BOSCH LIMITED vs. THE ASSISTANT COMMISSIONER

On remand, the Chief Commissioner, (LTU), Bengaluru, by order, dated 13.03.2015, Annexure-M, in great elaboration extracting the observations of the Apex Court as well as this Court in reported opinions, rejected the request for waiver by declining to accept petitioner/assessee’s submission of unpredicted or unanticipated income during the year due to which Advance Tax paid was less by observing further that:- petitioner had not brought out any other reason for its inability to forecast its sales in the said year in contrast to the other years where advance tax was paid correctly; the non anticipation of the income is not proved by the assessee; the assessee being a leading manufacturer of automobile parts had always made “good profit” year after year; and, there was no financial hardship in considering the grant of relief as observed by various

At the outset, learned Senior Counsel for petitioner places on record the year wise sales and total income (as returned) for the financial year 1999-2000 to 2010-2011 which is taken on record, since learned counsel for the revenue has no objection.

Few facts necessary for decision making are:

It was further observed, estimation of advance tax payments is based on internal estimates of the company’s working and profitability and not on “global parameters” which seem to have influenced the assessee’s estimation of advance tax; thrust of the case of the assessee was brought out on “macro economic factors” responsible for global economic crisis in the financial year 2008-09 which continued upto 2009-10 as indicated in the economic survey of 2009-10 presented in the parliament and statistics of periodical review conducted by centre for monitoring Indian Economy on the outlook of Indian economy, industrial/automotive sector.

The Chief Commissioner held that macro economic parameters and the state of the global economy cannot be considered as the basis for the estimation to pay advance tax. According to the Chief Commissioner, each assessee has to make its own estimation of income for payment of advance tax based

At paragraph 5 of the order, it is observed that though it is for the Board of Revenue to notify the classes of cases for waiver of interest in exercise of power vested in it based on economic conditions in the country or worldwide, nevertheless, no such classes of income have been notified so far and as a result, no individual case is eligible for waiver of interest in terms of the notification, disentitling petitioner/assessee for waiver of interest under Section 234C.

Having thus recorded conclusions, the Chief Commissioner extracted, in extenso (i) the observations of the five Judges Bench in Commissioner for Income Tax vs. Anjum M.H. Ghaswala, that Section 234 A, B and C are mandatory in nature; (ii) the observation of this court in Dr.S.Reddappa and another vs. Union of India and others reported in 232 ITR 62 that the nature of interest charged under the aforesaid

The authority while addressing the question of waiver of interest under Section 234A, B and C of the Act extracted the observations of this Court in M/s Union Land and Building Society Pvt. Ltd. Vs. Union of India reported in 215 ITR 758, rejecting the submission that imperfection and legitimate expose of the provisions to criticism or challenge to its vires, on the premise, that validity of legislation, otherwise valid, could not be struck down simply because, in some

The Chief Commissioner held that the aforesaid observations were a complete answer to the arguments of the petitioner based on possible hardship in a certain situation. At paragraph IV.8 the authority observed that waiver of interest under Section 119(2)(a) of the ‘Act’ is not absolute requiring a consideration in the light of the circumstances mentioned therein, although Courts have held that the Circular speaks of class of

Yet again in paragraph IV.9, it was further observed that there is no separate unanticipated income in the form of a windfall but only the increase in business turnover resulting in increase in profits at the end of the year and that the net profits of the business at the end of the year will be forecasted in the first quarter by the assessee himself who is in possession of the information regarding the affairs of the business and how business is performing. The authority having examined the advance tax paid for the assessment year 2007-08 onwards till 2014-15 (till December) though observed that on a comparison in the previous years, the advance payment remained the same, nevertheless recorded a finding that it was factually incorrect to submit that substantial increase in the business income during the last quarter of the financial year 2009-10

It was further observed that advance tax payment for the accounting year 2011-12 was higher than for the accounting year 2012-13 and yet again, an increase in the accounting year 2013-14, based upon the return of income which the assessee predicted and not by the department taking into consideration internal mechanism including TDS payable for the whole year. In the circumstances, the authority rejected petitioner’s plea that for the assessment year 2010-11, a forecast of the increase in profits during the last quarter of the year was unavailable, since, such increase in profits “may be” due to various internal and external conditions.

Sri K.P.Kumar, learned senior counsel submits that there being no dispute over applicability of notification dated 26.06.2006, Annexure-B to petitioner, an individual assessee, for waiver of interest under Section 234C of the ‘Act’ as noticed by the Chief

Learned Senior counsel points to the year wise sales and current income demonstrating fluctuating and reduction in income during the financial year 2006-07 to `761 crores; 2007-08 `753 crores; 2008-09 `620 crores, hence unable to predict current income of `901 crores for the financial year 2009-10 not at least during the first quarter of the financial year 2009-10. Learned Senior counsel hastens to add that petitioner is in the business of automobile parts, one of the global leaders and highest tax payer for over six decades, an admitted fact, and for estimation of anticipated current income for the financial year 2009-10 so as to pay advance tax took into consideration not only the reduction in the current income of the previous years, but also global

Sri Jeeval J. Neeralgi, learned counsel for respondent revenue seeks to support the order impugned as being will merited, fully justified and not calling for interference.

The core question for decision making is,

Having examined the order impugned of the Chief Commissioner and perused the pleadings, there is no more doubt that the authority meandered into aspects both in law and on facts unnecessary for decision

The finding of the Chief Commissioner that during the first quarter of the financial year 2009-10, petitioner should have anticipated current income of `901 crores by a mechanism of details of sales, consumption and production over the previous 3 years is far from acceptance. Learned senior counsel is correct in his submission that during the financial years 2006-07, the current income was `761 crores, while for the year 2007-08, was reduced to `753 crores and for the year 2008-09 further reduced to `620 crores and therefore, it was reasonable for the assessee to anticipate a further reduction in the current income for the financial year 2009-10, atleast during the first quarter of the said year, and the advance tax paid on the basis of anticipated reduction of current income for the said year cannot be said to be figment of wild imagination, more so, since assessee is admittedly a global manufacturer of automotive parts for over six decades and more. It is common knowledge that there was a global recession during the financial years 2008-09 as

Merely because the Board of Revenue did not issue notification over cases/class of income on the basis of economic condition of the country or worldwide, in my considered opinion, was unjustified since Chief Commissioner concluded, positively, that an individual assessee’s claim for waiver can be considered in terms of the notification.

Petitioner assessee is admittedly in the Automotive parts industry for more than six decades, and has a well

It is a matter of fact that it is only in the last quarter of the financial year 2009-10, petitioner saw rise in income but that by itself and nothing more, it cannot be said that petitioner anticipation of less current income for that year was not justified. Looking

Admittedly the Chief Commissioner without making reference to any material over manufacture, sales, production of automotive parts by the petitioner

It is no doubt true that petitioner did not experience a windfall during the last quarter of the financial year 2009-10, but did have an increase business income. Paragraph 2(b) of the notification cannot be read restrictively, to mean that waiver of interest under Section 234 ‘C’ is available only to cases of windfall, since that would be too myopic. In fact discretion is invested in the Chief Commissioner to be exercised judiciously, based on facts and circumstances, since not circumscribed by any fetters. If as noticed supra, and at the cost of repetition petitioner suffered decrease in current income in the three consecutive previous years, coupled with global recession in automotive industry, an admitted fact, it

In my considered opinion, in the facts and circumstances, petitioner’s explanation is acceptable, calling for exercise of discretion by the Chief Commissioner under paragraph 2(b) of the notification dated 26.06.2006, Annexure-B, over the extent of interest waiver. In the result, petition is allowed. The order impugned is quashed and the proceeding remitted for consideration by the Chief Commissioner, insofar as it relates to the extent of waiver of interest charged under Section 234C of the Income Tax Act, in terms of paragraph 2(b) of the notification dated 26.06.2006, Annexure-B. Compliance within four weeks from the date of receipt of a copy of this order.