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2016 (2) TMI 306 - DELHI HIGH COURT

2016 (2) TMI 306 - DELHI HIGH COURT - [2016] 381 ITR 423 - Determination of the tax to be paid in terms of the Kar Vivad Samadhan Scheme 1998 (KVSS) - Held that:- As regards the instructions issued, there are two aspects - one regarding the calculation of the disputed income with reference to the unpaid tax. The other is in relation to the application of the marginal rate. At the outset it requires to be noticed that the Finance Act, 1998 does not talk of any marginal rate to be applied. Also, i .....

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d income cannot apply where the taxable income arises only from capital gains and to which a uniform rate of 33.6% applies.

For the reasons already explained, the Court is of the view that the instructions issued are not consistent with the provisions of the Finance Act 1998 which does not talk of a marginal rate, particularly when it comes to computing the disputed income arising out of the capital gains. All that the Finance Act does is to stipulate what should be the rate of tax wh .....

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alculated at 35% of the disputed income so computed. In that view of the matter, the writ petition is disposed of by directing the Respondents to re-compute the disputed income and thereafter calculate the tax payable by the Petitioners in terms of the KVSS in the above manner. - W. P. (C) 1597/1999 - Dated:- 1-2-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioners : Mr V.P. Gupta, Advocate with Mr Anunav Kumar, Advocate For the Respondent : Mr Dileep Shivpuri, Senior Standing Counsel .....

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November, 1994 disclosing nil income. The Assessing Officer (AO) completed the assessment of the Petitioner No.1 on 18th March, 1997. The dissolution of Petitioner No. 1 took place during the AY. On dissolution, the assets of Petitioner No. 1 in the form of land was transferred to one of the partners at the book value of ₹ 59,84,802/-. The AO noticed that the market value of the said land was ₹ 5,68,00,000. Accordingly, the taxable income of Petitioner No. 1 was computed by the AO a .....

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able under Sections 234A and 234B of the Act worked out to ₹ 1,20,21,869/-. It is stated that Petitioner No. 1 made an aggregate payment of ₹ 72,54,260/- in the year 1998 towards the aforementioned tax demand. 3. The Petitioners decided to avail the KVSS which was introduced for the purposes of quick and easy settlement of tax dues. Under Section 87 (e) and (f) of the Finance Act, 1998, the terms disputed income and disputed tax were defined as under: 87.(e) disputed income , in rela .....

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ct tax enactment. Under Section 96 (1) of the Finance Act, 1998, the Central Government had the powers to issue directions, instructions and directions to the authorities for the proper administration of the KVSS. Under Section 96 (2) the Central Government was empowered to issue general special orders or instructions as to the principles or procedures to be followed by authorities in the work relating to the KVSS. 5. It is stated that pursuant thereto the Ministry of Finance, Government of Indi .....

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s defined in Section 87(e) to mean the whole or so much of the total income as is relatable to the disputed tax. The term, disputed income as used in the Scheme does not refer to the income in dispute by way of appeal, etc., but it refers to the income which is relatable to the disputed tax. The term disputed tax has been defined to mean the tax determined and payable but remaining unpaid on the date of declaration. The designated authority will work out the disputed income relatable to disputed .....

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ed at 35% of the disputed income. The said calculation reads as under: Calculation of Disputed Tax under the Scheme and the Sum Payable Income on account of long term capital gain Rs.4,58,70,994 Rate of Tax on long term capital gain applicable to petitioner (35% + 12% surcharges) 33.6% Tax payable 1,54,12,652 Less: Tax Paid- Upto 31.3.98- After 31.3.98 30,04,26142,50,000________72,54,261 Tax Unpaid 81,58,391 Disputed Tax in terms of sec. 87 (f) of the Finance Act 81,58,392 Disputed Income in ter .....

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he basis of the unpaid tax i.e. at ₹ 81,58,391/-. As a result while the Petitioners determined the rate payable under KVSS as 63,73,743, Respondent No.1 computed it as ₹ 1,03,87,456. The Petitioner is before this Court seeking a declaration that the computation by the Petitioners of the amount payable in terms of the KVSS is the correct one. 8. There is an obvious mistake in the clarification issued by the Respondents. Instead of clarifying that the disputed income has to be calculat .....

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irection that may be issued under Section 119 of the Act cannot take away or modify a benefit provided under a statutory notification. The Court noted that the same would really amount to giving power to a delegated authority to even amend the provision of law enacted by Parliament. 9. As regards the instructions issued, there are two aspects - one regarding the calculation of the disputed income with reference to the unpaid tax. The other is in relation to the application of the marginal rate. .....

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