TMI Blog2013 (7) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... Chairman, Central Board of Direct Taxes & Anr [1998 (10) TMI 512 - DELHI HIGH COURT] - Decided in favour of Assessee. Superseding jurisdiction - Whether Board of Direct Taxes’ views have primacy over that of BIFR - Held that:- Income tax authorities were not given notice of remitting their matter back to BIFR and the order of BIFR reveals that it applied its mind, and granted limited concession only as regards reduction and waiver of interest - The larger pleas of the company towards income tax dues and concessions were denied by the BIFR - Having regard to these circumstances, and Section 32 of the Act as well as the Circular No. 683 of 1994 the failure of income tax authorities to inform the Director General would not result in the invalidity of BIFR’s scheme - Period for operation of the limited concessions in the scheme has also apparently ended - In view of the concurrence of the other secured creditors, and implementation of the approved scheme, it would be inequitable and unjust to put the clock back, at the behest of the Income Tax authorities - Decided in favour of Assessee. - W.P.(C) 1915/2013, C.M. APPL. 3645/2013 - - - Dated:- 19-7-2013 - S. Ravindra Bhat And Naj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for COM did not fructify. Taking these factors into account BIFR prima facie concluded that it would be just, fair and in public interest that the Company should be wound-up and show cause notice for Winding Up should be issued to the Petitioner Company. By ex-parte order dated 02.06.2004, BIFR directed winding up of the Petitioner Company under Section 20(1) of SICA and accordingly directed issuance of Show Cause Notice (SCN) for Winding Up. Aggrieved by that order of BIFR, the Petitioner filed an appeal being Appeal No. 154/ 2004. 4. During pendency of the said appeal, the first Respondent, i.e. the Income Tax Department filed an application on 14.11.2005 under Section 22(1) of SICA seeking permission to recover its dues of Rs. 997.79 lakhs with an alternative claim that in the event a scheme is allowed to be formulated then a suitable provision for payment of income tax dues of the Petitioner-Company ought to be made in the scheme itself. It is stated that on 14.03.2006, during the pendency of the appeal before BIFR, the Petitioner could settle the dues of all its secured creditors (except IIBI, RIICO UTI). The AAIFR, taking note of the fact that the Petitioner, out of its 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in law. It is pointed out that the finding regarding the order (of AAIFR) having been made in contravention of principles of natural justice is contrary to facts. It was argued in this regard that the letter of 30.09.2009 of the concerned assessing officer of the Income Tax Department itself shows that the Respondents were aware of the BIFR s orders, and accepted them without demur. The said letter reads as follows: Order to give effect to the decision of the BIFR u/Ss 22 32 of the SICA Act 1985 Dated : 30-9-2009 The Board for Industrial and Financial Reconstruction, New Delhi in Case No. 308/2001 in the case of M/s Lords Chloro Alkalies Ltd. Dated 13.12.2006 has passed the order as per para 11.5 which is as under: The statutory liabilities which are under litigation/appeal shall on crystallization after exercise of all the legal remedies available to the company be paid over a period of seven years on interest free basis. All the penal interest, damages, penalties, charges are chargeable on the same shall be waived. The Hon ble ITAT, Jaipur in its decision in appeal no.199/JP/2000 and 210/JP/2000 dated 19.02.2008 set aside the decision before the ld. CIT(A), Alwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the nature of the scheme finalised by BIFR. It was argued that after the previous order of remand by the AAIFR, a duty had been cast upon the BIFR to circulate the draft scheme to it i.e. the income tax authorities. There was no material on the record to suggest that such an obligation had been fulfilled. 10. More substantially, learned Standing Counsel argued that the provisions of SICA could not prevail over those of the Income Tax Act. In this context, it was argued that in terms of the decision of the Supreme Court in Commissioner of Income tax v Anjum. M.H. Ghaswala Ors. (2002) 1 SCC 633 it was held that the interest contemplated under Sections 234A, 234B and 234C is mandatory in nature and the power of waiver or reduction, having not been expressly conferred on the Settlement Commission, waiver or reduction in payment of statutory interest is outside the purview of the settlement proceedings, contemplated in Chapter XIX-A of the Act. It was submitted that likewise, since no provision of SICA enabled waiver or reduction of statutory interest mandated by the Act, BIFR could not have unilaterally directed such a relief. In this respect, contended Learned Standing Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny which should be taken care of in an appropriate manner in the scheme itself. Income Tax Authorities in a separate application dated 14th Nov. 2005 have filed an application seeking permission under Section 22(1) of SICA to recover its dues of 997.79 lakhs. XXXXXX XXXXXX XXXXXX The BIFR scheme complied with this direction, and expressly provided that The statutory liabilities which are under litigation/appeal shall on crystallization after exercise of all the legal remedies available to the company be paid over a period of seven years on interest free basis. All the penal interest, damages, penalties, charges are chargeable on the same shall be waived. 12. The first question is whether the income tax authorities are justified in stating that the order of BIFR, to the extent that it scaled down interest (on income tax liability) are beyond jurisdiction, since only the Board through its designate has the authority to waive or remit interest under the Income Tax wholly or in part. The petitioner in this context, relies on Section 32 of SICA; it reads as follows: 32. Effect of the Act on other laws.-- (1) The provisions of this Act and of any rules or schemes made there u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 72-A of the Income Tax Act, mean that those provisions will stand excluded from the rigors of Section 32 of SICA. 14. A somewhat similar question had been considered by the Supreme Court in Aswini Kumar Ghosh Anr v. Arabinda Bose Anr, [1953] SCR 1, when it was observed that - "It should first be ascertained what the enacting part of the section provides on a fair construction of the words used according to their natural and ordinary meaning, and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment." In the case of Section 32 SICA, the specific exclusion of two enactments, and the express reference to Section 72A of the Income Tax Act, to say that its provisions apply (by Section 32 (2)) manifest Parliamentary intention that provisions of SICA have to prevail over those of the Income Tax Act. This court s conclusion is strengthened by precedent. In http://indiankanoon.org/doc/366360/ Mewar Sugar Mills Ltd. v. Chairman, Central Board of Direct Taxes Anr 1998 VI AD(DELHI) 309 a Division Bench had concluded that: 21. To sum up: (1) The non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er,- (a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time whether by way of relaxation of any of the provisions of sections 5[ 139], 143, 144, 147, 148, 154, 155, 6[ sub- section (1A) of section 201, sections 210, 211, 7[ 234A, 234B], 234C], 271 and 273 or otherwise, general or special orders in respect of any class of incomes or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income- tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise 8[ any income- tax authority, not being a Deputy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it did. Although the income tax authorities were not given notice, the order of BIFR reveals that it applied its mind, and granted limited concession only as regards reduction and waiver of interest. The larger pleas of the company towards income tax dues and concessions were denied by the BIFR. Having regard to these circumstances, and Section 32 of the Act as well as the Circular No. 683 of 1994 under the Income Tax Act, the failure of income tax authorities to inform the Director General (since the Circular was in existence at the time of formulation of the scheme in the present case) would not result in the invalidity of BIFR s scheme. Another aspect which this court notices is that the Income Tax authorities, i.e. the assessing officer and the Commissioner, have given effect to the orders of BIFR. These were pursuant to the orders of the Income Tax Appellate Tribunal (ITAT) dated 19.02.2008. That order stands and has attained finality. Besides, the period for operation of the limited concessions in the scheme has also apparently ended. Lastly, in view of the concurrence of the other secured creditors, and implementation of the approved scheme, it would be inequitable and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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