CIT Vs Hindustan Zinc Ltd. (Rajasthan High Court)
Summary: The Rajasthan High Court decided two connected Revenue appeals concerning Hindustan Zinc Ltd. arising from a common ITAT order, but reached different conclusions for AY 1993-94 and AY 1995-96 because the scope of the respective Kar Vivad Samadhan Scheme, 1998 (KVSS) settlements differed materially. For AY 1993-94, the KVSS certificate dated 02.02.1999 reflected an outstanding demand of Rs.20,30,04,511 entirely towards interest, against which Rs.10,15,02,255 was paid. Subsequently, while giving effect to an ITAT order relating to AY 1992-93, the Assessing Officer determined a brought-forward loss of Rs.5.53 crore available for set-off against AY 1993-94 income. The High Court held that the assessee’s right to consequential refund crystallised only through the order dated 30.12.2002 and could neither have been included nor covered by the earlier KVSS declaration and certificate. Since no outstanding income-tax demand was covered by the AY 1993-94 certificate, the Court agreed with the ITAT that the assessee’s right to set-off and refund could not be denied merely because it had availed KVSS in relation to interest. Revenue’s D.B. ITA No.96/2008 was therefore dismissed. For AY 1995-96, however, the certificate dated 03.02.1999 recorded a total outstanding demand of Rs.50,30,76,207, including income tax of Rs.22,13,44,799, and Rs.16,84,14,519 was paid in full and final settlement. The High Court held that refunding tax attributable to the subsequently determined brought-forward loss of Rs.4,03,12,165 would reduce the settled income-tax demand and effectively reopen the conclusive KVSS settlement, contrary to Section 90(3) of the Finance (No.2) Act, 1998. Accordingly, the ITAT’s refund direction for AY 1995-96 was set aside and Revenue’s D.B. ITA No.161/2008 was allowed.
