Order Rejecting Waiver Of Interest; Dispute under Companies act Falls Within Scope Of VSV Act: Delhi High Court
Delhi High Court ordered that Application under companies act against order rejecting waiver of interest; dispute falls within scope of VSV act. This was seen in the case of Kapri International Pvt. Ltd. versus Commissioner of Income Tax (W.P. (C) 1163/2021) and the judgement was presided over by the division bench of HON’BLE MS. JUSTICE MUKTA GUPTA and HON’BLE MR. JUSTICE ANISH DAYAL.
Facts of the case-
It was contended by Kapri International Pvt. Ltd that the interest computed by the revenue authorities under Section 220 (2) of the Income Tax Act was contrary to Rule 156 of the Companies (Court) Rules, 1959, and hence they have filed an application for waiver of interest, which was rejected by the CIT. They further submitted that the company application filed by it before the Delhi High Court, against the order of the CIT, comes within the purview of “disputed interest” as defined in Section 2 (1) (h) of VSV Act.
On the other hand the revenue department submitted before the High Court that the company application filed by the Kapri International Pvt. Ltd against the order of the CIT, rejecting the assessee’s application for waiver of interest, was primarily a petition under the Companies Act and thus, it was not an “appeal” within the meaning of the VSV Act. The department averred that as per the Central Board of Direct Taxes (CBDT) Circular No.9/2020 issued under the VSV Act, only the disputes relating to Income Tax Act are covered under the VSV Act and that the interest waiver applications are not “appeals” under the VSV Act.
Judgement-
The court held that the VSV Act is not a taxing statute but one which provides a dispute resolution scheme for tax disputes and hence, it would be amenable to a purposive construction. The Court held that it was the intent of the legislature to include all sorts of disputes under the VSV Act, even if they were pending before the Commissioner of Income Tax or the courts.
It further stated that Application under companies act against order rejecting waiver of interest; dispute falls within scope of VSV act. “In any event, that is not the ground of rejection of petitioner‟s declaration under the Act. The ground of rejection as stated that the company application filed by the petitioner in this Court was not an appeal and therefore not within the scope of the VSV Act, which in light of above analysis cannot be accepted.” The court said.
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Judgement reviewed by Utkarsh Sahu