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TMI Blog2013 (7) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... ies & Chemicals Limited, which was subsequently changed to M/s Lord Chloro Alkalies Ltd in the year 2003. It started commercial production of caustic soda in 1994-95 with a capacity of 126 TPD which was later enhanced to 195 TPD based on mercury cell technology which was replaced by membrane cell technology in the year 1994-95 with a further enhancement in its capacity to 255 TPD. Till 1997-98 the Petitioner-company operated satisfactorily. Later, due to adverse market conditions, change in government policy, high cost of power, high cost of production and heavy interest burden, the Petitioner started incurring heavy losses resulting in closure of its operations. On 30.06.1999, in view of the colossal losses, the net worth of the Petitioner eroded pursuant to which it made a reference under Section 15(1) of SICA to the Board for Industrial Finance and Reconstruction (hereafter "BIFR"); it was rejected in July 2001 as not maintainable. Later, on 30.06.2000, the Petitioner filed another reference before the BIFR based on its accounts. This time, it was registered as Case No.308 of 2001. On 15.01.2002, BIFR declared that the Petitioner was a sick company and directed IDBI to act as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the sanctioning of the scheme was brought to the notice of the income tax authorities on 27th February, 2007. 5. In September 2008, being aggrieved by the order (dated 30.11.2006 of BIFR), the Income Tax Department preferred a belated appeal to AAIFR, (being Appeal No.227 of 2008) in respect of the Income Tax reliefs and concessions provided in the Sanctioned scheme in Paras 10.7(1), (2), (3) & (4). An accompanying application, M.A. No.46 of 2009 for condoning the delay of two years was filed. The appeal and application were objected to by the Petitioner. On 01.04.2009 by its interim order, AAIFR allowed the application for condonation of delay and held that the first Respondent department had no knowledge of the proceedings before the BIFR prior to 07.08.2008. The Petitioner had opposed the application and argued that the Income Tax Department had in fact, given effect to clause 11.5 of the sanctioned scheme and waived the interest under Section 234B of Income Tax Act to the extent of Rs.2,47,34,779/- and interest under Section 220(2) amounting to Rs.3,20,62,504/- in respect of the Petitioner Company for assessment year 1996-1997. By the impugned order, the AAIFR finally allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand has been reduced to Rs.2,87,17,062/- after appeal effect. As per order of BIFR, you are required to make the payment of above demand in seven installments. Accordingly, it is requested to pay Rs.41,02,437/(1/7th of Rs. 2,87,17,062/-) by 31.03.2011 positively. Please note in the event of non-response the above mentioned demand will be recovered by adopting coercive measures." 7. It is argued on behalf of the Petitioner that in the above circumstances, the Income Tax authorities were estopped and bound by the principle of waiver from contending that the orders of the BIFR were not binding upon them. Counsel further emphasised that the order of BIFR had been worked out and the benefits of both in respect of the income tax concessions as well as the other benefits mandated under the rehabilitation scheme had been implemented. In these circumstances, contended learned senior counsel, it would be unjust and inequitable to set aside the order of BIFR on an erroneous interpretation of law and mistaken view of the facts. 8. Learned Counsel next argued that in terms of Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985, overriding effect has been given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAIFR, the Income Tax Commissioner had preferred an application, on 14.11.2005. In that application, the following reliefs were claimed: "1) the Deptt may be granted permission u/s 22(1) of SICA to recover its dues of Rs. 976.79 lakhs as intimated by the company. 2) If a scheme is being directed to be formulated, provision may be directed to be kept in that revival scheme for the payment of I.T. dues of Rs. 976.79 lakhs on priority basis. 3) Taking cognizance of Section 281 of the I.T.Act, 1961 the Deptt may be given priority in the matter of recovery of Rs. 976.79 lakhs. In the event, a scheme is allowed to be formulated the 1.T.dues of Rs. 976.79 Iakhs may be given due priority for payment over other dues. XXXXXX XXXXXX XXXXXX" The AAIFR, while disposing of the appeal, took note of the claims of the Income Tax Department, and directed as follows, in its order dated 14.03.2006: "XXXXXX XXXXXX XXXXXX Given this context we set aside the impugned order and remand the case to the BIFR. We also direct the company and the OA severally to ensure that a fully tied up revival scheme is presented to the BIFR not later than 60 days of this order. If in the meanwhile negotiations cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with another company." The decision of the Supreme Court in Anjum M.H. Ghaswala (supra) is no doubt an authority for the proposition that interest waiver cannot be granted to anyone except those specified in the Income Tax Act. However, the court did not have any occasion to deal with provisions of SICA, or their interface with provisions and orders under the Income Tax Act. 13. One well recognized principle of statutory construction is that when courts have to deal with conflicting or inconsistent laws, or inconsistent provisions of two separate enactments, the first approach should be to attempt at harmonization of the two provisions, to avoid, or minimize the conflict. The second line of approach is to see which of the two laws is a general law. A prior special law will prevail over a later and general law. This is more so, when the prior law contains a non-obstante clause (R.S. Raghunath vs State Of Karnataka And Anr AIR 1992 SC 81; Allahabad Bank v. Canara Bank & Anr. (2000) 4 SCC 406). The tenor and express provisions of Section 32 of SICA, in the opinion of this court, leave no doubt that the provisions of SICA are to prevail, except to the extent excluded. The immunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts to 'financial assistance' from the Central Govt to the extent of the sick industry having been exempted from the operation of Section 41 of the Income-tax Act." This court also notices that a similar view has been expressed by the Bombay High Court in Vadilal Dairy International Ltd v. State of Maharashtra 2009 (1) Comp. LJ 466 (Bom). 15. The next issue is whether the revenue is correct in saying that by virtue of Section 119 of the Income Tax Act, and circulars issued under that enactment, the Board of Direct Taxes' views have primacy over that of BIFR. Section 119 reads as follows: "119. Instructions to subordinate authorities (1) The Board may, from time to time, issue such orders, instructions and directions to other income- tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be issued (a) so as to require any income- tax authority to make a particular assessment or to dispose of a particular case in a particular manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the previous year in which such deduction is claimed: Provided that the Central Government shall cause every order issued under this clause to be laid before each House of Parliament. (3) Every Income- tax Officer employed in the execution of this Act shall observe and follow such instructions as may be issued to him for his guidance by the Director of Inspection or by the Commissioner or by the Inspecting Assistant Commissioner within whose jurisdiction he performs his functions." 16. In pursuance of the above provision, the Central Board of Direct Taxes had withdrawn previous circulars, and in its Circular No. 683 dated 08.06.1994, required that the nodal authority for coordinating between BIFR and the Central Board was the Director General (Administration). This was sought to be highlighted by counsel for the revenue. This court has no doubt about the proposition. However, the blanket submission that when the circular under Section 119 is ignored, and a scheme is given effect to by income tax authorities themselves, the BIFR's order or scheme is void, cannot be countenanced. There is no material on record to suggest such a conclusion. The Income Tax authorities in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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