TaxTMI 
TaxTMI 
2015 (1) TMI 568
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....rt formulated the following substantial question of law:- "Whether in the facts and circumstances of the case, the ITAT was right in law in holding that inspite of the Special Court's direction the appellant was liable to deduct tax at source as required u/s. 194A of the Act ?" 4. To adjudicate the question framed as above, the basic facts shorn off unnecessary details are required to be noticed. The present appellants-assessee entered into an agreement with Fairgrowth Financial Services Ltd [hereinafter referred to as "the FFSL). On 28.03.1992, loan of different amounts were sanctioned by the FFSL in favour of the appellants-assessee and the same was accepted by the appellants-assessees on 30th March, 1992. The appellants-assessees had taken loan of Rs. 14,98,2500/- from the FFSL against the pledge of 3,28,000 shares of United Phosphorous Ltd. (hereinafter referred to as "the UPL"). As per the terms of the agreement the appellants have to repay 20% within 60 days and balance 80% within 180 days. The appellants-assesees handed over 3,28,000 shares of UPL together with duly executed transfer form to FFSL sinc....
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....red and directed to be forthwith delivered and handed over to the petitioners or such of them as may be found entitled thereto by either of the Respondents Nos.1 to 5. (e) without prejudice to the prayer (d) above the limited attachment on all the 3,50,000 shares described in schedules being Ex. "A" and "B" hereto be raised and Respondents Nos. 1 to 5 be ordered and directed to deliver all the said shares to the respective payment of balance debt and interest in accordance with contractual terms to such persons as this Hon'ble Court directs; (f) This Hon'ble Court be pleased to give directions to the petitioners in respect of the payment of the balance debt on the due dates to the 1st or 2nd Respondents against delivery to the respective petitioners of the shares listed in the schedule being Ex. "A" and "B" hereto. (g) That it be declared that 3rd and 4th Respondents respectively have not acquired and are not entitled to any right title or interest in the said 2,50,000 shares described in Exhibit "A" hereto and the 1,00,000 shares described in Exhibit ....
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....d proper person be appointed Receiver of said 3,50,000/- shares described in the schedules being Exh. "A" and "B" hereto and of the relative transfer forms and all rights and benefits attached to and incidental to the said shares with all powers under Order XL: rule 1 of the Code of Civil Procedure, 1908 including power to take actual physical possesion of the said 3,50,0000 shares described in the schedules being Ex."A:" and "B" hereto (from whomsoever they may be lying with) and of the relative share certificates and the relative transfer form (from whomsoever they may be lying with) and to hand over to the respective petitioners against tender of balance debts and interest by the petitioners in such manner as this Hon'ble Court may direct and to exercise voting and all right attached and/or incidental to all the said shares according to the instructions of the respective petitioner-holders thereof. (n) for ad-interim reliefs in terms of prayers (l) and (m) above. (o) for costs of this petition and (p) for such other and further reliefs as this Hon'b....
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....rank as ordinary debts under Section 11(2)(c). this therefore, can only be released after the entire distribution has taken place. Even if the Notified party were to advance tax, the Court would refused it. Thus monies for payment of advance tax have not been released. Thus a Notified party has been prevented from paying advance tax. Thus, under the Special Courts Act, there is a legal disability to pay advance Tax. Yet under the Income Tax Act there is a compulsion to pay advance tax. There is a conflict between the provision of the Special courts Act and the Income Tax Act. The provisions of the Special Courts Act must prevail. Under the Income Tax Act if Advance tax is not paid, for such non-payment interest can be levied. This obviously on the footing that the assessee is in default. However a Notified party has been prevented by law from paying Advance Tax. He is not a defaulting party. He has not paid advance Tax because of legal restraint on him. The law has prevented him from paying advance Tax. In my view, in such cases i.e. where there is a conflict between the provisions of the Special Courts Act and some other Act/contract, the contrary provisions must necessarily give ....
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....ority, however, which is given under Section 11(2)(a) to such tax liability only covers such liability for the period 1.4.1991 to 6.6.1992. 27. At what point of time should this tax liability have become quantified by a legal assessment which is final and binding on the notified person concerned ? It is contended before us by some of the parties that only that liability which has become ascertained by final assessment on the date of the Act coming into force should be paid under Section 11(2)(a). Others contended that it should have been so ascertained on the date of the notification. The third contention is that it should have been so ascertained on the date of distribution. Since we have held that tax liability under Section 11(2)(a) refers only to such liability for the period 1.4.1991 to 6.6.1992, it would not be correct to hold that the liabilities arising during this period should also be finally assessed before 6.6.1992 (the date of the Act) or the date of the notification. It must refer to the date of distribution. The date of distribution arrives when the Special Court completes the examination of claims under section 9-A. If on that d....
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....stodian by order dated 14.08.1993, 20.2.1995 and 9.9.1996 and 3.5.199. Therefore, he submitted that in view of the above orders, there is no question of the appellants' being guilty of nondeduction of tax at source. 5.1. He further submitted that the Apex Court while admitting the appeals filed by the appellants and Syndicate Bank directed the parties to maintain status quo. Therefore, the appellants were not obliged to pay over the amount of TDS in a separate account or to the Custodian. 5.2. According to the learned senior advocate for the appellants, in view of the order dated 14th August, 1993, i.e. much before 31st March 1994, the date on which the alleged TDS liability arose, passed by the Special Court in Misc. Application No.158 of 1993, the appellant was bonafidly under the impression that there was no obligation cast upon him to deduct any tax at source. 5.3. Learned senior advocate for the appellants-assessee further submitted that the dispute between the Syndicate Bank and the appellants-assessee is pending where Syndicate Bank claims to be the owner of the shares. Therefore, it is difficult to determine the exact rights and obligations of the parties and ultimately,....
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....order of the Special Court, which was confirmed by the Supreme Court. Therefore, he urged that this Court may allow these appeals and quash and set aside the the orders of all the authorities below. 6. On the other hand, Mr. Mehta, learned advocate for the respondent-revenue has supported the impugned judgment and order of the Tribunal and submitted that the submissions canvassed by the learned senior advocate for the appellants assessees does not deserve consideration since the order of restrainment was passed on 9th September, 1996 and the same shall apply from the Assessment Year 1997-98 onwards. He submitted that Section 158 of the Income Tax Act shall not apply in the case of the appellants-assessess, but it is in the case of third party. 6.1. He further submitted that the present appeals deserve to be dismissed in view of the concurrent findings of the authorities below as also the Tribunal. Therefore, he urged that this Court may dismiss the present appeals and confirm the order of the Tribunal. 7. We have heard Mr. Soparkar, learned senior advocate appearing for the appellantsassessee and Mr. Mehta, learned advocate appearing for the respondent-revenue and perused the ma....
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....on is cast upon the payer of salaries etc. to deduct the tax at the source, the person who is entitled to the salary still remains liable to pay the tax if the tax has not been deducted, and it is made clear by section 18 that the person deducting the tax at the source is deducting it on behalf of the person entitled to the salary. It is also pointed out that under section 18(4) it is expressly provided:- "All sums deducted in accordance with the provisions of this section shall, for the purpose of computing the income of an assessee, be deemed to be income received." It is said that in absence of these provisions under the English law the only part of the annuity which became the income of Sir Joseph kay is 225 pound and not 500 pound, that when the insurance companies deducted 275 pound they were not deducting the sum on behalf of Sir Joseph Kay in order that they should pay the tax on behalf of Sir Joseph Kay, but they were deducting it because the English statute cast an obligation upon the insurance companies to retain this sum and it was by reason of this statutory obligation that this sum was being paid. What we....
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....right when he contends that the debt is only partly paid and not fully paid. He says that even if there is no extinguishment, only part of the debt in fact has been paid to Sir Joseph Kay and that part is 225 pounds and not the whole of 500 pound. In substance the whole debt of 500 pound has been paid to Sir Joseph Kay. The mode of payment is this. 225 pounds have been actually paid in case to Sir Joseph Kay, and the balance of 275 pounds is retained by the insurance companies in order to pay the tax which is payable on the sum of 500 pound. It is difficult to understand how the position is different from what it would have been if the insurance companies had paid the full sum of 500 pounds to Sir Joseph Kay and Sir Joseph Kay would have paid 275 to the Income Tax authorities which he was liable to pay. Surely Mr. Palkhivala then could not have contended that the full sum of 500 pounds has not been paid to him or that the debt has not been discharged. Instead of permitting the insurance companies to pay the full sum of 500 pounds to Sir Joseph Kay and then collecting 275 from him, the taxing machinery set up in England provides that the taxing authorities will recover 275 pounds fr....