Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (4) TMI 169 - HC - Income TaxSick company - Director General of Income Tax declined the reliefs sought by the petitioner company - Draft Rehabilitation Scheme (DRS) was devised and eventually sanctioned on 14.01.2003 - The complaint of the petitioner is that the previous order dated 26.09.2012 requires determination and such determination was to be based on materials called for, and particulars given to the writ petitioner Held that - The pleadings do not anywhere disclose that the revenue called for the views or granted any opportunity to the assessee to present its views it is necessary to examine whether the liability u/s 41(1) and capital gains liability etc. is confined to one year and if so the quantum, and whether such liability enured in respect of further ass essment periods the revenue should grant hearing and consider all materials on record, in respect of which assessment orders have been made as well as wherever the returns were made by the assessee Decided in favour of Assessee.
Issues:
1. Interpretation of Draft Rehabilitation Scheme (DRS) requirements under Section 41(1) and capital gains tax liability. 2. Compliance with Section 19(2) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). 3. Determination of liability and opportunity for the petitioner to present views. 4. Granting a reasonable opportunity for the petitioner to present its views before the Director of Income Tax (Recovery). Analysis: 1. The petitioner, declared a 'sick company' by the Board for Industrial and Financial Reconstruction (BIFR), had a Draft Rehabilitation Scheme (DRS) sanctioned in 2003, requiring consideration by Income Tax authorities to exempt the company from taxation liability under Section 41(1) and capital gains tax liability. The scheme also included concessions like unhindered asset sales and exemptions from TDS and Advance Tax. The BIFR discharged the company from its purview in 2006 based on the directions provided in the DRS. 2. The Director General of Income Tax, unaware of the DRS, filed a petition due to non-notification under Section 19(2) of SICA. The court directed the Income Tax authorities to give effect to the scheme's mandate, leading to a fresh demand if necessary. However, subsequent orders by the authorities in 2013 did not grant the reliefs sought by the petitioner, who argued that a proper determination based on materials and an opportunity to present views were lacking. 3. The court noted the absence of views sought from the petitioner by the respondents, emphasizing the need to assess the liability under Section 41(1) and capital gains for multiple assessment periods. Considering incomplete assessment orders and the petitioner's business location in Gujarat, the court directed the respondents to comprehensively examine all relevant materials, grant a hearing, and pass necessary orders. The petitioner was to be present through a representative before the Director of Income Tax (Recovery) to present its views. 4. In conclusion, the Writ Petition and pending application were disposed of with the directive for the petitioner to have a reasonable opportunity to present its views before the Director of Income Tax (Recovery) on a specified date to facilitate the determination of liabilities and compliance with the DRS requirements.
|