2020 (10) TMI 1157 - HC - Income Tax

Court denies Section 80IB deduction; directs appellant to file Vivad Se Vishwas form by deadline.

The court upheld the Income Tax Appellate Tribunal's decision to deny deduction under Section 80IB of the Income Tax Act to the assessee, who no longer ... Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form. Issues:Challenging common order passed by Income Tax Appellate Tribunal for Assessment Years 2006-07, 2007-08, and 2008-09 under Section 260A of the Income Tax Act, 1961.Analysis:The appeals were admitted based on Substantial Questions of Law regarding the denial of deduction under Section 80IB of the Act to the assessee, who ceased to be a small scale industry after ten years. The Tribunal's decision was challenged on the grounds of denying the deduction despite satisfying conditions initially. The counsels for both parties were heard, where the respondent cited a Supreme Court case against the assessee's arguments.The respondent argued that the questions raised were answered against the assessee by a Supreme Court decision. Consequently, the court had to rule against the assessee based on the precedent. However, the appellant expressed intent to avail the Vivad Se Vishwas Scheme, taking steps to file the necessary application, requesting appropriate directions for the appeal's disposal.Considering subsequent developments, the court noted the enactment of the Direct Tax Vivad Se Vishwas Act, 2020, offering a resolution for disputed taxes. The Act provided declarants with the option to settle tax disputes pending at various levels, offering immunity from penalties and offenses in certain cases.The court directed the appellant to file the required form under the Act before a specified date, with the competent authority instructed to process the application promptly. The appeals were disposed of with the liberty for restoration if the decision on the declaration was unfavorable. The court left the Substantial Questions of Law open for future consideration, with no costs imposed on either party.