Case: Macrotech Developers Limited (WP NO.79 OF 2021)

 

Short Overview of the case :

 

1. Shreeniwas Cotton mills , a subsidiary of the appellant was merged with the appellant herein for AY 2015-16 for which year the appellant was facing prosecution U/S 276C due to delayed payment of self assessment tax and the appellant wanted to settle the dispute pending with the Income Tax Tribunal, under the Viwad Se Vishwas Scheme (VSV).

 

2. The application under VSV scheme was rejected by the department based on answer to Question No 73 of Circular No 21 dated 04/12/2020 issued by the CBDT, as per which, if the prosecution was launched against an applicant for an assessment year, then the applicant was barred from filing application under VSV for that year.

 

3. The question arose whether prosecution in respect of a tax arrear as referred to in the circular qualified only that particular portion of the liability to be in eligible for being settled or it even covered the liability of the said Shreeniwas Mills which had been merged with the appellant.

 

Hon. Bombay HC held as under:

 

1. Delayed payment cannot be construed to be a tax arrear and so such a prosecution cannot be said to be in respect of tax arrear.

 

2. It would be in complete defiance of logic to debar the petitioner from filing a declaration for settlement of tax arrear for the said assessment year which is pending in appeal before the Tribunal.

 

3. Clarification given by respondent No.2 by way of answer to question No.73 vide circular No.21/2020 dated 04.12.2020 is not in consonance with section 9(a)(ii) of the Vivad se Vishwas Act and, therefore, the same would stand set aside and quashed.