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TMI Blog2012 (6) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... venue cannot sustain its plea treating as one pending for further consideration at the hands of the Tribunal - the assessee's declaration that the amount payable was determined by the CIT in his proceedings dated 17.6.1999 and that the Revenue's appeal before the Tribunal was filed on 7.7.1999 by which time the Samadhan Certificate had already been made – in favour of assessee. - TC(A). No.975 of 2005 - - - Dated:- 3-4-2012 - Mrs.Justice CHITRA VENKATARAMAN, Mr.Justice K.RAVICHANDRA BAABU, JJ. For Appellant : Dr.Anita Sumanth For Respondent : Mr.T.Ravikumar JUDGMENT CHITRA VENKATARAMAN, J. Tax Case (Appeals) are at the instance of the assessee against the order of the Tribunal by raising following questions of law:- "(1) Whether on the facts and in the circumstances of the case the Tribunal is right in law in holding that the benefit of declaration under the Kar Vivad Samadhan Scheme is not available to the appellant in respect of the departmental appeal in I.T.A.No. 2015/Mds/98? (2) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the expenditure incurred by the appellant by way of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g shares of Sugantham Sugars Ltd. and had paid bank charges therein. As the money was used for obtaining the shares, the interest and other charges paid to the Bank should be allowed as a deduction in the computation of income offered at Rs.20 lakhs, it being the amount received for rendering services. The said issue was considered in the assessment to the extent of Rs.7,01,079/- for the assessment year 1993-94. The Commissioner of Income Tax (Appeals) agreed with the assessee that the interest paid to the Bank for investment in shares was merited to be considered for deduction. The Commissioner of Income Tax (Appeals), however, directed the officer to compute the actual interest paid to the Bank and deduct the same from the taxable income. Any other receipt by way of refund on interest was to be taxed in the year of such receipt. However, on the other issues, the appellate commissioner granted partial relief. The Order of the Commissioner of Income Tax (Appeals) was however appealed against by the assessee and by the Revenue too. As far as the assessee's appeal is concerned in I.T.A.No.2034 of 1998, he objected to the addition made in respect of foreign trip, addition on the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. UNION OF INDIA, wherein the proviso to Section 92 was struck down and the clarification issued on 17.12.1998 accepting the said decision, learned counsel referred to the decision of the Karnataka High Court reported in (2008) 219 CTR 300 BHAWARALAL (HUF) v ASSTT. CIT also referred to the circular issued by the Central Government in Clarification bearing No. 149/ 152/ 1998 TPL dated 17.12.1998 and submitted that when once the Designated Authority determined the tax payable by the assessee notwithstanding the apparent failure in not including the amount involved in the Revenue's appeal and the mistake in not including the same attributable to Revenue's own lapse, the declaration could not be found fault with so as to leave the Revenue's appeal to be continued before the Tribunal. 6. Laying stress on the decision of the Apex Court reported in KILLICK NIXON LIMITED v. DEPUTY CIT (2002) 258 ITR 627, learned counsel pointed out that once declarant makes payment of the amount determined under Section 90, immunity under Section 91 springs into effect. Thus, reading in the context of KILLICK NIXON LIMITED v. DEPUTY CIT (2002) 258 ITR 627 as well as (1999) 236 ITR 1 ALL INDIA FEDERATI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or indirect tax enactment under which the proceedings against the declarant are or were pending shall be deemed to have been revived. Provided further that the designated authority may amend the certificate for reasons to be recorded in writing. (2) The declarant shall pay, the sum determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant. ...................... 92. Appellate authority not to proceed in certain cases :- No appellate authority shall proceed to decide any issue relating to the disputed chargeable expenditure, disputed chargeable interest, disputed income, disputed wealth, disputed value of gift or tax arrear specified in the declaration and in respect of which an order had been made under Section 90 by the designated authority or the payment of the sum determined under that section : Provided that in case an appeal is filed by a Department of the Central Government in respect of such issue relating to the disputed chargeable exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osecutor/ appellant/ applicant in the pending litigation is void as based on no intelligible differentia. The provisions apart from being arbitrary, irrational and evasive, have no rational relation to the object sought to be achieved by the Act. 11. Admittedly, the said decision of the Delhi High Court was accepted by the Revenue. The CBDT ultimately passed a clarification dated 17.12.1998 in F.No.149/145/98-TPL, which reads as under: KVSS Your attention is invited to the judgment dated 17th November 1998 by Hon'ble Delhi High Court in the above case and the Press Release issued by the Government conveying the acceptance of the judgment by Central Government. A copy of the above Press Release has already been sent to you along with DO letter No. 142/44/98- TPL dated 1st December, 1998 from Member (L). 2. Following the above judgment of Delhi High Court, the Government has decided that the assessees who want to make declaration under KVSS in respect of taxes involved in the appeals filed by the Department can do so. Such declarations shall be regulated as under: (i) The assessee has the option of filing declaration either in respect of arrears disputed in his appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo declaration forms, the Karnataka High Court considered the decision of the Apex Court reported in KILLICK NIXON LIMITED v. DEPUTY CIT (2002) 258 ITR 627 as well as (1999) 236 ITR 1 ALL INDIA FEDERATION OF TAX PRACTITIONERS v. UNION OF INDIA and the clarification issued by the Board and pointed out that when the assessee had filed its declaration, admittedly, the appeal by the Revenue was also pending. Hence, the determination by the designated authority on the tax arrears would necessarily have to take into consideration the issues involved in the assessee's appeal such arrears including what was raised in dispute by the Revenue by way of an appeal. The Karnataka High court further pointed out that a duty was cast on the designated authority to arrive at the correct amount payable by the declarant, notwithstanding that the declaration might not have included the tax arrears in dispute which was sought to be raised by way of an appeal by the Revenue. The High Court pointed out: "............. The determination by the designated authority of the tax arrears would necessarily have to take into consideration such arrears including what was raised in dispute by the Revenue by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the Revenue to consider the entirety of the case to arrive on the final determination. If the Revenue failed to do so, as stated by the Karnataka High Court, the Revenue has to suffer for its own lapse. On that score, the assesee could not be faulted on the amount determined as per Section 90. 15. Learned counsel for the assessee pointed out that as on the date of filing of its application under the Samadhan Scheme, admittedly, no notice was served on the assessee as regards the pending Revenue's appeal before the Tribunal. Even when the order was passed under Section 90 of the Samadhan Scheme, the appellant had no knowledge about the pendency of the appeal. We hold irrespective of whether the assessee had knowledge or not, when once the amount payable by the declarant in accordance with the provisions of the Act was determined by the Designated Authority, viz., the Commissioner of Income Tax, it amounts to the department having bestowed its attention to the entirety of the tax arrears to pass order under Section 90. Thus as held in the decision of the Kartanaka High court that once final determination is made, further hearing on any pending appeal before the Appellate for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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