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Case Law Details

Case Name : Tvl. Sanmac Motor Finance Ltd. Vs CCIT (Madras High Court)
Appeal Number : WP No. 12500 of 2010
Date of Judgement/Order : 10/02/2020
Related Assessment Year : 1995-96
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Tvl. Sanmac Motor Finance Ltd. Vs CCIT (Madras High Court)

The issue under consideration is whether the request of the petitioner for waiver of interest under Section 234A, Section 234B and Section 234C of the Income Tax Act, 1961 is granted by HC or not?

The petitioner company was operated as a Non-Banking Financial Company (NBFC) and it had encountered difficulties in servicing the deposits to its depositors as a result of which it faced several hardships including arrest of its Managing Director. All the other directors and principal and responsible officers of the petitioner company had resigned, as a result of which the interest of the company could not be protected. Result of which company went into winding up.

As per Section 119 of the Income Tax Act, 1961, there is a power to grant waiver from payment of interest in case of genuine hardship. Further, there is a circular dated 26.06.2006 bearing reference No.400/29/2002-IT(B), in which four situations are given by CBDT which can be qualified for interest waived off.

HC states that from a reading of the above circular, it is evident that the case of the petitioner is not specifically covered by any of the situation contemplated in the above notification. The CBDT while issuing the above notification has not factored a situation like the present case where an assessee is legally incapacitated from making any payments as it was ordered to be wound up. It was under a legal disability.

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