Income-tax---

----Interest---Waiver of interest---Delay in filing return---Failure to file estimate of advance tax---Income from sale of import entitlements made taxable because of retrospective amendment by Finance Act, 1990---Levy of interest for assessment years 1984-85 to 1986-87 requires waiver---Indian Income Tax Act, 1961, Ss. 139(8) & 217.

If for any reason the law is amended retrospectively creating liability of tax then, it would be sufficient cause for not charging interest under section 139(8) of the Income Tax Act, 1961:

Held, that interest levied under section 139(8) of the Income Tax Act, 1961, for the assessment years 1984-85 to 1986-87 in respect of income on sale of import entitlements which became taxable because of retrospective amendment of section 28 by the Finance Act, 1990, required waiver. Interest under section 217 of the Act on the same reasoning was also to be waived in respect of the income derived by the assessee on sale of import entitlement which was made taxable because of retrospective amendment by the Finance Act, 1990.

CIT v. Pure Beverages Ltd. (1995) 214 ITR 57 (Guj.) ref.

Ramabhadran for Petitioner.

M. V. Seshachala for Respondent.

JUDGMENT

V.K. SINGHAL, J---The order of the first respondent, dated September 14, 1992, passed under section 264 of the Income Tax Act, 1961, in respect of the assessment years 1984-85 to 1986-8 7 have been assailed in these petitions. The petitioners submitted for waiver of interest were rejected by an order passed under rules 40 and 117A. The dispute is in respect of the premium received on sale of import entitlement, which by retrospective amendment by the Finance Act, 1990, was made laible to tax. There was another addition on account of retrospective amendment of section 43B. The interest on addition because of retrospective amendment of section 43B was directed to be deleted by the Commissioner of Income-tax for the purpose of calculating the interest under sections 139(8) and 217 of the Act. It was found that there were different Courts' decisions on the question of taxability of premium on sale of import entitlement, the assessee took a calculated risk to claim this as not taxable. Therefore, the relief on that ground was not given.

Learned counsel for the petitioner-submitted that even if there are different Courts' decisions that itself is a ground for not levying the interest and any case since the Legislature has made the amendment retrospective, by the Finance Act, 1990, the liability cannot be fastened. Reliance is placed on the judgment given in CIT v. Pure Beverages Ltd. (1995) 214 ITR 57 (Guj.), where it was found that if there is a reasonable cause interest is not chargeable.

Arguments of both learned counsel for the parties have been heard: Section 139(8) provides charging of interest with a proviso that the Assessing' Officer may, in, such case and such circumstances as may be prescribed, reduce or waive the interest payable by any assessee in this subsection. Rule 117A prescribe the circumstances under which the power to reduce or waive the interest could be exercised. One of such circumstances is where the assessee produces the evidence to the satisfaction of the assessing authority that he was prevented by sufficient cause from furnishing the return within time. The word "sufficient cause" has been interpreted by different Courts. Even according to the observations of the Commissioner of Income-tax there were different interpretations taken by the different Courts and the position has become clear only because of the retrospective amendment of law. If for any reason, the law is amended retrospectively creating liability of tax then, in my opinion, it would be sufficient cause for not charging the interest under section 139(8). In these circumstances, the interest levied in respect of income because of retrospective amendment for sale of import entitlement requires complete waiver.

Section 217 of the Act charges the assessee with liability of interest when no estimate is made. Rule 40 provides the circumstances in which the interest could be waived. One of the circumstances is where the Deputy Commissioner considers that the circumstances are such that a reduction or waiver of interest payable under section 215 or section 217 is justified. In the present case, the Deputy Commissioner has rejected the petitioner without any reason and the Commissioner of Income-tax has adopted the same reasoning that assessee took calculated risk in respect of income from premium on sale of import entitlement. Since I am of the view that interest under section 139(8) requires waive, interest under section 217 on the same reasoning is also to be waived in respect of the income derived by the assessee on sale of import entitlement which was made taxable because of retrospective amendment by the Finance Act, 1990.

Petitions are allowed with the above observations

M. B. A./71/FC ????????????????????????????????????????????????????????????????????????????????? Petition allowed