C.W.P. No.3652 of 2006 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No.3652 of 2006 (O&M) Date of decision:18.01.2010 Haryana Warehousing Corporation ............Petitioner Versus Chief Commissioner of Income Tax, Haryana Region & another ..........Respondents CORAM:HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE ALOK SINGH -.- Present: Mr. Rajesh Garg, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondent. ADARSH KUMAR GOEL, J.(ORAL) 1. This petition seeks quashing of order dated 2.3.2006 (Annexure P-9) whereby claim of the petitioner for waiver of interest in terms of circular dated 23.05.1996 (Annexure P-6) has been rejected. 2. Case of the petitioner is that it was exempted from liability to pay tax under Section 10(29) of the Income Tax Act, 1961 by the assessing officer in the assessment year 1991-92 in view of the judgment of this Court in (1978) 112 ITR 374. The said view was reversed by the Hon'ble Supreme Court in the judgment reported in C.W.P. No.3652 of 2006 -2- Orissa Warehousing Corporation, 237 ITR 589. This led to assessment of the income of the assessee and also levy of interest on the tax due. The petitioner sought waiver thereof relying upon circular dated 23.05.1996. The relevant part of the said circular being clause (d) reads as under:- "Where any income which was not chargeable to income-tax on the basis of any order passed in the case of an assessee 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 as the case may be, the decision of Supreme Court in his own case, which even has taken place after the end of any such previous year, in any assessment or re- assessment proceedings the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment year is found to be less than the amount of advance tax payable on his current income, the assessee is chargeable to interest under section 234B or section 234C and the Chief Commissioner or Director General is satisfied that this is a fit case for reduction or waiver of such interest." 3. The Chief Commissioner rejected the claim with the following reasons:- "Firstly, it must be placed on record that the question of what sources of income received by a warehousing corporation are exempt u/s 10(29) has been spelt out clearly in MP Warehousing Corporation Vs. CIT (M.P. High Court 133 ITR C.W.P. No.3652 of 2006 -3- 158). The decision was rendered on 28th Jan, 1981 which is a date anterior to the previous years relevant to the asstt. years 1995-96 and 1996-97. The head notes are reproduced hereunder: Exemption – State warehousing corporation – income from letting of godowns or warehouses for storage, processing or facilitating marketing of commodities alone is exempt – if letting of godowns or warehouses is for any other purpose or if income is derived from any other source, such income is not exempt – commission charges for loading and unloading of agricultural commodities and interest on fixed deposits with banks are not exempt – Income Tax Act, 1961, 10(20A), (21), (22), (29). Thus there is an authoritative pronouncement of a High Court as early as in 1981 to say that incomes not derived from letting out warehouses and godowns are not exempt under the provisions of Section 10(29) and are therefore taxable. The Assessee cannot therefore say that it was under the bonafide belief that its income was wholly tax exempt for asstt. years 1994-95. Secondly, the decision of the Hon'ble Allahabad High Court reported in 195 ITR 273 on which the assessee relies for claiming exemption u/s 10(29) relates to an entirely different issue namely whether the UP State Warehousing Corporation was an authority constituted for the marketing of commodities, and whether certain miscellaneous incomes were liable to tax, which is not an issue in the assessee's own case. In my considered opinion the assessee has derived an unintended advantage by claiming exemption u/s C.W.P. No.3652 of 2006 -4- 10(29) and being given that benefit, upto asstt. year 1991-92 by relying on a case law that is on a totally different issue, and ignoring the judgment delivered on 28.1.1981 reported in 133 ITR 158 which is relevant and conclusive. Thirdly, the provisions of clause (d) of para 2 of Board's circular dated 23.05.1996 refer to cases where income was not chargeable to tax "on the basis of any order passed in the case of an assessee by the High Court within whose jurisdiction he is assessable.........". The decision of the Hon'ble P & H High Court dated 22.12.1976 and reported in 112 ITR 374 in the assessee's own case only refers to the status of the Assessee as an authority within the meaning of section 10(29) and does not dwell on the question of whether its income from sources other than letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities is taxable. This decision does not help the assessee in the matter at hand and therefore, the provisions in para-2 of Board's Circular dated 23.05.1996 will not apply. It is therefore clear that based on the M.P. High Court's decision given on 28.01.1981 reported in 133 ITR 158, the assessee had a liability to pay advance tax during the accounting year relevant to Asstt. Year 1994-95 (and indeed, even prior to that) on all incomes other than income from letting of godowns or warehouses for storage, processing or facilitating marketing of commodities which were exempt. This was the undisputed legal position. Interest u/s 234B is clearly chargeable for Asstt. Year 1994-95 and does not admit of waiver as the circumstances do C.W.P. No.3652 of 2006 -5- not come within the ambit of any of the clauses mentioned in Board's Circular No.400/234/95-IT (B) dated 23.09.1996." 4. We have heard learned counsel for the parties. 5. Learned counsel for the petitioner submits that reasons given for rejecting the claim of the assessee under clause (d) of the circular are patently erroneous. It is submitted that once income was treated as not chargeable to tax by the department itself in view of the judgment of this Court to that effect, different view on liability taken by a different High Court did not exclude the case of the assessee from clause (d), above. 6. Learned counsel for the respondents could not dispute that the department did not proceed to levy tax against the assessee, till judgment of the Hon'ble Supreme Court in Orissa Warehousing Corporation (supra) and thus held the view that income of the assessee was not chargeable to tax, in view of the judgment of this Court in 112 ITR (supra). This being the position, mere fact that the assessee may be liable to pay tax as per view of another High Court did not exclude applicability as clause (d) of the circular. Further contention raised on behalf of the respondents that in view of circular dated 30.01.1997 (Annexure P-7), clause (d) of the earlier circular was not applicable cannot be accepted. Neither this reason has been given in the impugned order nor this reason is sound. Circular dated 30.01.1997 has been filed by the petitioner to support its contention that the later judgment of the Hon'ble Supreme Court whereby assessee is held to be liable to pay tax need not to be in the case of the assessee. C.W.P. No.3652 of 2006 -6- 7. We are thus of the opinion, the reasons given in the impugned order, Annexure P-9, dated 2.3.2006 cannot be sustained. Accordingly, the impugned order is quashed and the matter is remitted back to Chief Commissioner of Income-tax for passing fresh order in accordance with law. 8. The petition is disposed of. (ADARSH KUMAR GOEL) JUDGE (ALOK SINGH) 18.01.2010 JUDGE ashish