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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 ..... le 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 tax which would be arrived at would not be tax which remained unpaid. Respondent no. 2, whilst calculating the disputed tax, has correctly taken the assessed tax and deducted the tax paid by the Petitioner by way of advance tax and tax deducted at source after deducting therefrom a sum which had been paid to the Petitioner by way of refund and interest under section 143 (1)(a) of the Act. After deducting the said sum from the tax paid Respondent no. 2 has correctly arrived at the figure as the amount of tax paid. After deducting the said amount from the said sum, Respondent no. 2 has correctly calculated the disputed tax and, on the basis of the said sum, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner 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. 234B and 234C of the Act as well as additional tax under section 143(1A) of the Act were to be paid in accordance with the third interpretation set out in the Petition. The Petitioner was also to furnish a bank guarantee of a nationalised bank for 50% of differential tax less advance tax and tax deducted at source for Assessment Year 1991-92 on the basis of the difference between the interpretation of Section 115J as per the said Circular No. 495 dated 22.09.1987 issued by the Central Board of Direct Taxes and the third interpretation, which bank guarantee was to be furnished within three months from the date of the determination and which was so furnished. 3. On 20.12.1991, the Petitioner filed its Return of Income for Assessment Year 1991-92. The Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Petitioner, worked out the tax payable on a provisional basis at Rs. 11,60,82,920/- and called upon the Petitioner to furnish a bank guarantee of 50% thereof viz., Rs. 5,80,41,460/- within ten days of the receipt of the said letter. 11. Thereafter, pursuant to reopening of the Petitioner s assessment under Section 148 of the Act, the total income of the Petitioner was revised to Rs. 31,96,52,478/- and a demand of Rs. 17,84,62,709/- was raised. 12. The Petitioner decided to take advantage of the KVSS to put an end to the disputes. Therefore, by its letter dated 30.12.1998 addressed to Respondent no. 2, Petitioner forwarded a declaration under the KVSS for the Assessment Year 1991-92. The tax arrears outstanding as on 31.03.1998 for the Assessment Ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er filed a copy of the said Order with Respondent no. 2, who thereafter issued a Certificate dated 02.08.1999 under Section 90(2), read with Section 91, of the Finance Act. 20. The present Writ Petition was filed on 17.09.1999. On behalf of the Respondents, Respondent no. 2 filed an Affidavit dated 12.11.1999 opposing the granting of any reliefs in the Petition. By an Order dated 06.12.1999, this Court 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is true that in the case of the Petitioner the income assessed for the A.Y. 1991-92 was of Rs. 31,96,52,478/- and tax determined on the same was of Rs. 14,70,40,140/-. The assessee had paid Rs. 5,53,22,454/- by way of advance tax and tax deducted at source. The assessee was however issued refund of Rs. 2,50,06,177/- which accrued to the assessee as a result of processing of the assessee's return u/s. 143(1)(a) of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted tax, the disputed income of the assessee has to be worked out, and, in order to claim benefits under KVSS, the assessee, if it is a company or a firm, has to pay taxes at the rate of thirty-five per cent of the disputed income so worked out. 27. Section 87(e) of the Finance Act defines disputed income as under:- 87(e) disputed income , in relation to an assessment year, means the whole or so much of the total income as is relatable 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), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only has to be given as the taxes already paid from the tax determined and payable. 31. In these circumstances, in our view, Respondent no. 2, whilst calculating the disputed tax, has correctly taken the assessed tax at Rs. 14,70,40,140/-, and deducted the tax paid by the Petitioner by way of advance tax and tax deducted at source of Rs. 5,53,22,454/- after deducting therefrom a sum of Rs. 2,50,06,177/- which had been paid to the Petitioner by way of refund 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 argu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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