The Bombay High Court has quashed the order for non-addressing the issue of waiver of interest, attributable to COVID-19 pandemic.
The bench of Justice G. S. Kulkarni and Justice Advait M Sethna have observed that the order in its findings has nowhere considered the primary submission of the petitioner on waiver of interest, attributable to the COVID-19 pandemic.
Background
The petitioner/assessee has paid Advance Tax of Rs.11 Crores for the first quarter being April to June 2020, despite suffering loss of Rs.395 Crores. The details of payment of Advance Tax and computation of interest under Section 243C of the Income Tax Act for the A. Y. 2021-22 are also set out in the order. The details reveal that the petitioner has paid total Advance Tax of Rs.1,71,00,00,000. The total interest paid by the petitioner is an amount of Rs.3,88,59,353 at the time of filing of returns for the A.Y. 2021-22.
Arguments
The assessee contended that petitioner’s application for waiver of interest dated 9th November 2022 filed for waiver of interest chargeable under Section 234C of the Income Tax Act. The Assessee diligently paid Advance Tax installments for the quarters commencing April to June 2020 to January to March 2021, amounting to Rs.1,71,00,00,000. Only for the quarter July to September 2020, the Assessee could not make payment of the Advance Tax within the due date.
The assessee argued that fluctuations were the impact of COVID-19 pandemic on the overall business of the petitioner, which made it extremely challenging for the Assessee to correctly/properly estimate the book profits for paying the Advance Tax during A.Y. 2021-22.
The assessee relied on Section 234C of the Income Tax Act for the purposes of claiming waiver of interest amounting to Rs.3,88,59,353/- for the A.Y. 2021-22. In support of such submission, he places reliance on the expression ‘failure to estimate’ which appears in the said statutory provision. It was not possible for the Assessee to estimate the book profits for payment of Advance Tax during A.Y. 2021-22, which was primarily attributable to the COVID-19, which prevailed at the relevant time.
The department contended that the order justified the refusal of granting waiver of interest which is discretionary. Such discretion according to him is appropriately exercised, as there is nothing arbitrary in rejecting the plea of the petitioner for grant of waiver of interest under Section 234C of the Income Tax Act, which is by a reasoned order.
Conclusion
The court noted that the thrust being the sudden outbreak of the COVID-19 pandemic which prevented the petitioner from correctly/properly estimating the income/book profits for paying the Advance Tax for the A.Y. 2021-22.
The court quashed the order passed by the department; and remanded the proceedings to the respondent/department for a denovo consideration of the petitioner’s waiver application to be decided on its own merits and in accordance with law in the light of observations and strictly without being influenced by the order.
Case Details
Case Title: Grasim Industries Limited Versus Chief Commissioner of Income Tax (Central) 1
Case No.: Writ Petition (Lodg.) No. 17982 Of 2024
Date: 12/11/2024
Counsel For Appellant: Dharan V. Gandhi
Counsel For Respondent: Akhileshwar Sharma
