Operating profit is Relevant in deciding Interest Waiver Application

The fact that the Assessee is a part of “DuPont”, a global conglomerate which had in 2011 $37.96 billion in net sales and $6.253 billion as operating profit , cannot be said to be an irrelevant factor in considering whether any genuine hardship0 was undergone by the Petitioner. Further, in comparison to the profitability of the Petitioner over the years, the amount paid by it towards interest under Section 220 (2) of the Act was merely $0.004 billion (approx). In the circumstances, the conclusion arrived at by the CIT that no genuine hardship can be said to have been caused to the Petitioner cannot be said to be an erroneous exercise of discretion by the CIT. It was a plausible view to take and does not call for interference by this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution.

Full Text of the High Court Judgment / Order is as follows:-

1. This is a writ petition by M/s. Pioneer Overseas Corporation USA, seeking a direction to quash the impugned order dated 6th May 2016 passed by the Respondent, Commissioner of Income Tax (International Taxation) – 2, Delhi ( “CIT”) whereby the application filed by the Petitioner for waiver of interest under Section 220 (2) of the Income Tax Act, 1961 ( “Act”) was rejected on the ground that the Petitioner failed to meet the very first condition laid down in Section 220 (2A) of the Act viz., that it failed to show that it had suffered “genuine hardship”.2.The background facts are that the Petitioner is the branch office of Pioneer Overseas Corporation, United States of America ( “POC US”). The Petitioner is engaged in Contract Research Activities and cultivation of parent seeds. Since the Petitioner has been regularly filing its returns of income. Since the Assessment Year ( “AY”) 1993-94, it has been claiming exemption by treating its entire income as agricultural income in terms of Section 10 (1) read with Section 2 (1A) of the Act. It is stated that this claim was accepted by the Department for the said AY as well as for the succeeding AYs 1994-95, 1995-96 and 1996-97.