TaxTMI 
TaxTMI 
2026 (4) TMI 1913
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.... 1998. The CIT(A) further held that the Assessing Officer was justified in not granting refund with reference to the reduced income. Consequently, the assessee's appeal was dismissed. 2. BRIEF BACKDROP: 2.1. Pursuant to the Kar Vivad Samadhan Scheme, 1998 (hereinafter referred as 'KVSS'), the assessee submitted a declarations under Section 88 of the Finance (No. 2) Act, 1988 qua the Assessment Years (A.Y.) 1993-94 and 1995-96. In this connection, the CIT, Udaipur issued two certificates dated 02.02.1999 and 03.02.1999, respectively under Section 90(2) read with Section 91 of the Act, ibid. In these certificates issued by the CIT, Udaipur it has been stated inter alia as under: Certificate dated 02.02.99 AY 1993-94: "And whereas the Designated Authority by order dated 6.1.99/28.1.99 determined the amount of Rs. 10,15,02.255/- payable by the declarant in accordance with the provisions of the Scheme and granted certificate setting forth therein the particulars of tax arrears and the sum payable after such determination towards full and final settlement of tax arrears as per details given below: A.Y. 1993-94 Outstanding Demand Payable Demand Interest....
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....bsp;Brought Forward Loss for AY 1992-93 as per order u/s.154 dated Rs. 5,53,13,531/- Net income Rs. 37,04,47,609/- It is found that the assessee has paid demand for the assessment year 1993-94, as per the provisions of Kar Vivad Samadhan Scheme, 1998 at Rs. 10,15,02,225/- on 1-2-99 in respect of the above mentioned income of Rs. 42,57,61,140/. Since the assessed income of Rs. 42,57,61,140/- is covered by KVSS, the tax paid there on can not be refunded. As such, refund on account of setting off of loss in the assessment year 1993-94 is not allowable to the assessee." 2.3. While deciding assessee's appeal against said order of the Assessing Officer, an order dated 04.03.2004 (Annexure-2) qua A.Y. 1993-94 was passed by the CIT(A) dismissing the appeal and holding/directing as under: "Keeping in view the above facts it is clear that the above amount, which has been paid by the assessee is also deemed to have been paid under the KVSS scheme and accordingly, no refund can be granted as per the provisions of Section 93 off the said Act. In view of the above, the AO was justified in not granting the refund with reference to the reduced income." ....
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....ed the appeal No.96/2008 seeking to set aside/quash the impugned order dated 03.10.2009 passed by the learned ITAT and for affirming the order dated 18.12.2008 passed by the CIT(A). 3. The appeal was admitted vide order dated 21.02.2011 on following substantial questions of law: (i) Whether the Tribunal was justified in directing A.O. to refund amount of tax which according to the assessee they had become eligible to claim as carry forward loss of earlier year? (ii) Whether the Tribunal was justified in properly interpreting KVSS scheme with reference to the claim of the assessee relating to refund? 4. Another connected appeal No. 161/2008 pertaining the A.Y. 1995-96 was admitted vide order dated 21.02.2011 on following substantial questions of law: (i) Whether the Tribunal was justified in directing A.O. to refund amount of tax which according to the assessee they had become eligible to claim as carry forward loss of earlier year? (ii) Whether the Tribunal was justified in properly interpreting KVSS scheme with reference to the claim of the assessee relating to refund? 5. We have heard the learned counsel for the parties and with their ....
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.... of the Finance (No. 2) Act, 1988, issued by the designated authority reproduced above shows that the settlement under KVSS was only in respect of the outstanding demand of interest and absolutely no outstanding demand of tax was shown therein, let alone covered by the settlement under KVSS. 11. The assessee's right to refund of tax crystallized by virtue of order dated 30.12.2002 (Annexure-3) passed by the Assessing Officer/Assistant Commissioner of Income Tax, Circle 2, Udaipur, whereby the brought forward loss of Rs.5.53 crores was set off against the income for A.Y. 1993-94. It could not possibly have been nor was it included/ covered by the antecedent declaration of the assessee and certificate dated 02.02.99 A.Y. 1993-94issued by the designated authority under the KVSS. 12. The fact here is that there was no outstanding demand of tax on income as is evident from certificate dated 02.02.99 A.Y. 1993-94 issued by the designated authority under the KVSS and that the entire outstanding demand of Rs. 20,30,04,511/- was only on account of interest. The contention of the learned counsel for appellant that if there had been no disputed income, there would not have been any tax ....
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.... Tribunal (ITAT), determined the loss of Rs.5.53 crores available for set off against the income of the instant year (1993-94). 16.1. The learned Tribunal was, therefore, of the considered opinion that the right of the assessee for claiming set off cannot be snatched simply for the reason that it had availed the benefit of KVSS for the interest payable under the Act. 16.2. The learned Tribunal, thus also held and directed that the amount of tax on the brought forward loss of Rs. 4,03,12,165/- be refunded to the assessee. We are inclined to agree with the aforesaid sound reasons recorded, the conclusion reached and direction given by the learned ITAT and affirm the same. 17. As a result, we hold that the learned Tribunal was justified in directing A.O. to refund amount of tax which, according to the assessee, they had become eligible to claim as carry forward loss of earlier year and that the learned Tribunal was justified in properly interpreting KVSS scheme with reference to the claim of the assessee relating to refund. The substantial questions of law reproduced above are answered accordingly. 18. It thus follows that the appeal No. DB ITA No.96-2008 of the revenue co....
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.....07.38.947/- is covered by KVSS tax paid on income of Rs. 74,07,38,947/- cannot be refunded to the assessee. Since the subsequent addition of Rs. 81,05,000/- is not covered by KVSS the tax and interest u/s 234B and 220(2) thereon total of which comes to Rs. 1,07,89,327/- along with interest u/s 244A is refunded to the assessee by this Order. Refund in respect of the remaining sum of Rs. 3,22,07,165/- (Rs. 4,03,12,165/- minus Rs. 81,05,000/-), which is in respect of Rs. 74,07,38,947/-being covered by KVSS, is not allowable to the asseessee." 21.1. The Assessing Officer thus further held that since the assessee had already paid Rs. 16,84,14,519/- under the KVSS in respect of income of Rs. 74,07,38,947/-, and such income stood covered by the settlement, no refund of tax paid under the KVSS could be granted. However, as a subsequent addition of Rs. 81,05,000/- was not covered under the KVSS, refund of tax and interest thereon was granted to that limited extent. Refund relating to the balance amount of Rs. 3,22,07,165/- was denied, as it pertained to income already covered under the KVSS settlement. 22. The assessee's appeal before the CIT(A) was dismissed. Thereafter, the matter ....