In Kumudam Publications Pvt Ltd v. CBDT, the division bench of the Delhi High Court held that the declarant under the Income Declaration Scheme, 2016 is entitled to claim credit of advance tax amounts paid relating to the relevant assessment years.
The petitioner-Company could not appoint a statutory auditor and file income tax return due to some internal disputes between the Directors. The petitioners contended that they have paid around 16 crores to the IT Department as advance tax.
Anticipating assessment proceedings from the Department, the petitioner moved an application seeking permission for filing return before the authority. During the pendency of the application, Income Declaration Scheme, 2016 was notified by the Central Government and the petitioners declared the income as per the Scheme. The total tax payable including interest and penalty as under the Scheme was 19.60 crores, against which advance tax paid by the petitioner and TDS deducted to its benefit was 16.49 crores, leaving the net tax payable of ` 3.11 crores. These details had to be mentioned in the Form 1 at serial No.11 and were duly disclosed by the Petitioner in its application. However, the Principal Commissioner of Income-Tax, (PCIT) in response to its declaration in Form 1, demanded a tax of 19.60 crores.
The petitioner relied on Circular No. 25/2016 in which it was clarified that credit for TDS shall be given while computing tax liability under IDS. The petitioners urged that the impugned order disregards the said credit even though complete details of the same were stated by Petitioner in the declaration in Form 1 along with required proof.
The bench pointed out that, schemes like IDS are to be seen as containing special dispensations and interpreted in a “stand alone” or sui generis manner. Equally, those who seek its benefits are to go by it. “But there should be something which provides a clear insight that Parliament wished that such past amounts are not to be reckoned at all, for purposes of payments. All that the words of the statute enjoin are that the tax and surcharge amounts under the scheme “shall be paid on or before a date to be notified“. These words necessarily refer to all payments. They are not limited in their meaning to only what is paid immediately before, or in the proximity of the declaration filed.”
Allowing the petition, the division bench comprising of Justice S. Ravindra Bhat and Justice Najimi Waziri observed that the avowed objective of the Scheme is to enable assessees who did not file their returns, an opportunity to do so.
“…the only bar discernable under the scheme in question is evident from Section 189 is that no person declaring under the Act shall not be entitled to “claim any set off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment.” Also, under that provision the person so declaring shall not be entitled to ” to re-open any assessment or reassessment made under the Income-tax Act or the Wealth-tax Act, 1957 (27 of 1957)”. Therefore, the court is of the opinion that there is no bar for an assessee or declarant to claim credit of advance tax amounts paid previously relative to the assessment years or periods for which it seeks benefits under the scheme. This interpretation is in no way inconsonant with the ratio of the Supreme Court’s rulings, relied upon by the Revenue.”
The bench further observed that the clarification by the Revenue, that credit for TDS paid, can be enjoyed for availing the benefit (under the scheme in question) precludes any meaningful argument by it that advance tax payments relative for the assessment years covered by the declaration cannot be taken into consideration as payments under and for purposes of availing the benefits of the scheme.
Read the full text of the Judgment below.
