1. This is an appeal by assessee against the order of CIT(Appeals) confirming the action of the Assessing Officer in regard to interest levied under sections 234B and 234C.2. Brief facts of the case arc that assessee deposited tax of Rs. 53,40,334 arrived at an income of Rs. 84,76,720 as per law existing on 6-11 -1989. The assessee claimed cash assistance received against the export as capital receipt, in view of the decision in the case of Gaddore Tools of the Income-tax Appellate Tribunal, Delhi (SB) and Aero Leather (P.) Ltd v. Union of India [1992] 194 ITR 7. Subsequently, the law was amended with retrospective effect by the Finance Act, 1990 and as such the receipts became taxable. Accordingly, the income was enhanced by the Assessing Officer and interest under Sections 234B and 234C was charged. The Assessing Officer did not accept the explanation of the assessee that there was a bona fide intention of the assessee, as the Special Bench decision was available and accordingly the assessee was of the view that he was not liable to pay tax on account of cash compensatory support, as it was treated as capital in nature.
The CIT (Appeals) also confirmed the order of the Assessing Officer. It was further observed by the CIT (Appeals) that the provisions of law are very clear. Therefore, the assessee was liable to pay advance tax which he did not. Accordingly interest charged under Sections 234B and 234C were correct. Now, the assessee is in appeal here before us.
3. The contentions raised before the CIT(Appeals) were reiterated here before us. It was further stated that amendment on statute came by the Finance Act, 1990 and Circular No. 564, dated 5-7-1990 was issued on a later stage and assessee had paid advance-tax before these dates.
Therefore, the assessee was under bona fide belief that he is not liable to pay advance tax on CCS received by assessee, as it was capital in nature. The learned counsel also stated that the return of the assessee was processed under Section 143(1)(a) and no interest under Sections 234B or 234C was charged and it was charged only when the assessment was completed under Section 143(3) after the amendment came on the statute by Finance Act. The reliance was placed on the decision of jurisdictional High Court and Asstt CIT v. Jindal Irrigation Systems Ltd. [1996] 56 ITD 164 (Hyd.).
4. On the other hand, the learned DR placed reliance on the orders of the authorities below. He further placed reliance on the decisions in Sant Lal v. Union of India [1996] 222 ITR 375 (Punj. & Har.) and A.M.Sainalabdeen Musaliar v. Union of India [2000] 242 ITR 400 (Ken).
5. We have heard the rival submissions carefully and also perused the material on record. After considering the material and submissions, we are of the view that assessce deserves to succeed here. This is not in dispute that the decision of the Special Bench in the case of Gaddore Tools (P.) Ltd. was available and in view of this decision the assessee did not pay advance tax on the amount received as Cash Compensatory Support. The amendment came in the year 1990 and the estimate was filed much earliers i.e., on 6-11-1989. Therefore, it cannot be said that there was any mala fide intention on the part of the assessee. The decision in the case of Aero Leather (P.) Ltd. (supra), where the Hon'ble High Court has observed as under:-- "It was contended in respect of assessment year 1987-88, the position of law, at least in Delhi, was that CCS which was received was not being regarded as a revenue income. This was by virtue of the decision of the Tribunal firstly in Gaddore Tools' case in 1985 and thereafter by the Full Bench in 1988. It was submitted that the Department ought not to take any proceedings for imposing the penalty or for levying any interest. It is not in dispute that the matter is still alive inasmuch as, a petition under Section 264 is pending before the Commissioner of Income-tax, in such a case, a sympathetic view should be adopted when there is a retrospective piece of legislation and it cannot be said that the view which the assessee was taking in 1987 was without any foundation. We do not except that injustice would be done to the petitioner and the Commissioner of Income-tax will, we are sure, pass a fair and judicious order." 6. The above observation of the Hon'ble Judges of jurisdictional High Court is clearly in favour of assessee, wherein in last but one para it is observed that "We do not except that injustice would be done to the petitioner and the Commissioner of Income-tax will, we are sure, pass a fair and judicious order." Of course this is not a decision but this is an advice to the Commissioner for doing justice. As we have already stated that assessee has not paid the advance tax as the CCS was treated as capital receipt in view of the decision of the Special Bench of the Tribunal, Delhi. The assessee's jurisdiction falls under Delhi Benches. Therefore, the assessee's contention was bona fide and accordingly tax was not paid by him. The CBDT while exercising powers specified under Section 119(2)(a) decided to authorise Chief Commissioner and Director General, Investigation to reduce or waive penal interest charged under the aforesaid sections in the circumstances, where as a result of any retrospective amendment of law or the decision of the Supreme Court, after the end of the relevant previous year, certain receipts which were hitherto treated as exempt, became taxable. Since no advance tax would normally be paid in respect of such receipts during the relevant financial year, penal interest is levied for the default in payment of advance tax." These instructions were issued by the Board in order No. F. 400/234/95-IT(B), dated 21-5-1996. The relevant instructions can be seen in Taxman's Master Guide to Income-tax Act at page 3.195. From these instructions it is amply clear that intention of the tax authorities are such that the interest should not be levied where any amendment came with retrospective effect. In the present case also the amendment came in the year 1990 with retrospective effect. Therefore, in our considered view, there was a bona fide intention on the part of the assessee and accordingly he could not pay advance tax on CCS amount. We further noted that Assessing Officer also did not charge any interest under sections 234B and 234C while processing the return under Section 143(1)(a) on 19-1-1990. It clearly shows that the Assessing Officer was of the view that no advance tax was payable on account of CCS amount, as by that date amendment has not come as the amendment came by Finance Act, 1990. In view of these facts and circumstances we hold that no interest under sections 234B or 234C should be charged on account of failure to pay advance tax on the amount of Cash Compensatory Support.
Accordingly we restore the matter to the file of the Assessing Officer to re-calculate the interest under sections 234B and 234C after excluding the amount received by assessee on account of CCS.