A Kar Vivad Samadhan Scheme (hereinafter referred to as 'the Scheme') came into force on 1 -4-1987. Assessees were given option to take benefit of this Scheme. The assessees were supposed to pay the disputed tax which was to be determined as per the definition given in section 87(f) of the Finance (No. 2) Act, 1998 (hereinafter referred to as 'the Act'). The said clause defines 'disputed tax' to mean the total tax determined and payable in respect of an assessment year, namely, under direct tax enactment, but which remains unpaid as on the date of making of declaration under section 88. It is the case of assessee that an assessment was made by the assessing authority. This was subject-matter of challenge by the revenue before the appellate authority. The assessing authority created some liability. This was subject-matter of challenge by the assessee before the appellate authority. The appellate authority decided the appeal. This happened prior to 1-9-1998. Earlier to that, the revenue had preferred an appeal before the Tribunal. Later on, the revenue wanted to amend these grounds of appeal. So far as this prayer seeking permission to amend the appeal is concerned, that was declined. This happened on 13-6-2000.
2. The learned counsel for the assessee/petitioner submits that only the disputed tax as also the tax as determined by the appellate authority can be taken note of. It is urged that at the most what can be included therein, is the quantum which has been mentioned in the original grounds of appeal. It is urged that what has been included in the additional grounds of appeal, that cannot be taken into consideration for determining the disputed tax. With a view to reinforce this argument, it is submitted that the revenue has not been permitted to urge the additional grounds and an order has been passed on 13-6-2000, is required to be taken note of. If this order is taken into consideration, then the amended or the proposed grounds would cease to exist and these cannot be taken note of. In addition to it, the argument raised is that if the proposed grounds are taken note of, then it would naturally amount to imposing tax liability on the basis of an order of assessment not passed by the Income Tax Officer.
3. A perusal of the amended grounds of appeal makes it apparent that the revenue had taken a plea that the machineries including tippers, dumpers, etc., used by the assessee-company are not eligible for additional depreciation under section 32(1)(ii) of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act') and investment allowance under section 32A(2)(b)(iii) of the said Act, in view of the decision given by the Supreme Court in the case of CIT v. N.C. Budharaja & Co. : [1993]204ITR412(SC) . It was further stated in para 4 that in view of the judgment of the Supreme Court, contracts carried out for construction of a dam, a bridge, a building, a road, a canal and other similar constructions, is not an eligible business for granting deduction under sections 80HH and 80J of the said Act. It was, accordingly, pleaded that the Commissioner could not direct grant of deduction under sections 80HH and 80J. The learned counsel for the revenue wants to press grounds at Serial Nos. 3 and 4, to be taken note of.
4. The basic argument which has been urged on behalf of the petitioner is that under the scheme when a settlement is to be arrived at, then whatever facts and figures have been given by the assessing authority, that are required to be taken note of. It is on that basis, the dispute is to be settled. It is, accordingly, submitted that whatever has been said and found by the assessing authority that should be made the basis of settling the dispute under the scheme. The other contentions put across by the revenue that something which could not be brought within the ambit of taxation was not brought or that it can be brought are said to be totally irrelevant considerations. It is urged that when settlement is to be arrived at under the scheme, then in terms of the scheme, whatever is the situation pointed out by the assessing authority that has to be taken note of. That situation can be favourable to the assessee or it can be dis-favourable. These are not the factors to be taken note of. If the merits of the controversy are to be gone into, then the question of settling the dispute under the scheme would not arise. It is urged that under the scheme what is required to be seen is the disputed income, disputed tax and tax arrears. It is, accordingly, urged that disputed income in relation to an assessment year would mean the whole or so much of the total income as is relatable to the disputed tax. The disputed tax has been defined as the total tax determined and payable in respect of an assessment year under the direct tax enactment but which remains unpaid as on the date of making the declaration under section 88. 'Tax arrears' has been defined to mean 'in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31-3-1998, under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration'. It is urged that the modification which is to be effected in the appellate order is to be at the instance of the assessee and not at the instance when an appeal is taken by the revenue. In the nutshell, what is sought to be urged is that it is the assessment year which is required to be taken note of. In this regard, what is said by this court in Puri Bros. Industries Ltd. v. Union of India (OWP (IT) No. 290 of 1999, dated 31-12-2001) has been relied upon. At internal page 11 of the judgment, it was observed that '........ the definition of 'tax arrears' would, therefore, remain the same whether the assessee is in appeal on it is the department which has gone in appeal...' The aforementioned judgment does support the proposition put across by the counsel for the petitioner that what is required to be seen is the order of assessment and it is on that basis that settlement has to be arrived at.
In view of the above, this petition is disposed of with a direction that respondents would take notice of the order of the assessment and whatever amount is found due that would form the basis of settlement of dispute.
5. Disposed of as such.