Court permits petitioner to deposit 25% under Income Declaration Scheme 2016 for TDS/advance tax adjustment

The Court allowed the petitioner to deposit 25% of the net amounts payable under the Income Declaration Scheme, 2016 as an interim measure, enabling adjustment of amounts deposited earlier towards Tax Deduction at Source and advance tax. The Court's decision permitted the petitioner to proceed with the deposit pending the final outcome, with the understanding that if the petitioner's argument on adjustability of TDS/advance tax failed, the application would be rejected automatically. Further proceedings were scheduled for 31.01.2017 under the Court's direction.

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Issues:
Interpretation of Section 184 and 187 of the Income Declaration Scheme, 2016 regarding adjustment of Tax Deduction at Source and advance tax amounts deposited with the Income Tax Authorities.

Analysis:
The petitioner in this case contended that their interpretation of Section 184 and 187 of the Income Declaration Scheme, 2016 entitled them to claim adjustment of the Tax Deduction at Source and advance tax amounts deposited with the Income Tax Authorities for the relevant period. Due to inter se disputes between directors and shareholders, the petitioner's accounts could not be audited, leading to non-filing of returns. Consequently, they applied for the Scheme for the assessment years 2010-11 to 2016-17. The Income Tax Authorities demanded 25% of the total amount payable, which was Rs. 19.60 crores, with a deadline for depositing Rs. 4.9 crores by 30.11.2016.

The respondents argued against the petitioner's interpretation, citing the non-obstante clause in Section 184(1) to assert that the income declared under the Scheme would be treated separately, and adjustments under the Income Tax Act, 1961 would not benefit the assessee availing the Scheme. After considering the submissions, the Court decided that as an interim measure, the petitioner should be allowed to deposit what they deemed as the liability due, which is 25% of the net amounts payable under the Scheme. This decision would enable the petitioner to adjust the amounts deposited earlier towards TDS/advance tax, pending the final outcome. If the petitioner fails in their argument that TDS/advance tax were adjustable, the application would be rejected automatically.

The Court's ruling permitted the petitioner to proceed with the deposit as an interim measure, allowing for adjustment of amounts deposited earlier towards TDS/advance tax, subject to the final decision on the matter. The case was listed for further proceedings on 31.01.2017 under the direction of the Court Master for necessary action.

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