Section 245BD: Decision by Majority of the Settlement Commission
Section 245BD provided a procedure for deciding disagreements among members of a Bench of the former Income-tax Settlement Commission. It distinguished a majority decision from an equal division of opinion and provided a reference mechanism involving the Chairman.
What does Section 245BD mean?
Bench means a group of members of the Settlement Commission authorised to hear a settlement case. A majority decision is the view supported by more than half of the members who decide the relevant point. A difference of opinion arises when members hearing a case disagree on a question of fact or law.
Section 245BD, inserted by the Finance Act, 1987 (Act 11 of 1987), section 59, with effect from 1 June 1987, prescribed the manner of resolving such differences. The statutory rule is described below without treating the former Commission as a currently available forum.
How decisions were made under Section 245BD
- Majority exists: If members of a Bench differed on any point and a majority view existed, the point was decided according to that majority.
- Equal division: If the members were equally divided, they had to identify the point or points on which they differed and refer those points to the Chairman.
- Chairman's choice: The Chairman could hear the disputed point or points personally or refer them for hearing by one or more other members of the Settlement Commission.
- Final majority: The disputed points were then decided according to the majority opinion of all members who heard the case on those points, including the members who first heard them.
The reference procedure was intended to resolve a tie. It did not authorise a fresh settlement application or permit the Chairman to disregard a majority that already existed.
Illustration: equal division on a tax issue
Suppose two members validly hearing a point reached opposing conclusions. As neither opinion commanded a majority, the disputed point would be recorded and referred to the Chairman. If the Chairman heard the point and agreed with one of the two members, the majority of the three members who heard that point would determine the outcome. This is a simplified historical illustration, not a description of present Interim Board procedure.
Relationship with other settlement provisions
Section 245B and Section 245BA
Section 245B dealt with constitution of the Settlement Commission, while Section 245BA addressed its Benches and their powers. Section 245BD operated when the members of such a Bench disagreed.
Discontinuation of the Settlement Commission
The Finance Act, 2021 ended the former Settlement Commission mechanism with effect from 1 February 2021 and established statutory arrangements for specified pending applications. In particular, Section 245AA addresses Interim Boards for Settlement and Section 245M addresses transitional matters, including the option of withdrawal in specified circumstances. The actual procedural rules for an Interim Board must be checked independently; the former Commission's voting procedure under Section 245BD should not be applied automatically.
Income-tax Act, 2025
The Income-tax Act, 2025 commenced on 1 April 2026. Questions involving an earlier settlement order or pending legacy matter require examination of the applicable date, the governing statute, transitional provisions and any relevant notifications. Section 245BD should not be described as a generally available procedure for new settlements in 2026.
Frequently asked questions
What is Section 245BD of the Income-tax Act, 1961?
It laid down how differences of opinion among members of an Income-tax Settlement Commission Bench were decided, ordinarily by a majority.
What happened when members were equally divided?
The members had to identify the disputed point and refer it to the Chairman, who could hear it or assign it to one or more other members. The final view followed the majority of all members who heard that point, including the original members.
Can a taxpayer file a new settlement application with the former Settlement Commission?
No. The Settlement Commission ceased operating with effect from 1 February 2021. Transitional applications and proceedings must be assessed under the specific provisions governing Interim Boards and applicable savings rules.
Does Section 245BD automatically govern an Interim Board?
No. Section 245BD describes the former Settlement Commission. Interim Boards operate under their own statutory framework; the old voting procedure should not automatically be assumed to apply.
Official legal sources and further reading
For statutory text, amendments, notifications and current guidance, consult the Income Tax Department's official legislation resources, the Income Tax e-Filing portal and India Code. Check the applicable version of Chapter XIX-A and the Finance Act, 2021 before relying on an older settlement order.
Editorial note: This article explains a historical statutory mechanism and its later transition. It is general legal information, not advice on an individual proceeding. Last reviewed: 27 October 2026.