Fresh consideration of tax benefit ceiling modification required, with income-tax recovery stayed until the Board decides the application.

An application for modification of the tax benefit ceiling under section 72A had not been considered on merits because the earlier closure order was already in place when it reached the Board for Industrial and Financial Reconstruction. The matter was therefore required to be examined afresh without being influenced by the earlier order. As the tax benefit dispute remained pending before the Board, enforcement of the income-tax demand was to remain in abeyance until the Board decided the application. The Board was directed to decide the application within two months.

---

---

Issues: Whether the Board for Industrial and Financial Reconstruction should decide the petitioner's application for modification of the tax benefit ceiling afresh without being influenced by its earlier order, and whether enforcement of the income-tax demand should be kept in abeyance till such decision.

Analysis: The application for modification of the ceiling on benefit under section 72A was not considered on merits because the earlier closure order had already been made when the application reached the Board. In these circumstances, the petitioner was held entitled to have the matter examined by the Board afresh. Since the tax benefit dispute was still pending before the Board, the Court also directed that the income-tax authorities should not enforce the demand until the Board decided the application.

Conclusion: The Board for Industrial and Financial Reconstruction was directed to decide the application within two months without being influenced by its earlier order, and the income-tax authorities were restrained from enforcing the demand until that decision.

---