UNIPON (INDIA) LTD. Vs. INCOME TAX SETTLEMENT COMMISSION

JUDGEMENT

(1.) THE petitioner has challenged an order dated 17.12.2007 passed by the Settlement Commission. Under such order, the Settlement Commission held that the petitioner failed to pay additional tax and interest on the income disclosed in the application for settlement as required under section 245D(2A) of the Income -tax Act, 1961 ("the Act" for short). The petition arises in the following factual background:

(2.) FROM such decision it can be seen that the Settlement Commission rejected the petitioner's contention, that the tax required to be paid under section 245D(2A) was fully paid, on two grounds. Firstly, that sub -sections (1A) to (1D) of section 245C do not permit the set off of brought forward business losses or unabsorbed depreciation/investment allowance and secondly, that the very question of such set off of unabsorbed depreciation or brought forward business losses against income from short term capital gains or from other sources in the normal computation of income, is itself questionable.

(3.) ON the other hand, Shri Manish Bhatt for the department opposed the petition contending that for the purpose of making deposit of additional tax in terms of section 245D(2A) of the Act, special computation is provided under sub -sections (1A) to (1D) of section 245C. These provisions do not permit set off of unabsorbed depreciation against the additional income disclosed in the application for settlement. When such special formula is provided by the Legislature, general rules for computation of total income and tax liability of an assessee cannot be applied disregarding the formula so provided under the Act. Counsel further submitted that at the stage of verifying whether the additional tax as required under section 245D(2A) was deposited or not, complex exercise of ascertaining the ultimate possible tax liability of an assessee cannot be undertaken. These being summary proceedings, the Legislature desired that different stages envisaged before the Settlement Commission would be completed without waste of time. In this context, therefore, while verifying whether the applicant before the Settlement Commission had deposited the tax as required under section 245D(2A), the formula under sub -sections (1A) to (1D) of section 245C had to be applied.