In Pioneer Overseas Corporation USA v. CIT (International Taxation), the division bench of the Delhi High Court, while confirming the rejection of an application seeking waiver of interest held that the financial capacity of the assessee is a relevant factor in considering application for waiver of interest under section 220(2A) of the Income Tax Act.
In the instant case, the petitioner, a branch office of Pioneer Overseas Corporation, United States of America, moved an application seeking waiver of interest under section 220(2A), which was rejected by the Commissioner on ground that no genuine hardship had been caused to the Petitioner. He was of the view that the Petitioner was part of the global conglomerate “DuPont‟, which made humongous profits in billions of dollars meant that it did not suffer any “genuine hardship‟.
Aggrieved by the order, the petitioners approached the High Court challenging the action of the Commissioner. Before the Court they relied on the Apex Court decision in B.M. Malani v. Commissioner of Income Tax and contended that a genuine hardship would mean a genuine difficulty and the same would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.”
Dismissing the petition, the bench comprising Justice S Muralidhar and Justice Chandra Sekhar said that “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 hardship” 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.”
Read the full text of the Order below.
