Vallabh Knits Ltd., Ludhiana V. ACIT, Ludhiana

ITA 893/CHANDI/2012

• Counselvise Citation: 89321514 RSA 2012
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 29-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Assessee Lawyers: D K GOYAL
• Keywords: Rectification of order
• Section: 54; 154; 143(3); 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 893/CHD/2012 (ASSESSMENT YEAR : 2002-03) VALLABH KNITS LTD., VS. THE A.C.I.T., B-XXIV-4700, SUNDER NAGAR, CIRCLE-II, LUDHIANA. LUDHIANA. PAN: AAACV5970F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K.GOYAL RESPONDENT BY : SHRI MANJEET SINGH, DR DATE OF HEARING : 05.11.2012 DATE OF PRONOUNCEMENT : 22.11.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 28.06.2012 RELATING TO ASSESSMENT YEAR 2002-03 AGAINST THE ORD ER PASSED UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: 1. BECAUSE THE LD. CIT(A) HAS ERRED ON FACTS AND L AW BY HAVING NOT ADJUDICATED ON THE JURISDICTION AND POWERS OF ASSESSING OFFICER U/S 154 OF THE INCOME TAX ACT, 1961 PARTICULARLY WHILE ON THE DISPUTE QUA THE DEDUCTION U/S 80HHC R.W. 80IA/B ISSUE IS DEBATABLE TOO IN PURSUANCE TO DECISIONS OF THE VARIOUS HIGH COURTS AND THEREAFTER SLP IS PENDING IN SLP(C) NO.25664 OF 2011. 3. THE LEARNED D.R. FOR THE REVENUE AT THE OUTSET P OINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL STANDS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN TH E CASE OF M/S JACOB 2 EXPORT HOUSE VS. ACIT IN ITA NO.739/CHD/2011 RELAT ING TO ASSESSMENT YEAR 2002-03 VIDE ORDER DATED 30.9.2011. 4. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE RECTIFICATION UNDER SECTION 154 OF THE ACT CARRIED OUT BY THE ASS ESSING OFFICER WAS ON ACCOUNT OF A DEBATABLE POINT AND WAS NOT A MISTAKE APPARENT FROM RECORD. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE ACT ON THE PRO FITS OF BUSINESS ON WHICH THE ASSESSEE HAD BEEN ALLOWED THE BENEFIT OF DEDUCTION UNDER SECTION 80IB OF THE ACT. THE ASSESSING OFFICER BY WAY OF RECTIFICATION CARRIED OUT UNDER SECTION 154 OF THE ACT HAD RECOMP UTED THE SAID DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 8 0HHC OF THE ACT, WHICH WAS CONFIRMED BY THE CIT (APPEALS). THE ASSE SSEE IS IN APPEAL AGAINST THE SAID RECOMPUTATION OF DEDUCTION UNDER S ECTION 80HHC OF THE ACT BY WAY OF EXCLUDING PROFITS ON WHICH DEDUCTION UNDER SECTION 80IB OF THE ACT HAD BEEN ALLOWED IN VIEW OF THE PROVISIO NS OF SECTION 80IA (9) R.W.S.80IB OF THE ACT. WE FIND THAT SIMILAR IS SUE AROSE BEFORE THE TRIBUNAL IN M/S JACOB EXPORT HOUSE (SUPRA) WHEREIN THE TRIBUNAL IN TURN RELIED UPON THE RATIO LAID DOWN BY THE JURISDICTION AL HIGH COURT IN CIT VS. ARUNA LUTHRA [252 ITR 76 (P&H)] WHEREIN THE SCO PE OF POWER GIVEN UNDER SECTION 154 OF THE ACT WAS CONSIDERED AND HEL D AS UNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IN ITS RETURN OF INCOME H AD CLAIMED DEDUCTION AGAINST THE PROFITS AND GAINS OF ITS UNIT, BOTH UNDER THE PROVISIONS OF SECTIONS 80IB AN D 80HHC OF THE ACT. THE ASSESSING OFFICER HAD ALLOWE D THE CLAIM OF THE ASSESSEE IN ENTIRETY WHILE PASSING THE ORDER U/S 143(3) OF THE ACT. SUBSEQUENTLY, NOTICE U/S 154 OF THE ACT WAS ISSUED TO THE ASSESSEE FOR RESTR ICTING THE DEDUCTION U/S 80HHC OF THE ACT BY EXCLUDING THE PROFITS ON WHICH DEDUCTION U/S 80IB OF THE ACT WAS ALLOWED. THE ASSESSEE CHALLENGED THE ABOVE SAID AC TION BEING CARRIED OUT U/S 154 OF THE ACT. HOWEVER, THE 3 ASSESSING OFFICER RECOMPUTED THE DEDUCTION U/S 80HH C OF THE ACT IN THE HANDS OF THE ASSESSEE, WHICH WAS UPHELD BY THE CIT (APPEALS) IN HIS ORDER. THE QUES TION TO BE ADDRESSED IN THE PRESENT APPEAL IS WHETHER SU CH EXERCISE CARRIED ON BY THE ASSESSING OFFICER IN THE GARB OF SECTION 154 OF THE ACT IS PERMISSIBLE UNDER LAW. 8. WE FIND THAT SIMILAR ISSUE OF RECOMPUTATION OF INCOME OF THE ASSESSEE BY RESTRICTING THE DEDUCTION U/S 80HHC OF THE ACT IN VIEW OF THE CLAIM OF THE ASSESS EE BEING ALLOWED FOR DEDUCTION U/S 80IB OF THE ACT, AR OSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2001-02 IN ITA NO.28/CHANDI/2010. THE TRIBUNAL HAD NOTED THAT THERE WERE DIVERGENT VI EWS OF THE VARIOUS TRIBUNALS ON THE AFORESAID ISSUE AND NO DECISION OF THE JURISDICTIONAL HIGH COURT WAS BROUG HT OUT. THE TRIBUNAL THUS HELD THAT IN VIEW OF THE CLE AVAGE OF OPINION THERE WAS NO ERROR IN THE ACTION OF THE CIT (APPEALS) IN AFFIRMING THE PREMISES THAT THE ISSUE IS DEBATABLE. THE TRIBUNAL VIDE ORDER DATED 15.10.2010 HELD THAT SIMILAR EXERCISE OF RECOMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT IN VIEW OF THE DEDUCTION ALLOWED U/S 80IB OF COULD NOT BE CARRIED OUT UNDER THE PROVISIONS OF SECTION 154 OF THE ACT. 9. HOWEVER, IN THE PRESENT PROCEEDINGS BEFORE US TH E LEARNED D.R. FOR REVENUE HAS POINTED OUT THAT THE S AID ISSUE IS NOW SETTLED BY THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN FRIENDS CASTINGS (P) LTD. VS. CIT (SUPRA). WE FIND THAT THE HON'BLE HIGH COURT HAS LAID DOWN THE PROPOSITION THAT IN VIEW OF THE PROVISIONS OF SECTION 80IA(9) OF THE ACT DEDUCTION ALLOWED U/S 80IA/80IB OF THE ACT WOULD BE A BAR TO CLAIM DEDUCT ION UNDER ANY OTHER PROVISIONS OF THE CHAPTER. THE ISS UE NOW STANDS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT. THE QUESTION WHICH ARIS ES FOR ADJUDICATION IS WHETHER IN VIEW OF THE RATIO LA ID DOWN BY THE JURISDICTIONAL HIGH COURT, THE ASSESSIN G OFFICER COULD CARRY OUT THE RECTIFICATION U/S 154 O F THE INCOME TAX ACT ON ACCOUNT OF THE ABOVE SAID ISSUE O F ALLOWANCE OF DEDUCTION U/S 80IB AND 80HHC OF THE AC T. 10. THE FULL BENCH OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ARUNA LUTHRA (252 ITR 76)(P&H)] CONSIDERED THE SCOPE OF POWER GIVEN U/S 1 54 OF THE ACT FOR RECTIFICATION OF ANY MISTAKE APPAREN T ON RECORD AND IT WAS HELD THAT THE POWER GIVEN TO THE AUTHORITY WAS WIDE. THE COURT FURTHER HELD AS UNDE R : THE POWER GIVEN TO THE AUTHORITY IS WIDE. IT CAN CORRECT ANY MISTAKE PROVIDED IT IS APPARENT FROM THE RECORD. THE FIRST QUESTION THAT ARISES F OR CONSIDERATION IS WHEN A MISTAKE CAN BE SAID TO BE APPARENT FROM THE RECORD? THE PLAIN LANGUAGE OF THE PROVISION SUGGESTS THAT THE MISTAKE SHOULD BE APPARENT. IT MUST BE PATENT. IT MUST APPEAR EX FACIE FROM THE RECORD. IT 4 MUST NOT BE A MERE POSSIBLE VIEW. THE ISSUE SHOULD NOT BE DEBATABLE. MR.SAWHNEY CONTENDED THAT WHEN THE VIEW TAKEN BY AN AUTHORITY IS EX FACIE CONTRARY TO THE DECISION OF THE JURISDICTIONAL HIGH COURT OR A SUPERIOR COURT, THE CASE WOULD FALL WITHIN THE MISCHIEF OF SECTION 154. HOWEVER, MR.BANSAL SUBMITTED THAT WHILE DECIDING A MATTER, AN AUTHORIT Y CANNOT ANTICIPATE THE VIEW THAT MAY BE TAKEN BY THE HIGH COURT OR THE SUPREME COURT ON A SUBSEQUENT DATE. IF AT THE TIME OF THE PASSING OF THE ORDER, THE AUTHORITY TAKES A PARTICULAR VIEW, WHICH IS NOT CONTRARY TO THE EXISTING INTERPRETATION OF LAW, THE PROVISION OF SECTION 154 CANNOT BE INVOKED. APPARENTLY, THE ARGUMENT OF MR.BANSAL APPEARS TO BE ATTRACTIVE. IF THE ISSUE OF ERROR IN THE ORDER IS TO BE EXAMINED ONLY WITH REFERENCE TO THE DATE ON WHICH IT WAS PASSED, IT MAY BE POSSIBLE TO LEGITIMATELY CONTEND THAT IT WAS LEGAL ON THE DATE ON WHICH IT WAS PASSED. THE SUBSEQUENT DECISION HAS ONLY RENDERED IT ERRONEOUS OR ILLEGAL. HOWEVER, THERE WAS NO ERROR MUCH LESS AN APPARENT ERROR ON THE DATE OF ITS PASSING. THUS, THE PROVISION OF SECTION 154 IS NOT APPLICABLE. HOWEVER, SUCH A VIE W SHALL BE POSSIBLE ONLY IF THE PROVISION WERE TO PROVIDE THAT THE ERROR HAS TO BE SEEN IN THE ORDER WITH REFERENCE TO THE DATE ON WHICH IT WAS PASSED. SUCH WORDS ARE NOT THERE IN THE STATUTE. RESULTANT LY, SUCH A RESTRICTION CANNOT BE INTRODUCED BY THE COUR T. THUS, THE CONTENTION RAISED BY COUNSEL FOR THE ASSESSEE CANNOT BE ACCEPTED. THERE IS ANOTHER ASPECT OF THE MATTER. IN A GIVEN CASE, ON AN INTERPRETATION OF A PROVISION, AN AUTHORITY AN TAKEN A VIEW IN FAVOUR OF ONE OF THE PARTIES. SUBSEQUENT TO THE ORDER, THE JURISDICTION AL HIGH COURT OR THEIR LORDSHIPS OF THE SUPREME COURT INTERPRET THE SAME PROVISION AND TAKE A CONTRARY VIEW. THE APPARENT EFFECT OF THE JUDGMENT INTERPRETING THE PROVISION IS THAT THE VIEW TAKEN B Y THE AUTHORITY IS RENDERED ERRONEOUS. IT IS NOT IN CONFORMITY WITH THE PROVISION OF THE STATUTE. THUS , THERE IS A MISTAKE. SHOULD IT STILL BE PERPETUATED ? IF THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE WERE ACCEPTED, THE RESULT WOULD BE THAT EVEN THOUGH THE ORDER OF THE AUTHORITY IS CONTRARY TO THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE OF THE COUNTRY, STILL THE MISTAKE COULD NOT BE RECTIFIED F OR THE REASON THAT THE DECISION IS SUBSEQUENT TO THE DATE OF THE ORDER. ONLY THE DEAD MAKE NO MISTAKE. EXEMPTION FROM ERROR IS NOT THE PRIVILEGE OF MORTALS. IT WOU LD BE A FOLLY NOT TO CORRECT IT. SECTION 154 APPEARS TO HAVE BEEN ENACTED TO ENABLE THE AUTHORITY TO RECTIF Y THE MISTAKE. THE LEGISLATIVE INTENT IS NOT TO ALLO W IT 5 TO CONTINUE. THIS PURPOSE HAS TO BE PROMOTED. THE LEGISLATURES WILL HAS TO BE CARRIED OUT. BY PLACI NG A NARROW CONSTRUCTION, THE OBJECT OF THE LEGISLATIO N SHALL BE DEFEATED. SUCH A CONSEQUENCE SHOULD NOT B E COUNTENANCED. 12. IN THE FACTS OF THE PRESENT CASE BEFORE US THE ASSESSING OFFICER HAD EXERCISED HIS JURISDICTION U/S 154 OF T HE ACT WHICH IS RESTRICTED TO RECTIFYING ANY MISTAKE APPARENT FROM RECORD. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN FRIENDS CASTINGS (P) LTD. (SUPRA), WE UPHOLD THE ORDER PASSED BY THE AUTHORITIES BELOW IN INVOKING T HE PROVISIONS OF SECTION 154 OF THE ACT AND REDUCING THE CLAIM OF DE DUCTION U/S 80HHC OF THE ACT TO RS.16,67,121/- AS AGAINST RS.23 ,93,055/- ALLOWED VIDE ORDER PASSED U/S 143(3) OF THE ACT. T HE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS DISMISSED. 6. THE ISSUE ARISING THE PRESENT APPEAL IS IDENTICA L TO THE ISSUE BEFORE THE TRIBUNAL AND FOLLOWING THE AFORESAID RATIO WE U PHOLD THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 154 OF THE ACT IN RECOMPUTING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT ON THE PROFITS OF THE BUSINESS, ON WHICH DEDUCTION UND ER SECTION 80IB OF THE ACT HAD BEEN ALLOWED. UPHOLDING THE ORDER OF THE C IT (APPEALS), WE DISMISS GROUND OF APPEAL RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF NOVEMBER, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND NOVEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH