- (1.) Leave granted.
(2.) Respondent No. 1 (hereinafter referred to as the 'Company'), namely, M/s GTC Industries Ltd. became sick Company sometime in the year 1997 as its net worth had eroded. As per the requirements of Section 15 of The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the 'SICA'), it filed reference before the Board of Industrial and Financial Reconstruction (hereinafter referred to as the 'Board') which was admitted and registered as Case No.17/1997. The Board conducted enquiry into the working of Company to determine whether it had become a sick industrial company and in the process appointed the Managing Director, State Bank of India (MA) (RCB), Mumbai as the Operating Agency (OA) to enquire into and make a report with respect to certain matters which was specified in the orders passed by the Board in this behalf. The Board, on the completion of the enquiry, satisfied itself that Company had become a sick industrial company. A Draft Rehabilitation Scheme (DRS) was prepared by the OA which was submitted to the Board and the Board circulated the said Scheme vide its order dated 14.01.2000. In this DRS, following income tax reliefs were proposed: (a) To exempt from the applicability of the provisions of Section 41(1) of the Income Tax Act, 1961 and to allow carry forward of unabsorbed losses and allowances beyond eight years. (b) To lift attachment order imposed by Income Tax Department against immovable and movable properties including Debtors and Bank Accounts. Thereafter, not to attach any property including movable properties of the company during the rehabilitation period. (c) To grant stay against demand raised by Department but are in dispute before various appellate authorities/Courts. (d) To waive interest and penalty, if any, imposed and not to levy such interest and penalties during the rehabilitation period. (e) To exempt GTC from Capital Gain on sale of surplus land and/or sale of industrial sheds proposed for development on surplus land at Marol. (f) To exempt from TDS against payments to be received by the company. Objection was filed by the appellant against the DRS on 23.03.2001. During hearing dated 29.03.2001, the representative of the appellant stated that the appellant had no objection if the reliefs and concessions sought were not directed to be given but kept for the consideration of the Income Tax Department.
(3.) The Scheme of reconstruction/rehabilitation which was submitted by the OA, after consultation with all the stakeholders and creditors as per the requirement of law, was approved and sanctioned by the Board (hereinafter referred to as the 'SS-02') vide order dated 16.02.2002. It may be mentioned here that after the DRS was circulated and before it could be sanctioned, the income tax demand of Rs.366 crores was intimated by the Income Tax Department (appellant herein) to OA on 01.08.2001. While sanctioning the Scheme on 16.12.2002, the following income tax reliefs were kept in the Scheme: "(a) To consider exemption from the applicability of the provisions of Sections 41(1), 115JB, 43-B and 72(3) of the Income Tax Act, 1961 and to allow carry forward of Unabsorbed Losses and allowances beyond eight years. (b) To consider waiving interest and penalty, if any, imposed and not to levy such interest and penalties during the rehabilitation period. (c) To consider exempting GTC from Capital Gain on sale of surplus land and/or sale of industrial sheds proposed for development on surplus land at Marol and/or sale of any other surplus assets. (d) To consider exempting GTC from TDS against payments to be received by the company." Besides this, under the head 'General Terms and Conditions' in Para 10(k) of the Rehabilitation Scheme, the Board directed with regard to the income tax dues as under: "10(k): The Income Tax Department would lift the attachment orders imposed by them against immovable and movable properties of GTC including debtors and bank accounts and thereafter not to attach any property including movable properties of the company during the rehabilitation period without prior consent of BIFR. The recovery proceedings against demands raised by Income Tax Department against disputed liabilities shall remain suspended and refunds due to company, if any, would not be adjusted against such demands.";