TMI Blog2008 (3) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Jasani, for the Petitioner. Vimal Gupta, for the Respondents. JUDGMENT The judgment of the court was delivered by F.I. REBELLO J. - Rule. Heard forthwith. 2. The petitioner had filed his return of income for the assessment years 2003-2004, 2004-2005 and 2005-2006 respectively on 30 th September, 2003, 26 th September, 2004 and 30 th October, 2005. There was a search and seizure operation on the premises of the petitioner on 9 th December, 2004 and 10 th December, 2004, as a result of which certain books and papers were found and seized. The petitioners contend that their firm came in existence on 1 st May, 2002. During the search a diary relating to receipts and expenditure of the firm on its project was also sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te total income as required by Section 245C. According to the petitioner Section 2(45) defines "Total Income" to mean the total amount of income referred to in Section 5 computed in the manner laid down in the Act, which obviously includes Section 70 and 72 also, as held by the Supreme Court in CIT v. Shirke Construction Equipment P. Ltd. (2007) 291 ITR 380. The Petitioner accordingly worked out additional tax payable on the aggregate total income of Rs.51,70,820/- at Rs.18,55,032/- and paid Rs.25,59,932/- together with interest on 26 th May, 2007 i.e. well within time. A letter dated 11 th August, 2007 was sent to the Assessing Officer to that effect. 4. Prior to that the petitioner's Chartered Accountants M/s. Khandelwal Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject matter of the present petition. 6. It may be pointed out that the respondent No.1 while rejecting the petitioners application as abated proceeded on the footing that on a plain reading of the relevant provisions of the Act as reproduced in the order, it was clear that for the purpose of appreciating the compliance of the provisions of Section 245D(2A) carried forward loss of an earlier year is not to be taken into account. The petitioner had disclosed the income of Rs.53,57,375/- while taxes etc., have been paid on income of Rs.51,71,070/- after adjusting not only the loss (Rs.93,112/-) of the relevant year but also the carry forward loss (Rs.93,193/-) of the preceding assessment year. The respondent No.1 held that if the carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C before the 1 st day of June, 2007, but an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, has not been made before the 1 st day of June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31 st day of July, 2007. Explanation.— In respect of the applications referred to in this sub-section, the 31 st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under sub-section (1)." 10. This sub-section along with some other sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income as declared by the petitioners is in terms of Section 245C read with Section 245D. What, therefore, is the meaning of the expression "Income" on which the tax had to be paid or the additional amount of Income Tax payable on the income disclosed. In the normal course the petitioner under the provisions of the Act was entitled to carry forward the loss while computing the tax to be paid. 12. Are such losses not to be carried forward while computing the income on which tax is payable under Section 245C read with Section 245D of the Income Tax Act. We may firstly refer to the judgment relied upon by the petitioner in the case of Commissioner of Income-tax v. Shirke Construction Equipment Ltd. (2007) 291 ITR 380 (S.C.). The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at would mean that whatever allowance or disallowance that the assessee is entitled to. If the assessee is entitled to carry forward the loss of the previous year then the total income has to be calculated in that manner. The Settlement Commission while considering as to whether the tax has been paid as contemplated by Section 245D(2A) has to examine whether that tax is on the total income as disclosed. If the argument of the respondent-Revenue is to be accepted that would mean that the assessee while working out the total income if entitled to any deduction, would not be so entitled and because he has applied under Section 245C would have to pay the tax on income which otherwise would not have been payable. In our opinion this is not what ..... X X X X Extracts X X X X X X X X Extracts X X X X
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