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TMI Blog2023 (7) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent no. 2 under Section 90(2), read with Section 91, of the Finance Act. 2. The Petitioner is a public limited company which carries on the business inter alia of manufacture and sale of textiles. The Petitioner had filed a Writ Petition in this Court, being Writ Petition No. 2007 of 1991, wherein it had challenged inter alia the validity of Section 115J of the Income Tax Act, 1961 ("the Act"), the validity of CBDT Circular No. 495 dated 22.09.1987 and the manner in which Respondents ought to apply the said Section in the matter of working out the set off of brought forward depreciation and investment allowance. In the said Writ Petition, Rule was issued by this Court on 26.06.1991. While issuing Rule, this Court passed an interim order whereunder the Petitioner was permitted to pay advance tax or self assessment tax and/or file its return of income in accordance with the third interpretation given in the said Writ Petition to the provisions of Section 115J of the Act. Further, the Respondents were permitted to proceed with the assessment but could not serve any notice of demand on the Petitioner pending further orders in the said Writ Petition. Interest under Sections 234A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner filed an Appeal to the Commissioner of Income tax (Appeals). The Petitioner also filed an application for rectification by its letter dated 24.05.1993. 7. Respondent no. 1, by an Order dated 15.07.1993, rectified his earlier order and granted an additional credit for tax deducted at source of Rs. 5,24,909/- as well as recomputed the interest allowable under section 244A. Accordingly a further refund of Rs. 16,30,205/- was worked out and the same was received by the Petitioner. 8. The Petitioner's Appeal challenging the said Order dated 31.12.1992 was allowed by the Commissioner of Income Tax (Appeals) by his Order dated 02.09.1993. On further Appeal by the Revenue to the ITAT, by an Order dated 22.12.1997, the ITAT restored the matter to the file of the Commissioner of Income Tax (Appeals) with a direction that the Appeal be disposed de novo. 9. By a letter dated 31.03.1994, Respondent no. 1 intimated to the Petitioner that its assessment for the Assessment Year 19911992 had been completed under Section 143(3) of the Act and the total income was determined at Rs. 29,04,54,928/-. 10. Respondent no. 1, thereafter, by his letter dated 16.11.1994 addressed to the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermined the tax paid at Rs. 3,03,16,277/- as against the Petitioner's claim that the total tax paid was Rs. 5,53,22,454/-. According to Respondent no. 2, from the advance tax paid and tax deducted at source aggregating to Rs. 5,53,22,454/-, the refund of Rs. 2,50,06,177/- granted pursuant to the intimation under section 143(1)(a) had to be reduced. The calculation made by Respondent no. 2 is as under: KAR VIVAD SAMADHAN SCHEME, 1998 A) Assessed income Rs. 31,96,52,478 B) Assessed tax thereon (including S.C.) Rs. 14,70,40,140 C) Taxes paid: TDS & advance tax Rs. 5,53,22,454 Less: R.O. issued as per 143 (1)(a) Rs. 2,50,06,177 ------------------------ Rs. 3,03,16,277 Tax arrears (disputed tax) Rs. 11,67,23,863 When tax is Rs. 14,70,40,140/- income is Rs. 31,96,52,478 When tax is Rs. 3,03,16,277/- income is Rs. 6,59,04,950 Disputed income Rs .25,37,47,528 Hence amount payable under KVSS 1998 @ 35% of disputed income Rs. 8,88,11,635 14. The Petitioner, by its letter dated 03.03.1999 addressed to Respondent no. 2, pointed out that the difference between the disputed income and the tax payable pursuant to the declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued Rule on the Petition. 21. Although raised in the Writ Petition, Mr. Agrawal did not press the submission that the amount of tax refund of Rs. 1,93,76,497/- should not have been reduced to determine the amount of tax paid by the Petitioner. 22. Mr. Agrawal, however, submitted that, even if it is held that the amount of tax refunded to the Petitioner is to be reduced while determining the amount of disputed tax, then, also, only the amount of Rs. 193,76,497/-, being the tax refund, should be reduced and not the amount of interest under Section 244A of Rs. 56,29,680/-. In this context, Mr. Agrawal submitted that, from the tax paid by the Petitioner of Rs. 553,22,454/-, the tax which had been refunded to the Petitioner is only Rs. 193,76,497/- and as the Revenue had the benefit of the said sum of Rs. 193,76,497/- from the date of payment to the date of refund, interest on the said amount of Rs. 56,29,680/- had been paid to the Petitioner under Section 244A of the Act. He submitted that it is undisputed that what was refunded to the Petitioner by way of tax is only the amount of Rs. 193,76,497/- and, therefore, in any view of the matter, it is only this amount which should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. This refund amount of Rs. 2,50,06,177/- comprised of Rs. 1,93,76,497/- being the amount of excess prepaid taxes and Rs. 56,29,680/- being the amount of interest on this amount of Rs. 1,93,76,497/-. Thus though the assessee had paid Rs. 5,53,22,454/- by way of advance tax and tax deducted at source, an amount of Rs. 2,50,06,177/- was refunded back to the assessee as per the intimation u/s. 143(1)(a) of the Act much prior in time to making of the assessment and thereby determining the assessed income and the tax payable thereof. The tax paid in advance by the assessee was therefore Rs. 3,03,16,277/-only (5,53,22454- 2,50,06,177). On the day of assessee's filing the declaration under the Kar Vivad Samadhan Scheme the tax remaining unpaid i.e. the disputed tax was therefore of Rs. 11,67,23,863/- which is the resultant figure arrived at by deducting Rs. 3,03,16,277/- being the tax paid in advance from Rs. 14,70,40,140/- being the amount of assessed tax. As per the definition the "disputed tax" means the tax determined and payable but which remains unpaid. In view of the fact that in this case an amount of Rs. 2,50,06,177/- was already refunded back to the assessee (Rs. 1,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the disputed tax." 28. Section 87(f) of the Finance Act defines disputed tax as under: 87(f) "disputed tax" means the total tax determined and payable, in respect of an assessment year under any direct tax enactment but which remains unpaid as on the date of making the declaration under section 88." 29. On the basis of the said definitions of disputed tax and disputed income, it is clear that, in order to arrive at the disputed tax, the total assessed tax for that particular year would have to be worked out, and, from the same, the taxes which may have been paid by the assessee have to be deducted. That disputed tax has to be total tax determined and payable but which remains unpaid, as per the provisions of Section 88(f), 'tax which remains unpaid' as on the date of making declaration. To calculate tax which remains unpaid, it is obvious that, whilst deducting from the total assessed tax the tax already paid, effect would have to be given to any refund issued by the Revenue to the Assessee and to any interest paid thereon by the Revenue to the Assessee. If effect is not given to the said Refund and interest paid by the Revenue to the Assessee, then the figure of disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund and interest under section 143 (1)(a) of the Act. After deducting the said sum of Rs. 2,50,06,177/- from the tax paid of Rs. 5,53,22,454/-, the Respondent no. 2 has correctly arrived at the figure of Rs. 3,03,16,277/- as the amount of tax paid. After deducting the said amount of Rs. 3,03,16,277/- from the said sum of Rs. 14,70,40,140/-, Respondent no. 2 has correctly calculated the disputed tax as Rs. 11,67,23,863/- and, on the basis of the said sum, has correctly worked out the amount payable by the Petitioner under the KVSS as Rs. 8,88,11,635/-. In our view, the said calculation made by Respondent no. 2 is in consonance with the provisions of the Finance Act and cannot be faulted. 32. Further, while considering this argument of the Petitioner, it is important to keep in mind the fact that the Revenue refunded tax to the Petitioner, and paid interest thereon, because the Petitioner had not disclosed and calculated tax properly. This being the situation, the Petitioner cannot take advantage of its own wrong and claim that the interest which has been paid to it should not be reduced while computing the disputed tax. We are not inclined to entertain such an argument at all, and ..... 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