases and incomes specified by Central Board of Direct Taxes as per notification dated 26/6/2006 for income tax authorities to exercise power under Section 119(2)(a) of Act. As WPC 2791 of 2007 3 stated above, it is aggrieved by said decision of second respondent, this writ petition is filed. 3. Heard Adv.P.Gopinath Menon, learned counsel for petitioner and Adv.Jose Joseph, learned Standing Counsel for respondents. 4. learned counsel for petitioner contended, relying on decision of Karnataka High Court in Kwality Biscuits Ltd. v. Commissioner of Income Tax [2000 Vol.243 ITR 519] that since book profit cannot be determined before end of relevant assessment year, petitioner is not obliged to pay interest under Section 234C of Act for non-payment of advance tax on book profit. 5. Section 119 (1) and 119(2)(a) of Act reads thus : 119. (1) Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for proper administration of this Act, and such authorities and all other persons employed in execution of this Act shall observe and follow such orders, instructions and directions of Board: Provided that no such orders, instructions or directions shall be issued - (a) so as to require any income-tax authority to make particular assessment or to dispose of particular case in particular manner; or WPC 2791 of 2007 4 (b) so as to interfere with discretion of Commissioner (Appeals) in exercise of his appellate functions. (2) Without prejudice to generality of foregoing power,- (a) Board may, if it considers it necessary or expedient so to do, for purpose of proper and efficient management of work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of provisions of sections [115P, 115S], [115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115 WK,] [139], 143, 144, 147, 148, 154, 155, [158BFA] [sub-section (1A) of section 201, sections 210, 211, [234A, 234B], 234C], 271 and 273 or otherwise), general or special orders in respect of any class of incomes [or fringe benefits] or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to guidelines, principles or procedures to be followed by other income-tax authorities in work relating to assessment or collection of revenue or initiation of proceedings for imposition of penalties and any such order may, if Board is of opinion that it is necessary in public interest so to do, be published and circulated in prescribed manner for general information; It is clear from Sections 119(1) and 119(2)(a) of Act that statute had conferred authority to waive interest payable under Sections 234A, 234B and 234C only on Central Board of Direct Taxes and it is based on general or special orders WPC 2791 of 2007 5 issued by Board, other income tax authorities are exercising power of waiver. It is also clear from aforesaid Sections that income tax authorities other than Board are empowered and authorised to waive interest only in accordance with guidelines, principles and procedures specified by Board in general or special orders issued by Board. classes of incomes and cases in respect of which Chief Commissioner of Income Tax is authorised to waive interest payable under Section 234C of Act as per notification dated 26/6/2006 referred to in Ext.P4 order, which was made available to me by Standing Counsel for respondents, read thus: (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 first or subsequent instalments of advance tax which was neither anticipated nor was in contemplation of assessee, and advance tax on such income is paid in remaining instalment or instalments, and Chief Commissioner/Director General is satisfied on facts and circumstances of case that this is fit case for reduction or waiver of interest chargeable under section 234C of Income-tax Act. (c) Where any income was not chargeable to income-tax in case of assesse on basis of any order passed by High Court within whose jurisdiction he is assessable to income-tax, WPC 2791 of 2007 6 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(which was not challenged before Supreme Court and has become final), in any assessment or re-assessment proceedings advance tax paid by assessee during such financial year is found to be less than 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. As stated above, second respondent is empowered and authorised to waive interest payable by petitioner under Section 234C of Act only if case of petitioner falls under any of two classes of cases referred to above. petitioner has no case that its case would fall under said classes of cases. contention raised by learned counsel for petitioner that since book profit cannot be determined before end of relevant assessment year, assessees are not obliged to pay interest under Section 234C of Act for non-payment of advance tax on book profit also cannot be accepted, for, question whether WPC 2791 of 2007 7 petitioner is liable to pay interest under Section 234C of Act is not issue in this case. As noticed above, issue in this case is as to whether second respondent is justified in declining request made by petitioner for waiver of interest in exercise of his authority under Section 119 of Act. decision relied on by learned counsel for petitioner is also not decision rendered in context of authority of income tax officers to waive interest under Section 119 Act. Further, as noticed above, question whether petitioner is liable to pay tax under Section 234C of Act was considered and decided against petitioner in appeal preferred by them against assessment order of concerned year and said order has become final. In aforesaid circumstances, Ext.P4 order of second respondent is perfectly in order. There is, therefore, no merit in writ petition and same is, accordingly, dismissed. Sd/- P.B.SURESH KUMAR, JUDGE. tgs Fertilizers And Chemicals Travancore Ltd. v. Deputy Commissioner of Income-tax (Assmt) Special Range-2, Ernakulam/ Chief Commissioner of Income-tax