2002 (12) TMI 6 - SC - Income Tax

Supreme Court Clarifies Tax Scheme Criteria, Emphasizes Timely Payments for Eligibility

Dr. Mrs. Renuka Datla & Others Versus Commissioner of Income-Tax And Another

The Supreme Court analyzed the 'Kar Vivad Samadhan Scheme, 1998,' focusing on criteria for availing benefits and judicial review of rejected declarations. ... Appellants' declarations which the appellants had filed under the 'Kar Vivad Samadhan Scheme, 1998, was rejected - Since the appellant's case formally fulfilled the criteria for being considered under Chapter IV of the Finance (No. 2) Act, 1998 (, we set aside the order of the HC by which the declaration filed by the appellant under the Scheme was rejected - respondents are directed to consider the declaration filed by the appellant under section 88 Issues involved:Interpretation of the 'Kar Vivad Samadhan Scheme, 1998' - Rejection of declarations under the Scheme - Criteria for availing benefits under the Scheme - Exclusion of tax arrears from the Scheme based on pending appeals or references - Determination of tax arrears before March 31, 1998 - Modification of tax determination - Payment of tax arrears at the time of declaration - Judicial review of rejection of declarations under the Scheme.Interpretation of the Scheme:The judgment by MRS. RUMA PAL J. delves into the interpretation of the 'Kar Vivad Samadhan Scheme, 1998' introduced under the Finance (No. 2) Act, 1998. The Scheme aimed at settling tax arrears defined in section 87(m) of the Act. The court emphasized the importance of specific dates, notably March 31, 1998, and the date of declaration, for determining tax arrears eligible for settlement under the Scheme. It clarified that the modification of tax determination need not be completed by March 31, 1998, as it would practically be impossible. The judgment highlighted the relevant sections such as 88, 89, and 95, which outlined the conditions for availing benefits under the Scheme.Criteria for Availing Benefits:The court outlined the criteria for availing benefits under the Scheme, which included the necessity for tax determination before March 31, 1998, modification consequent to an appellate order, filing a declaration in the prescribed form between September 1, 1998, and December 31, 1998, and ensuring the unpaid modified demand at the time of declaration. Additionally, the presence of pending appeals, references, or writ petitions concerning the tax arrears was crucial for eligibility under the Scheme, as per section 95(i)(c) of the Act.Analysis of a Specific Case:The judgment analyzed a specific case concerning an appellant's declaration under the Scheme for the assessment year 1992-93. The appellant's declarations were rejected based on the interpretation that there were no tax arrears as the demand had been conceded and interest waived. However, the court disagreed with this interpretation, emphasizing that the modified demand not being paid at the time of declaration was crucial, irrespective of whether the demand was conceded or not. The court highlighted the relevance of pending appeals and the incorrectness of presuming the appeal as ineffective or infructuous.Judicial Review and Relief Granted:The court held that the designated authority and the High Court erred in their interpretation of 'tax arrears' under section 87(m) and the exclusion criteria under section 95(i)(c). It was emphasized that the mere pendency of an appeal should not disqualify an appellant from availing benefits under the Scheme. Consequently, the court set aside the orders rejecting the declarations, directing the authorities to reconsider the declarations within a specified period. The judgment concluded by allowing all three appeals without any order as to costs.This comprehensive analysis of the judgment provides a detailed understanding of the legal issues, interpretations, and the relief granted by the Supreme Court in the case involving the 'Kar Vivad Samadhan Scheme, 1998.'