LexDIRECTOR GENERAL OF INCOME TAX (ADMN.) & ANR. versus M/S. GTC INDUSTRIES LTD. & ANR.
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(2016] 4 S.C.R. I 0 I 0 A DIRECTOR GENERAL OF INCOME TAX (ADMN.) & ANR. B c D E F G H v. MIS. GTC INDUSTRIES LTD. & ANR. (Civil Appeal No. 5038of2016) MAY 12, 2016 [A.K. SIKRI AND R.K. AGRAWAL, JJ.) Sick Industrial Companies (Special Provisions) Act, 1985 - ss. 18(5) and 22(1) - Respondent-company declared a sick company by Board of Industrial and Financial Reconstruction (BIFR) - Scheme for reconstruction/rehabilitation sanctioned - Certain income tax reliefs including the relief 'to consider waiving of interest and penalty' kept under the Scheme - Rehabilitation period was for eight years from 31.3.2003 to 31.3.2011 - In the year 2007, the company was discharged from the purview of the Act as it ceased to be a sick undertaking on its net worth turning positive - Thereupon, Revenue made demand for its outstanding dues - In the meantime the company had sold its property in Mumbai to third parties for developing the same - The company filed application before the BIFR seeking stay of coercive action proposed to be taken by the Revenue - BIFR directed the revenue not to take any coercive action - Order of BIFR upheld by appellate authority - Writ petition by Revenue challenging the order - During pendency of the writ petition, company filed application seeking extension of rehabilitation period by another one year - Extension denied by BIFR and fi1rther ipheld by appellate authority- Writ petition against the order dismissed as withdrm1'n - Thereafter, writ petition of the Revenue was dismissed - On appeal by Revenue, held: Revenue had the right to recover arrears of income tax after 2007 (when the company ceased to be a sick company) and in any case after the rehabilitation scheme expired - The quantum of the dues for which the Revenue had raised the demand, were correct - The question, as to whether it was permissible for the Revenue to include interest and penalty in view of the income tax reliefs granted in the scheme, not decided in the present appeal - Parties permitted to approach BIFR to seek clarification as to whether it was mandatory or recommendatory to waive interest and penalty. 1010 DIRECTOR GENERAL OF INCOME TAX (ADMN.) & ANR. v. 1011 MIS. GTC INDUSTRIES LTD. & ANR. Disposing of the appeal, the Court A HELD: 1. The Sanctioned Rehabilitation Scheme has outlived its life which came to an end on 31st March, 2011. Application for extension of the Scheme filed before the Board of Industrial and Financial Reconstruction, was dismissed. The Appellate Authority had upheld this order of the Board. Moreover, way back in the year 2007, the net worth of the Company had turned positive and it was no more a sick Company. Thus, the Revenue had right to recover arrears of income tax after 2007 and in any case after 31.03.2011 when the Scheme expired. [Paras 20 and 24] [1021-B-D] 2. The plea of the respondent-Company was that the demand of Rs. 761.35 crores on account of income tax dues as made by the Revenue was not correct and that the Revenue had included even those demands, where the Company had succeeded and the appeals filed by the Department were pending. It has been clarified by the Revenue that the disputed amount has not been included and only that amount which was payable as per the or- der of CIT (Appeal), is included. [Paras 26 and 29] [1023-C, H; 1024-A-BJ 3. The question as to whether it was permissible for the Department to include the interest and penalty in its demand, is not being decided in the present appeal. The parties are permit- ted to approach the Board, seeking clarification as to what was meant by the words 'to consider' (as it occurred in the Rehabili- tation Scheme) i.e., whether the Board meant that it was manda- tory on the part of the Revenue to waive the interest and penalty or it was only recommendatory and, therefore, it was upto to the Department to agree or not to agree to the said request. The jurisdiction of the Board, whenever such application is filed, would be limited to the aforesaid aspect alone. [Paras 31 and 32) [1024- G-H; 1025-A] 4. The Income Tax Department shall be entitled to take steps for attachment of the properties of the Company, including the property at Mumbai, as per the provisions of the Income Tax Act and shall be entitled to sell the same. If there are any secured creditors in respect of these properties, such attachment and sale shall be subject to the rights of those creditors
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