Waiver of Interest u/s 234B for confusion in Circular & amendment to s.54EC

Whether Clause (a) to (d) of section 54EC, states the circumstances beyond the control of the assessee and they may be considered as the species or illustrations of unavoidable circumstances or circumstances beyond the control of the assessee which is the genus contained in Clause (e) providing that  Where a return of income could not be filed by the assessee due to unavoidable circumstances, and assessee proved to have a bona fide belief , coupled with the voluntary payment of tax liability, the Chief Commissioner was not justified in declining the benefit of a waiver of interest to assessee under section 234B. Thus, ends of justice would be met by waiving interest up to 80 per cent under section 234B.

HIGH COURT OF KARNATAKA, BANGALORE

DATED THIS THE 2nd DAY OF JULY, 2013

WRIT PETITION NO. 42424OF 2012 (T-IT)

P S SESHADRI

Versus

THE CHIEF COMMISSIONER OF INCOME TAX

ORDER –

Petitioner, a retired scientist from the Indian Defence Organisation, claims to have acquired under a deed of settlement dated 14.2.1981 a certain immovable property at Chennai valued at Rs. 60,000/-, which when sold under a registered sale deed dated 16.3.2006 fetched a consideration of Rs. 1,99,00,000/-. With an intention to invest the sale consideration under Bonds issued by the National Highways Authority of India or Rural Electrification Corporation, for short Capital Gains Exemption Bonds under Section 54EC of the Income Tax Act, 1961, for short Act , made an application to the National Highways Authority of India on 8.8.2006 to invest Rs. 1,82,00,000/- in the absence of a limit on the quantum of investment under Section 54EC. Petitioner filed a return of income-tax on 25.9.2006 declaring income of Rs. 2,01,284/- and paid self assessment tax of Rs. 3,321/- and thereafter on 09.10.2006 filed a revised return of income disclosing sale of property at Chennai claiming exemption of investment under the capital gain bonds, which out of inadvertence was not set out in the original return of income filed on 25.9.2006. The National Highways Authority having noticed that the petitioner had not mentioned the PAN number issued a letter which was responded to by letter dated 15.8.2006 furnishing the PAN number. That application when rejected by the National Highways Authority of India, the application was returned with the Demand Drafts for Rs. 1,82,00,000/- by letter dated 5.10.2006 Annexure-F. Petitioner claiming to be under the bonafide belief that he would be allotted the capital gain bonds made the application for investment and seek exemption from paying long term capital gains tax.