TMI Blog2016 (12) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... long does not show that any substantial injustice was done warranting exercise of discretion. Concededly, the petitioner Inter Craft appears to have deposited the modified amount of ₹ 68,61,775/- during the pendency of these proceedings. In its case the claim would, therefore, undoubtedly not only involve interpretation of provisions of the Income Tax Act at the risk of doing violence to them but would also include an intricate exercise and mathematical calculation. Likewise in the case of Old Village, too, the argument is not tenable. The propositions that the petitioners advance are unsound in law and have no basis under the Scheme. Once the statute clarified that amounts paid towards tax are not to be deemed "unpaid" for any r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter) in WP(C) 1707/ 1999 challenges a similar demand for ₹ 27,10,363/- and ₹ 13,39,857/- and seeks a declaration that its liability under the Scheme is limited to ₹ 16,78,665/-. 2. The brief facts are that the Finance Act (No.2) of 1998 introduced, by Chapter IV, a Scheme known as the Kar Vivad Samadhan Scheme [hereafter the Scheme ], which came into force on 01.09.1998. This enabled the applicants to settle their tax disputes after making appropriate declaration to the designated authority. Tax arrears was defined as follows by Section 2(m) of the Finance Act (No.2) as follows: (m) tax arrear means,- (i) in relation to direct tax enactment, the amount of tax, penalty or interest determined on or bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by him pending any appeal or in pursuance of a court order in relation to such duties, cesses, interest, fine or penalty, such payment shall not be deemed to be the amount unpaid for the purposes of - determining tax arrear under this sub-clause; 3. By Section 88 of the Finance Act (No.2) of 1998, the settlement of tax payable was provided for in the following terms: 88. SETTLEMENT OF TAX PAYABLE Subject to the provisions of this Scheme, where any person makes, on or after the 1st day of September, 1998 but on or before the 31st day of December, 1998 a declaration to the designated authority in accordance with the provisions of Section 89 in respect of tax arrear, then notwithstanding anything contained in any direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declaration filed by Inter Craft, the total disputed income - on the basis of which tax arrears had to be computed was ₹ 1,37,95,937/- as against the total assessed income of ₹ 2,11,76,055/- for AY 1995-96. The petitioner relies upon the assessment documents, including the returns filed and the balance sheet indicating that substantial amounts of ₹ 33,94,854/- (including TDS) were paid as advance tax. This, according to it, is the basis for the claim in the proceedings. According to Old Village, the tax @35% of disputed income of ₹ 47,96,187/- was ₹ 16,78,665/-. 5. The petitioners argue that in calculating and making the impugned demand, the tax authorities have ignored that credit ought to be given un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disputed tax by applying marginal rate applicable for the relevant assessment year for that assessee and thereafter determine the sum payable in accordance with Section 88 of the Scheme. 7. The respondent urges that in terms of the assessment order under Section 143(3), Old Village's total income was determined to be around ₹ 1.02 crores which was later reduced on appeal to ₹ 83,86,310/-. Under the Scheme the petitioner had declared the tax payable at ₹ 16,78,665/-. After due examination, the tax payable was determined at ₹ 27,10,363/-. The revenue highlights the petitioner's computation at ₹ 48,22,128/- as against the computed income and states that a compensation of ₹ 20,64,720/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, there are some observations in the three judgments supplied by the petitioners which support them that Section 140A adjustment is not overridden by virtue of non-obstante clause in Section 88. This Court, however, notices that those observations did not give importance to the definition of tax arrear under Section 2(m) of the Finance Act (No.2), especially the Explanation which underlines that declarations, voluntary payments or payments under protest of any amount or duties, cesses, interest . would not be deemed to be the amount unpaid for the purpose of determining tax arrear . In other words, it is very clear that the Explanation ipso facto excludes amounts paid prior to the declaration and that the entire unpaid amounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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