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2022 (11) TMI 1304 - HC - Income TaxScope of the DTVSV scheme - Requirement to settle all the pending appeals filed by the respondents-revenue for an assessment year - settlement any appeal under the DTVSV Act - what is the rule of interpretation that the Court must apply while interpreting the DTVSV Act? - whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute? - HELD THAT - Every modern legislation is actuated with some policy. While the intent of taxing statutes is to collect taxes, the intent of amnesty acts like Voluntary Disclosure of Income Scheme (for short VDI Scheme ) is to provide an opportunity to the assesses to declare their undisclosed income on fulfilling certain terms and conditions. There are also legislations which are directed to cure some mischief and bring into effect some type of reform by improving the system or by relaxing the rigour of the law or by ameliorating the condition of certain class of persons who according to present-day notions may not have been treated fairly in the past. Such welfare, beneficent or social justice oriented legislation are also known as Remedial statutes. It is settled law that any ambiguity in a taxing statute enures to the benefit of the assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in favour of the revenue and amnesty/exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing the amnesty/exemption. See Commissioner of Customs (Import), Mumbai vs. Dilip Kumar Company and Ors 2018 (7) TMI 1826 - SUPREME COURT . For determining whether the DTVSV Act is a taxing statute or an amnesty act or a beneficial/remedial act, one has to examine what is the objective and intent behind enacting the statute. It is a statute which provides benefit as it recovers the taxes for the Department upfront without having to wait to succeed in the litigation which itself is uncertain. DTVSV Act also provides a sop to an assessee, as it puts an end to the litigation and the assessee is relieved of payment of interest and penalty if the same were to imposed. The DTVSV Act also benefits the society as it reduces litigation, acrimony, decongests the Courts and relieves the system of unnecessary burden. Consequently, this Court is of the view that DTVSV Act is neither a taxing statute nor an amnesty act. It is a remedial/beneficial statute. The Courts have only to see that the particular case is within the mischief to be remedied and falls within the language of the enactment. The words of such a statute must be so construed as to give the most complete remedy which the phraseology will permit, so as to secure that the relief contemplated by the statute shall not be denied to the class intended to be relieved. Consequently, the appropriate principles of interpretation to be applied having regard to the entire conspectus of facts are the principles of purposive and liberal interpretation. Applicability of judgment of the Supreme Court in Commissioner of Customs vs. Dilip Kumar Co. 2018 (7) TMI 1826 - SUPREME COURT which deals with interpretation of exemption notification - The benefit of the notification was denied to the assessee on the ground that the goods imported by the assessee contained chemical ingredient for animal feed and not animal feed/ prawn feed as such. Therefore, the question before the Supreme Court was whether the assessee who is seeking exemption from taxation under the provisions of the Act is covered by the said exemption notification. It was in this context that the Supreme Court held that the exemption notification is required to be construed strictly and any ambiguity in the exemption notification must enure to the benefit of the revenue. As already held hereinabove, the DTVSV Act is neither an amnesty act nor an exemption scheme as it does not provide for any exemption or benefit solely to the taxpayer. While interpreting Kar Vivad Samadhan Scheme , the Supreme Court in Commissioner of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja, 2005 (9) TMI 362 - SUPREME COURT held that the object of the said Scheme was to settle tax arrears locked in litigation at a substantial discount and it provided that any tax arrears could be settled by paying the prescribed amount of tax arrears, and it offered benefits and immunities from penalty and prosecution. The Supreme Court held that the Kar Vivad Samadhan Scheme was in substance a recovery scheme though it was nomenclatured as a litigation settlement scheme and was not similar to the earlier VDI Scheme. It further held that the object of Kar Vivad Samadhan Scheme was to put an end to all pending matters in the form of appeals, reference, revisions and writ petitions under the IT Act/Wealth Tax Act and the object was to put an end to litigation in various forms and at various stages under the IT Act/Wealth Tax Act and therefore the rulings on the scope of appeals and revisions under the IT Act or VDI Scheme will not apply. Consequently, the judgment of the Supreme Court in Dilip Kumar (supra) which deals with interpretation of exemption notification, has no application to the present case. As under the DTVSV Act, 2020 each appeal, writ petition or SLP is treated as a separate dispute which is evident from Section 2(1)(j) read with Section 2(1)(a) of the Act - The unit for settlement of dispute under the DTVSV Act, 2020 is an appeal, writ petition or SLP and not the assessment year as had been canvassed by the revenue. Even assuming that the DTVSV Act is a taxing statute, there is no restriction on an assessee to choose an appeal to be settled under the DTVSV Act as Section 2(1)(j) uses the words any appeal which even on a literal interpretation would mean any one or more appeals. The issues raised by the Department in the SLP filed before the Supreme Court is in respect of deduction for salary paid to expatriates and the applicability of Section 115JB of the Act. However, this issue is not at all connected with the deemed appeal arising from the order of the Tribunal dated 16th September, 2019 wherein the issue of taxability of ECB interest and levy of interest under Section 234D of the Act is involved. Since, the issues involved in both the appeals are different and unconnected, this Court is of the view that the contention of the Department that the Petitioner ought to have settled the SLP pending in the Supreme Court, along with the deemed appeal of the Department is incorrect and bad in law. Reliance on FAQ-7, 27, 11 and 14 is misconceived and untenable in law - FAQ - 27 is consequential to FAQ - 7, as it provides for the manner of computing disputed tax when the declarant files a declaration for settlement of issues which are remanded by an appellate authority to the AO. FAQ - 27 states that in the event the declarant decides to settle the issues remanded by an appellate authority, the declarant is also required to settle the issues which are not set aside by the appellate authority and further provides that the disputed tax for the issues remanded to the AO will be the same amount if the addition was to be repeated by the AO. FAQ-27 has no application in the instant case as the Petitioner had filed a declaration with respect to a deemed appeal of the Department arising from the order of the Tribunal dated 16th September, 2019 and there were no issues pending before the AO for consideration. This Court is of the view that FAQ No. 11 deals with cases where in one appeal a qualifying and a non-qualifying issue arise for consideration. However, the case of the Petitioner does not fall under any clauses of the section 9, which defines non-qualifying tax arrears. Consequently, FAQ-11 has no applicability to the present case. This Court is also of the view that FAQ-14 supports the case of the Petitioner as it allows the assessee to make a declaration for settlement of a dispute with respect to one order and does not require the assessee to settle all the disputes arising from different orders for a particular year. Option to the assessee to choose appeals for the same assessment year, which are pending before different forums, to be settled under the provisions of DTVSV Act - The contention of the respondents-revenue that the option is available to the petitioner only in a case where there are cross appeals arising from the same order is incorrect as FAQ-19 in unequivocal terms indicates that the assessee has an option to choose the appeals to be settled under the DTVSV Act and there is no obligation on the petitioner to settle all the appeals filed by the assessee for a particular assessment year. This Court is of the view that an assessee is free to settle any appeal under the DTVSV Act and is not required to settle all the pending appeals filed by the respondent-revenue for an assessment year.
Issues Involved:
1. Whether an assessee is free to settle any appeal under the Direct Tax Vivad se Vishwas Act, 2020 (DTVSV Act) and is not required to settle all the pending appeals filed by the respondents-revenue for an assessment year. Issue-Wise Detailed Analysis: 1. Whether an assessee is free to settle any appeal under the DTVSV Act, 2020 and is not required to settle all the pending appeals filed by the respondents-revenue for an assessment year. Relevant Facts: The Petitioner, a banking company incorporated in Japan, challenged various adjustments made by the Assessing Officer for the Assessment Year 2007-08. The Tribunal's order dated 19th September 2014 decided several issues in favor of the petitioner, while some were decided against it. Both the Petitioner and the Respondent-Department filed appeals. The Petitioner later filed an application under the DTVSV Act to settle the deemed appeal of the Department against the Tribunal's order dated 16th September 2019. The Department rejected this application, arguing that the Petitioner must settle all pending appeals for the same assessment year. Arguments on Behalf of the Petitioner: The Petitioner argued that the DTVSV Act treats each appeal and SLP as separate disputes for settlement purposes, as evident from Sections 2(1)(j) and 2(1)(a) of the DTVSV Act and Rule 2(b) of the DTVSV Rules. The Petitioner emphasized that the Act allows an assessee to file a declaration for any appeal or SLP pending before an appellate authority without the necessity to settle all appeals for a particular assessment year. The Petitioner relied on Circular No.9/2020 issued by CBDT to support this contention. Arguments on Behalf of the Respondents: The Respondents contended that the DTVSV Act requires settling all issues for an assessment year, not allowing the assessee to pick and choose. They emphasized that the unit for settlement under the Act is an assessment year, not individual appeals. The Respondents also argued that any ambiguity in the amnesty scheme should be construed in favor of the Revenue, citing the Supreme Court's judgment in Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Company and Ors. Court's Reasoning: The Court determined that the DTVSV Act is a remedial/beneficial statute aimed at reducing litigation, generating timely revenue, and providing certainty and savings of resources. Consequently, the principles of purposive and liberal interpretation should be applied. The Court held that the unit for settlement under the DTVSV Act is an appeal, writ petition, or SLP, not the assessment year. This interpretation is supported by Sections 2(1)(j) and 2(1)(a) of the Act and Rule 2(b) of the DTVSV Rules. The Court also noted that the issues involved in the Department's SLP and the deemed appeal arising from the Tribunal's order were different and unconnected. Conclusion: The Court concluded that an assessee is free to settle any appeal under the DTVSV Act and is not required to settle all the pending appeals filed by the respondent-revenue for an assessment year. The impugned order rejecting the Petitioner's application was set aside, and the respondents-revenue were directed to reconsider the declaration filed by the Petitioner. Relief: The impugned order and reasons were set aside. The respondents-revenue were directed to reconsider the declaration filed by the Petitioner for the assessment year 2007-08 and issue a refund, if any, in accordance with the law within eight weeks.
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