High Court Of Kerala
C.V. Jayachandran Vs. Chief Commissioner of Income-tax, Trivandrum
Section 234A, 119
Muhamed Mustaque, J.
Wp(C) No. 15456 Of 2011
November  1, 2017Â
JUDGMENT
1. The petitioner in this writ petition impugns the order of the Chief Commissioner of Income Tax, Trivandrum produced as Ext.P3 under Section 119(2)(a) of the Income Tax Act, 1961. The present dispute is with regard to rejection of the request for waiver of interest made by the assessee consequent upon the re-opening of assessment. The assessment was completed and intimation was issued under Section 143(1)(a) of the Act. Thereafter a notice under Section 147 of the Act was issued noting the fact that the assessee received compensation for the land acquired and the assessee did not disclose any income by way of capital gains. The re-assessment was completed.
2. There was a challenge against re-opening of assessment. Ultimately, by the order of this Court, re-opening of the assessment was affirmed. Apart from the demand for capital gains, interest was levied. The petitioner filed an application for waiver of interest. This lead to the impugned order.
3. Learned counsel for the petitioner, relying upon the judgment of the Supreme Court in Life Insurance Corpn. of India v. CIT [1996] 85 Taxman 313/219 ITR 410, argued that only in the year 1991, by virtue of an amendment to the Income Tax Act introduced by the Finance Act, income tax was levied on capital gains arising out of the acquisition of land on the basis of the date of receipt of compensation and therefore, the capital gains accrued in the year 1987 cannot be saddled with the liability to pay interest. According to the learned counsel for the petitioner, the actual demand could be raised only by way of order by this Court and therefore, the petitioner is entitled for waiver of interest. Learned counsel particularly relied upon Ext.P4 circular. Ext.P4 circular is in fact a continuation of the previous circular.
4. Learned Standing Counsel appearing for the respondent placed before me the previous circular. Both circulars appear to be more or less the same except to certain other provision. Anyhow, the petitioner’s claim is based on clause 2(c) of the circular which reads as follows:
“Where any income was not chargeable to income tax in the case of an assessee on the basis of any order passed by the High Court within whose jurisdiction he is assessable to income tax, and as a 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 the decision of the Supreme Court of India, or as the case may be, a decision of a larger Bench of the jurisdictional High Court (which was not challenged before the Supreme Court and has become final), in any assessment or re-assessment proceedings the advance tax paid by the assessee during such financial year is found to be less than the amount of advance tax payable on his current income, and the assessee is chargeable to interest under Section 234B or section 234C, and the Chief Commissioner/Director General is satisfied that this is a fit case for reduction or waiver of such interest”.
5. This Court finds that the above clause would not apply to the facts of this case. The petitioner disputed his liability to pay income tax on capital gains. The interest levied giving effect to capital gains based on receipt of compensation would not absolve the petitioner from paying tax on capital gains. Further, the circular is only a guideline and it cannot have an overriding effect on the statutory provision.
In such situation, this Court is of the view that there is no merit in the writ petition. The Chief Commissioner of Income Tax has rightly rejected the petitioner’s request for waiver of interest.
This writ petition is therefore dismissed. No costs.
[Citation :Â 401 ITR 484]
