Madras High Court
P.R. Thangavelu vs Commissioner Of Income-Tax on 23 February, 2001
Equivalent citations: [2001]250ITR492(MAD)
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
JUDGMENT R. Jayasimha Babu, J.
1. The Revenue has declined to permit the petitioner to avail of the benefit of the Kar Vivad Samadhan Scheme (Chapter IV of the Finance (No. 2) Act, 1998) on the ground that though there was a determination of tax in the assessment order prior to March 31, 1998, which was upheld in appeal that determination had been set aside in further appeal by the Tribunal, which had directed the Commissioner to redo the exercise with respect to one of the items and such redetermination had not been done by the Commissioner.
2. It is not possible to accept the argument of counsel for the Revenue that the reason so given constituted a good reason for not extending the benefit of the Scheme. The determination of the tax payable had been made in that assessment order. The fact that the determination was to be re-examined by the Commissioner, as a result of the remand made to him by the Tribunal on an appeal which the Revenue had preferred, does not imply that there was no determination at all. The redetermination which the Commissioner was required to do, as and when made, would certainly be a continuation of the assessment order, substituting the figure as determined by the Commissioner, for the figures determined by the Assessing Officer. The word "determination" referred to in Section 87(m) of the Scheme does not imply that the determination must have become final. On the other hand, the whole object of the scheme is to provide Samadhan instead of continuing the litigation which has to be brought to an end by reason of the assessee availing of the benefit of the scheme. When a determination of the tax had been made and that determination had been set aside in appeal and the process of redetermination was yet to be completed, it cannot be said that there was no determination at all. The redetermination to be made by the Commissioner on remand was a determination which would, for the purpose of the Scheme, be required to be regarded as one made prior to March 31, 1998. The assessee, by his volunteering to benefit from the scheme, had already indicated to the Revenue that even without the redetermination by the Commissioner an amount which he was required to examine was being accepted by the assessee as part of the taxable income.
3. In this context, the observations made by Lahoti J., as he then was, in the case of All India Federation of Tax Practitioners v. Union of India are apposite. It was held that :
"The term 'arrears' means an amount or quantity which still needs to be paid. It refers to money that is owed. Wharton's Law Lexicon (fourteenth edition) defines 'arrears' to mean-'money unpaid at the due time : as spent behind ;... money in the hands of an accounting party'. It is true that 'tax arrears' has been defined as the amount of tax, penalty or interest 'determined' on or before March 31, 1998, under clause (m) of Section 87. Still it cannot be denied in the illustration given hereinabove that at one point of time the tax was determined though such determination was reversed in appeal by the Commissioner (Appeals). The determination is sought to be restored in the appeal preferred by the Department before the Tribunal. Once the appeal is allowed, the determination would relate back to the date of originating the same- . . .
In our opinion, no sub-classification can., therefore, be made in the class of litigating assessees in arrears merely by reference to the fact whether they are prosecuting the litigation or defending themselves. In our opinion, once a liability to pay the tax was incurred and determined on or before March 31, 1998, the assessee would be treated to be in arrears in spite of his having succeeded at one stage of the litigation if the Revenue has chosen to continue with the litigation and there is no reason why the benefit of the scheme should be denied to him. ..."
4. Learned counsel for the Revenue, however, submitted that the view taken by the Revenue is in accordance with the law laid down in the case of Dr. Mrs. Renuka Datla v. CIT . With respect to the learned judges who decided that case, I am unable to subscribe to the view taken by them that the fact that an assessment made before March 31, 1908, had been set aside and the redetermination was still to be done at the time the Scheme was in force, would disentitle the assessee from claiming the benefit of that Scheme.
5. It is not the person who took the matter in appeal, or the fact of that matter having been remanded without being finally decided, or the fact of the redetermination not having been made after the remand, that is relevant. What is relevant is that the determination of the tax had been made prior to March 31, 1998, in an order of assessment. The subsequent developments with regard to appeal, remand and redetermination will not affect the fact that the tax had been determined prior to March 31, 1998.
6. The writ petitions are, therefore, allowed.