THE COMMISSIONER OF INCOME TAX vs. M/S SPR GROUP HOLDINGS P LTD

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 5TH DAY OF MARCH 2013

PRESENT

THE HON’BLE MR. JUSTICE N.KUMAR AND THE HON’BLE MR. JUSTICE B.MANOHAR

I.T.A. NO.689/2007 C/W. I.T.A. NO.685/2007

BETWEEN :

(By Sri.M.Thirumalesh, Adv.)

AND :

M/s. SPR Group Holdings (P) Ltd., No.34/2, V Main, Gandhinagar, Bangalore – 560 009. …RESPONDENT (Common in both)

(By Sri.A.Shankar & Sri.M.Lava , Advs.) . . . .

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These I.T.As. are filed under Section 260A of the Income Tax Act, 1961 praying to (i) formulate the substantial questions of law stated therein, (ii) allow the appeals and set-aside the orders passed by the Income Tax Appellate Tribunal, Bangalore Bench in I.T.A. No.201/Bang/1998 and I.T.A. No.202/Bang/1998 respectively, dated 29.03.2007 confirming the orders of the Appellate Commissioner and confirm the orders passed by the Assistant Commissioner of Income Tax, , Bangalore.

These I.T.As. coming on for hearing, this day, N.Kumar J., delivered the following:

JUDGMENT

These two appeals relate to the same assessee, but for two assessment years i.e., 1993-94 and 1994-95.

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said period. Acting on the said submission, the appeal was dismissed by the Tribunal as it has become infructuous. Aggrieved by the said order the Revenue is in appeal.

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“(i) The assessee has the option of filing declaration either in respect of arrears disputed in his appeal or of taxes involved in Departmental appeal or for both independently of each other.” (ii) For declarations relating to Departmental appeals also the existing Form No.IA can be used. In such cases, there are no outstanding taxes and hence the process of working out `disputed income’ on which the the sum payable can be determined. In respect of Departmental appeals, the declaration has to be for the entire income disputed in such appeals. (iii) Where the declarations in respect of Departmental appeals are accepted by the designated authority, the CIT(A) may proceed to withdraw such appeals on passing fo the order under s.90(2). (iv) In the event of cross appeals on same issue. If the assessee does not opt to declare in respect of taxes involved in Departmental appeals, the provisions of s.92 would not apply as these place bar only in respect of issue covered in the declaration in respect of which order under s.90 has been passed. This will also be the position, if the assessee does not opt for declaration in respect of other

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Departmental appeals. The appeals in all such cases should not be withdrawn.” The above clarifications are not with reference to the provisions of the Act providing for the Scheme, but an interpretation sought to be placed on the legal position and the manner in which the same is ought to be implemented. The present case on hand having been decided by the Tribunal after the decision of the Delhi High Court in All India Federation of Tax Practitioners (supra) the appeals by the Department could not be placed on a separate pedestal as was required to be done under the proviso to s.92. A declaration made in terms of the Scheme was therefore required to be considered with respect to the tax arrears pertaining to that assessment year irrespective of whether the dispute was in question in an appeal preferred by the assessee or in an appeal preferred by the Revenue.

The determination by the designated authority of the tax arrears would necessarily have to take into consideration such arrears including

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what was raised in dispute by the Revenue by way of an appeal. This was a duty cast on the designated authority notwithstanding that the declaration may not have included the tax arrears including what was sought to be raised by way of an appeal by the Revenue. It was open to the designated authority to have called upon the assesses to avail the benefit of settlement only if all tax arrears, including those which are disputed by the Revenue and which are pending in appeal as on the date of such determination, are paid. In the instant case, the designated authority having determined the tax arrears as defined under the Act, would be deemed to include the amount of tax determined on or before 31st March, 1998 in respect of that assessment year as modified by any appellate order, but remaining unpaid on the date of declaration and further, as held by the Delhi High Court, it would include such arrears, which after determination have been set aside, but such setting aside has not been accepted by the Department and continues to remain under challenge before a Court or Tribunal. Sec. 90 required the designated authority to determine the amount payable by the declarant in accordance with the

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provisions of the Scheme and grant a certificate setting forth the particulars of the tax arrears and the sum payable after such determination towards full and final settlement of tax arrears. And upon payment of such amount, determined and on an order having been passed under sub-s. (1) of s. 90, it is conclusive and shall not be reopened. In the instant case, the designated authority having issued such a certificate, the same attains finality.”

Sd/- JUDGE

Sd/- JUDGE SPS