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2002 (2) TMI 40 - HC - Income TaxKar Vivad Samadhan Scheme, Part Payments - the only question that arises for consideration is whether the computation under the KVS Scheme by the appellant is correct or whether the computation made by the respondent is correct. This involves resolution of the following issue: - "Whether any amount paid towards the tax arrears (which includes the income-tax and interest payable) should be taken as payment towards tax or towards interest, for the purpose of the KVS Scheme." - To find an answer to the issue, detailed reference to the relevant provisions of the KVS Scheme contained in the Finance Act, as also the clarification given by the Central Board of Direct Taxes (the "CBDT") will be necessary. - The normal rule that payments will first be adjusted towards interest and then towards principal (income-tax), based on the Explanation to section 140A(1) of the Income-tax Act and general law, will be inapplicable to matters covered by the KVS Scheme. The learned single judge has lost sight of the above aspects and has wrongly proceeded as if the Explanation to section 140A(1) of the Income-tax Act is applicable to the KVS Scheme.
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