2024 (12) TMI 319 - HC - Income Tax

Benefit of Direct Tax Vivad Se Vishwas Act, 2020 - settlement of disputes - declaration as furnished by the petitioner u/s 3 of the DTVSV Act was modified to include settlement of certain disputes that were not the subject matter of the declaration made by the Assessee. Whether the Assessee can confine the settlement of disputes to the issue regarding disallowance of loss claimed by it in respect of trading in derivatives, which was subject matter of its appeal as disposed of by the ITAT by its order dated 2019 (12) TMI 1185 - ITAT DELHI ? - HELD THAT - Section 3 of the DTVSV Act provides that where a declarant files a declaration before the designated authority in accordance with Section 4 of the DTVSV Act in respect of tax arrears then notwithstanding anything contained in the Act or any other law for the time being in force, the amount declared as payable would be computed in accordance with the tabular statement as set out in the said section. The term declarant is defined u/s 2 (1)(c) of the DTVSV Act to mean a person who files a declaration u/s 4 of the DTVSV Act. As is apparent from the aforesaid definition, the term tax arrears would include the aggregate amount of disputed tax as well as interest chargeable or charged on such disputed tax. The expression disputed tax is defined in clause (j) of Section 2 (1) of the DTVSV Act. It is necessary to note that the DTVSV Act also contains provisions to address the question of disputes when an order has been passed by the AO, CIT(A), or the learned ITAT and the time for filing the appeal against the said order has not expired. In such cases, the person in whose case such an order has been passed would also fall within the meaning of the term appellant as defined u/s 2 (1)(a) of the DTVSV Act. In such cases, the disputed tax would amount to the tax payable by the appellant after giving effect to the order so passed. In the present case, Assessee had filed a declaration in respect of its appeal. The disputed tax paid is confined to the tax, interest and penalty payable in respect of the loss in derivatives which was the subject matter of appeal The fact that the Revenue had preferred a consolidated appeal against the order passed 2019 (12) TMI 1185 - ITAT DELHI would not in any manner detract from the fact that Revenue s appeal to this Court is in respect of order relatable to two separate appeals. The issue involved in the two appeals are not interlinked. The present petition is allowed and the certificate issued by the designated authority in Form no.3 is directed to be confined to the declaration made by the Assessee. The respondents are accordingly directed to take steps for issuing a modified certificate under Section 5(1) of the DTVSV Act.

Summary

Issues Involved:

1. Whether the Assessee can confine the settlement of disputes under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) to specific issues in its appeal while excluding others.
2. Interpretation of the terms "tax arrears," "disputed tax," and "appellant" under the DTVSV Act.
3. The impact of pending appeals and the filing of declarations under the DTVSV Act.

Detailed Analysis:

1. Confine Settlement of Disputes:

The primary issue addressed in this judgment is whether the Assessee can limit the settlement of disputes under the DTVSV Act to specific issues that were part of its appeal, excluding other disputes that were part of the Revenue's appeal. The court examined the provisions of the DTVSV Act, particularly Section 3, which allows a declarant to file a declaration for settling tax arrears. The court noted that the term "disputed tax" refers to the tax that is the subject matter of a pending appeal, writ petition, or special leave petition. Therefore, the Assessee is entitled to settle only the disputes that were part of its appeal (ITA No. 5958/Del/2014) concerning the disallowance of loss in trading derivatives, without being compelled to settle disputes from the Revenue's appeal (ITA No. 5411/Del/2014).

2. Interpretation of Key Terms:

The court delved into the definitions of "tax arrears," "disputed tax," and "appellant" as per the DTVSV Act. "Tax arrears" include the aggregate amount of disputed tax, interest, and penalties. "Disputed tax" is defined as the tax payable if an appeal is decided against the appellant. The court emphasized that "appellant" includes both the person who filed the appeal and the income tax authority. This interpretation supports the view that each appeal is treated as a separate dispute under the DTVSV Act, allowing the Assessee to choose which appeals to settle.

3. Impact of Pending Appeals and Declarations:

The court addressed the procedural aspect of filing declarations under the DTVSV Act. Section 4(2) of the Act indicates that filing a declaration results in the withdrawal of any pending appeal related to the disputed income. The court highlighted that the unit of settlement is the appeal itself, not the assessment year. This interpretation aligns with the Central Board of Direct Taxes (CBDT) Circular No.9/2020, which clarifies that each appeal is treated as a separate dispute. The court also noted that the Revenue's subsequent filing of an appeal does not alter the Assessee's right to settle specific disputes as per its declaration.

Conclusion:

The court concluded that the Assessee is entitled to confine the settlement under the DTVSV Act to the disputes that were part of its appeal (ITA No. 5958/Del/2014) and exclude the disputes from the Revenue's appeal (ITA No. 5411/Del/2014). The court directed the issuance of a modified certificate under Section 5(1) of the DTVSV Act, reflecting the Assessee's declaration. The petition was allowed, and the pending application was disposed of accordingly.