HARYANA WAREHOUSING CORPORATION vs. CHIEF COMMISSIONER OF INCOME-TAX, HRY REG. & ANR

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CWP/21169/2010HC Punjab & HaryanaPHHC01074090201028 January 2011Bench: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the petitioner was not entitled to a waiver of interest. The Court noted that it was not disputed that in terms of the High Court's earlier judgment and the Supreme Court's decision in Orissa State Warehousing Corporation (supra), income other than that derived from letting of godowns was not exempt. There was no prior judgment holding such income as exempt. Consequently, the petitioner did not meet the conditions stipulated in the CBDT circulars for waiver of interest, as the basis for exemption did not extend to the income now held to be taxable. The impugned order of the Commissioner was upheld, and no interference was deemed necessary. The operative direction was to dismiss the petitions.

What were the facts?

The petitioner, Haryana Warehousing Corporation, a statutory body, claimed exemption for its income under Section 10(29) of the Income Tax Act, 1961. The Assessing Officer initially accepted this claim. However, the Commissioner, invoking Section 263, revised the assessment, holding that only income derived from letting out godowns for storage was eligible for exemption, and other income was taxable. Consequently, the petitioner was held liable for tax and interest under Section 234B. The petitioner sought waiver of interest based on CBDT circulars, arguing that exemption was granted based on a High Court order. After a prior remand, the impugned order dated June 15, 2010, was passed, denying waiver on the grounds that no prior High Court judgment held the non-godown letting income as exempt, and the relied-upon High Court judgment only confirmed the petitioner's coverage under Section 10(29).

What were the issues?

1. Whether the petitioner is entitled to a waiver of interest under CBDT circulars dated 23.5.1996 and 11.1.1997, in light of the income other than that derived from letting out of godowns being held taxable? Assessee's contention: The petitioner argued that it was entitled to waiver of interest as exemption was granted based on a High Court order, and the subsequent taxation of certain income should fall under the waiver provisions of the CBDT circulars. They relied on the High Court's earlier judgment in Commissioner of Income Tax v. Haryana Warehousing Corporation (1978) 112 ITR 374. Revenue's contention: The revenue contended that the earlier High Court judgment only confirmed the petitioner's eligibility under Section 10(29) and did not hold the income other than from letting out godowns as exempt. Therefore, the conditions for waiver under the circulars were not met. They relied on the Supreme Court judgment in Orissa State Warehousing Corporation and Rajasthan State Warehousing Corporation v. Commissioner of Income-tax (1999) 237 ITR 589.

Which sections of the Income-tax Act were involved?

Section 10(29),Section 263,Section 234B

AI-generated summary — verify with the full judgment below

CWP No. 21169 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 21169 of 2010 (O&M) Date of Decision: 28.1.2011 Haryana Warehousing Corporation ....Petitioner. Versus Chief Commissioner of Income Tax and another ...Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Garg, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondents. ADARSH KUMAR GOEL, J. 1. This order will dispose of CWP Nos. 21169 and 21187 of 2010 as both the petitions involve common question. 2. The petitioner is a statutory body under the provisions of Warehousing Corporation Act, 1962. It claimed its income to be exempt under Section 10(29) of the Income Tax Act, 1961 (in short “the Act”) which was accepted by the Assessing Officer but the Commissioner acting under Section 263 of the Act, set aside the assessment on the ground that only specified income i.e. income derived from letting out of godowns for storage etc. was eligible for exemption and the remaining income was taxable. Accordingly, the petitioner was held to be liable to pay tax with interest under Section 234B of the Act on income which

CWP No. 21169 of 2010 -2- was taxable. It sought waiver of interest on the basis of circular dated 23.5.1996 read with circular dated 11.1.1997 issued by the CBDT laying down that if exemption from income tax is granted on the basis of order of the jurisdictional High Court, the interest component could be waived if such income becomes taxable. In the earlier round of litigation, the matter was remanded for reconsideration as waiver was declined only on the ground that the earlier judgment of this Court was not in the case of the petitioner which was not a valid ground. Thereafter, the impugned order dated 15.6.2010 (Annexure P-13) has been passed holding that there being no earlier view of this Court that the income other than the income derived from letting out of godowns was exempt, the circular providing for waiver was not applicable. The judgment of the jurisdictional High Court relied upon on behalf of the petitioner being Commissioner of Income Tax v. Haryana Warehousing Corporation, (1978) 112 ITR 374 was only to the effect that the petitioner was covered under Section 10(29) of the Act and did not lay down that the income now taxed was exempt. The income other than the income from letting out of storage etc. was taxable as held by the Hon'ble Supreme Court in Orissa State Warehousing Corporation and Rajasthan State Warehousing Corporation v. Commissioner of Income-tax (1999) 237 ITR 589. 3. We have heard learned counsel for the parties. 4. It is not disputed by learned counsel for the petitioner that in terms of judgment of this Court in Haryana Warehousing Corporation (supra) and in view of the judgment of the Hon'ble Supreme Court in Orissa State Warehousing Corporation (supra) as

CWP No. 21169 of 2010 -3- well as the provision of Section 10(29), the income other than the income from letting of godown etc. was not exempt. There was no earlier judgment taking the view that such income was exempt. This being the position, the petitioner is not entitled to waiver in terms of the circulars relied upon, as held in the impugned order. No interference is, thus, called for. 5. Accordingly, the petitions are dismissed. (ADARSH KUMAR GOEL) JUDGE January 28, 2011 (AJAY KUMAR MITTAL) gbs JUDGE

CWP No. 21169 of 2010 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 21187 of 2010 (O&M) Date of Decision: 28.1.2011 Haryana Warehousing Corporation ....Petitioner. Versus Chief Commissioner of Income Tax and another ...Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Garg, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondents. ADARSH KUMAR GOEL, J. For orders, see CWP No. 21169 of 2010 (Haryana Warehousing Corporation v. Chief Commissioner of Income Tax and another). (ADARSH KUMAR GOEL) JUDGE January 28, 2011 (AJAY KUMAR MITTAL) gbs JUDGE

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