Law applicable as on date of application to be applied while considering application for waiver of interest: HC

Case Details: CCIT v. Van Oord ACZ Marine Contractors BV - [2022] 141 taxmann.com 30 (Madras)

Judiciary and Counsel Details

• • R. Mahadevan & J. Sathya Narayana Prasad, JJ.
  • Mrs Hema Muralikrishnan & A.P. Srinivas, Sr. Standing Counsel for the Appellant.
  • R. Sivaraman for the Respondent.

Facts of the Case

The instant writ was filed before the Madras High Court against the rejection of the application of waiver of interest under section 234B. The brief fact of the case is discussed below:

Assessee had filed an application for waiver of interest on 26-02-2003 when the notification F.no 400/234/95-IT(B), dated 23-05-1996 issued under section 119 was in force. As per the notification, the Chief Commissioner and the Director General of Income Tax may reduce or waive the interest charged under Section 234A or Section 234B, or Section 234C.

However, during the pendency of the application for waiver, a new notification was issued that superseded the earlier notification. Accordingly, the revenue has contested that assessee’s application for waiver of interest wasn’t maintainable.

High Court Held

The Tribunal held that it is relevant to note that the circulars/notifications issued by the Board as in the form of delegated legislation deriving its authority from Section 119 of the Income Tax Act and is hence a “law” falling within Article 13 of the Constitution of India.

Both the notifications dated 23-05-1996 and 26-06-2006 lay down the classes and circumstances under which an application for waiver of Interest under Sections 234A, 234B, and 234C can be entertained. The notifications lay down the substantive law. It is only if the case of the assessee falls in any of the categories mentioned therein, an application can be entertained

The assessee had the right to apply for waiver as per the notification dated 23-05-1996 by invoking clause 2(e) which empowered an assessee to apply for waiver, when the return could not be filed for “unavoidable reasons”. Once the assessee was found eligible to apply on the date of application, his application cannot be thrown out as not maintainable because of a subsequent notification.

The subsequent notification will not affect the consideration of the applications pending on merit. Such an interpretation would not be against the law and would also be arbitrary. Thus, the conspicuous and irresistible conclusion that could be drawn is that the law as applicable on the date of the application must be applied.