High Court Of Karnataka
Director General Of Income Tax (Exemptions) & Anr. vs. Jockey’sassociation Of India
Section 234A, 234B, 234C
Asst. Year 1994-95 to 1998-99
N.K. Patil & Mrs. B.V. Nagarathna, JJ.
Writ Appeal No. 468 of 2008
25th June, 2010
Counsel Appeared :
M.V. Seshachala, for the Appellants : S. Parthsarathi & H. Mallaha Rao, for the Respondent
JUDGMENT
N.K. PATIL, J. :
This is an appeal filed by the appellants against the order dt. 18th Sept., 2007 passed by the learned Single Judge in Writ Petn. No. 11966 of 2006.
2. The brief facts of the case are : the respondent is the association and obtained registration from the CIT under 12A(a) of the IT Act. The Tribunal by its order dt. 26th July, 1993, while dealing with the matter pertaining to asst. yr. 1988-89 held that respondent is the charitable trust and allowed the exemption under s. 11 of the Act. Be that as it may. The respondent had filed returns of income by declaring nil income for the asst. yr. 1994-95 onwards till 1997-98 claiming exemption under s. 11 of the Act. When things stood thus, this Court while deciding the matter pertaining to some other parties in its judgment in the case of the CIT vs. I.T.I. Employees Death & Superannuation Relief Fund (1999) 153 CTR (Kar) 530 : (1998) 234 ITR 308 (Kar) held that the interest on investments would not be covered by principles of mutuality and that therefore, the interest was not entitled for exemption. On the strength of the said judgment, the Department issued notice under s. 148 of the Act for the asst. yrs. 1994-95 to 1997-98. In response to the said notice, the respondent filed revised returns, declaring income for the asst. yrs. 1994-95 to 1997-98 after withdrawing the claim for exemption under s. 11 of the Act. On 3rd March, 1999 the assessment order under s. 143(3) r/w s. 147 of the Act was passed for the year 1994-95 accepting the revised returns filed and the tax was computed at Rs. 60,256. However, the interest under ss. 234B and 234C was also levied and for subsequent years also, the assessment orders were passed under s. 143(3) r/w s. 147 of the Act. Thereafter, the respondent has filed an application under s. 119(2)(a) of the Act praying for waiver of interest in respect of asst. yrs. 1994-95, 1995-96, 199697, 1997-98 and 1998-99. The said application had come up for consideration before the Director General of IT (Exemptions), who in turn, has rejected the same holding that the case of the respondent does not fall under cl. 2(d) of the circular-cum-notification dt. 23rd May, 1996 and therefore, he is not the competent authority to consider the said request. Assailing the correctness of the order passed by the first appellant herein, respondent had filed a writ petition before the learned Single Judge of this Court in Writ Petn. No. 11966 of 2006. The said writ petition had come up for consideration before the learned Single Judge on 18th Sept., 2007. The learned Single Judge has allowed the said writ petition and quashed the order passed by the first appellant holding that when the respondent has got exemption under s. 11 of the Act for the asst. yrs. 1994-95 to 199798 he could not pay the taxes in advance and therefore, waiver of interest could have been allowed by the first appellant and the respondent cannot be made to pay the interest without any fault by him and accordingly, quashed the impugned order therein. Being aggrieved by the impugned order passed by the learned Single Judge, the appellants felt necessitated to present this appeal.
The principal submission canvassed by the learned counsel for the appellants is that the order impugned passed by the learned Single Judge is liable to be quashed. To substantiate his submission, he has taken us through the circular-cum-notification issued by the competent authority bearing F. No. 400/235/95-IT(B), dt. 23rd May, 1996 and submitted that the first appellant has rightly not considered the application filed by the respondent for waiver of interest and rejected the same on the ground that the power delegated under the said notification is for very limited purpose, which falls under cl. 2(a) to (e) mentioned therein and it is the case of the respondent that he falls under cl. 2(d). Further, he placed reliance on the decision of the apex Court in the case of CIT vs. Anjum M.H. Ghaswala & Ors. (2001) 171 CTR (SC) 1 : (2001) 252 ITR 1 (SC), wherein the apex Court has observed that, the circular dt. 23rd May, 1996, has empowered that the Chief CIT and Director General of IT may waive or reduce interest charged under ss. 234A, 234B and 234C of the Act in the class of cases or class of incomes specified in cl. 2 of the said order for the period and on conditions which are enumerated therein and affirmed the same. Therefore, he submitted that, as per the circular-cum-notification dt. 23rd May 1996, the Chief CIT/the Director General of IT is not the competent authority if the case of the respondent does not fall within the said categories and the only option open for him is to file necessary application before the CBDT for waiver of interest. Therefore, he submitted that, the order impugned passed by the learned Single Judge is liable to be set aside.
As against this, learned counsel for the respondent inter alia, substantiated the order passed by the learned Single Judge. He submitted that, learned Single Judge after due consideration of the records available on file has passed the said order and therefore, interference by this Court does not call for.
After careful consideration of the submissions made by learned counsel for both the parties, after going through the circular-cum-notification dt. 23rd May, 1996 and the reliance placed by the learned counsel for the appellants on the decision of the apex Court as stated supra, including the impugned order passed by the learned Single Judge, it is not in dispute that, in pursuance of the circular-cum-notification dt. 23rd May, 1996, the power has been delegated to the Chief CIT or the Director General of IT (Exemptions) to waive or reduce interest charged under ss. 234A, 234B and 234C of the Act, specifically in respect of cl. 2(a) to (e) mentioned therein. It is the case of the respondent that he falls under cl. 2(d) of the same. It has been rightly pointed out by the Director General of IT (Exemptions) that the case of the respondent does not fall under the said clause, on the ground that respondent has not brought any High Court or apex Court order holding that he is entitled for the waiver of interest. But the learned counsel for the respondent has pointed out that the Tribunal has held that he is entitled for the said benefits and therefore, the director General of IT (Exemptions) has got jurisdiction to consider the said request. It is clear from the decision of the apex Court in the case of CIT vs. Anjum M.H. Ghaswala & Ors. (supra) that the Chief CIT and Director General of IT (Exemptions) has got jurisdiction to waive or reduce the interest in pursuance of the circular-cum-notification dt. 23rd May, 1996 if the request of the respondent falls within category 2(a) to (e). But in the instant case, the case of the respondent does not fall under cl. 2(d) of the said circular dt. 23rd May, 1996. But this aspect of the matter has not been looked into or considered or brought to the notice of the learned Single Judge during the submissions by the respective counsel. Therefore, we are of the considered view that the order impugned passed by the learned Single Judge cannot be sustained and is liable to be set aside.
6. For the foregoing reasons, the instant appeal filed by the appellants is allowed in part. The impugned order dt. 18th Sept., 2007 passed by the learned Single Judge in Writ Petn. No. 11966 of 2006 is hereby set aside. The respondent herein is permitted to file necessary application before the CBDT, within a period of four weeks from the date of receipt of a copy of this judgment.
The CBDT is directed to receive the same and pass appropriate orders on merits, in accordance with law, without being influenced by the observations made by this Court in the preceding paras and dispose of the same, as expeditiously as possible, within a period of three months therefrom after affording reasonable opportunity of hearing to the parties personally or through their counsel.
All the contentions urged by both parties in this appeal are left open.
[Citation : 328 ITR 405]
