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2014 (5) TMI 16 - GUJARAT HIGH COURTSet off of unabsorbed depreciation from STCG or from other sources - Application before settlmetn commission - Failure to pay additional tax and interest – Permissibility to set off of brought forward losses or unabsorbed investment - Interpretation of sub-sections (1A) to (1D) of section 245C of the Act – Held that:- Sub section (1A) of Section 245C prescribes the manner in which the additional amount of income tax payable in terms of sub section (1) of Section 245C in respect of income disclosed in an application made under the sub section shall be computed by providing that the same shall be calculated in accordance with the provisions of sub sections (1B) to (1D) - the applicant had furnished return in respect of the total income of the assessment year under consideration, in such a case, the tax would be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income - In terms of Clause (ii) of said section (1B) therefore the tax would be calculated on the aggregate of the returned total income and the disclosed income, treating the aggregate thereof as the total income of the applicant - Sub section (1C) of Section 245C provides for the additional amount of income tax payable in respect of income disclosed - Clause (b) thereof which covers our situation provides that the amount of tax calculated under Section 245C(1B)(ii) shall be reduced by the amount of tax calculated in the total income returned for that year. The legislature has created a deeming fiction by providing that the tax of the applicant would be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income - This device is created for a special purpose and has a localized effect - It comes into existence only for the purpose of calculating the tax to be deposited by an applicant for settlement of a case - the aggregate of the total income returned and the income disclosed would be considered as total income - deeming fiction must be allowed its full effect - the very same clause uses the term "total income returned in a different context and the aggregate of the total income returned and the income disclosed which would partake the character of a total income for this limited purpose - deeming fiction cannot be discarded by bringing into consideration such term used elsewhere by the legislature - legislature provides for definition of various terms frequently used in the statutes. At a stage where the Settlement Commission is required to ascertain where an assessee applicant has paid the additional tax with interest thereon only upon which application can be allowed to proceed further, no complex exercise or verification is envisaged - If the concept of total income contained in the Act is imported at such a stage, it can give rise to multiple disputes and lengthy debates with respect to the total income of an assessee and whether full tax on such income has been paid or not - the legislature does not envisage the Commission to go into a complex exercise of ascertaining the total income of the assessee and further ascertaining his tax liability on such income - The legislature has provided for a simple formula possible of a simple arithmatical application - the assessee may be entitled to a refund once the Settlement Commission passes its final order. The assessee's returned total income was nil - the assessee had filed nil return - In terms of Clause (ii) of sub section (1B) of Section 245C, thus, Rs. 72 lacs which the assessee declared in the application for settlement would be his total income for the purpose of computing the additional tax liability - the assessee had not deposited the tax with interest thereon calculated on amount of Rs. 72 lacs - The Commission correctly did not allow application to be proceeded further - The reasons adopted by the Commissioner are somewhat different – decided against Assessee.
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