Linc Pen & Plastics Ltd., Kolkata V. ACIT, Central Circle - VII, Kolkata, Kolkata

ITA 971/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78408 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 08-02-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 01-07-2011
• Court: TRIBUNAL
• Department Lawyers: DAVID S CHAWNGTHU ACIT
• Assessee Lawyers: S L KOCHAR
• Keywords: Rectification of order; Opportunity of being heard; Period of limitation; Retrospective amendment; Difference of opinion; Change of opinion
• Section: 143(3); 80IB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NO.971/KOL/2011 ASSESSMENT YEAR : 2002-03 ( APPELLANT ) (RESPONDENT) LINC PEN & PLASTICS LTD. -VS- A.C.I.T., CENTRAL CIRCLE-VII, KOLKATA KOLKATA (PAN:AAACL 6426 C) FOR THE APPELLANT SHRI S.L.KOCHAR AND SHRI ANIL KOCHAR (ADVOCATE) FOR THE RESPONDENT SHRI DAVID S.CHAWNGTHU, ACIT, SR.DR DATE OF HEARING : 27.06.2014 DATE OF PRONOUNCEMENT : 14. 07.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF LD. C.I.T.(A)- CENTRAL-I, KOLKATA DATED 24.05.2011 AND PERTAINS TO ASSESSMENT YEAR 2002-03. 2. THE GROUNDS OF APPEAL IN THIS APPEAL READ AS UN DER :- 1. FOR THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED T HE APPEAL OF THE APPELLANT AND CANCELLED THE ORDER PASSED U/S 154 BY THE A.O. ACCE PTING THE CONTENTION OF THE APPELLANT THAT THE ORDER OF AMENDMENT WAS PASSED BEYOND THE T IME PRESCRIBED U/S 154. 2. FOR THAT THE LD. CIT(A) ERRED IN HOLDING THAT TH E PROCEEDINGS INITIATED BY ASSESSING OFFICER U/S 154 OF THE INCOME TAX ACT, 1961 ON 01.0 3.2010 TO AMEND ORDER U/S 254/251/143(3) WERE WELL WITHIN HIS JURISDICTION. 3. FOR THAT THE LD. CIT(A) ERRED IN OBSERVING THAT MISTAKE RECTIFIED BY THE A.O. WAS NEITHER RAISED NOR DECIDED BY WAY OF APPEAL OR REVI SION AND ACCORDINGLY THE A.O. HAD JURISDICTION AS PER PROVISIONS OF SEC.154 OF THE AC T TO AMEND THE SAME. 4. FOR THAT THE LD. CIT(A) OUGHT TO HAVE ACCEPTED T HE CONTENTION OF THE APPELLANT THAT THERE WAS NO MISTAKE IN THE ORDER OF ASSESSMENT MAD E BY THE A.O. ON 22.03.2005 U/S 143(3) AND AS SUCH PROCEEDINGS U/S 154 OF THE ACT D ID NOT LIE. 5. FOR THAT THE LD. CIT(A) ERRED IN OBSERVING THAT SINCE DECISION OF THE HONBLE SUPREME COURT IN LIBERTY INDIA VS CIT 317 ITR 218 (SC) DECI DED ON 31.08.2009 WAS IN EXISTENCE AT THE TIME OF INITIATION OF PROCEEDINGS U/S 154 BY THE A.O., THE A.O. DERIVED JURISDICTION U/S 154 TO AMEND THE ORDER OF ASSESSMENT. 6. FOR THAT THE LD. CIT(A) DID NOT PROPERLY CONSIDE R THE ISSUE CONTENDED BY THE APPELLANT THAT THERE WAS NO MISTAKE IN THE ORDER U/ S 254/251/143(3) THAT COULD BE RECTIFIED U/S 154 OF THE ACT BY THE A.O. ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 2 7. FOR THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ORDER OF ASSESSMENT MADE U/S 143(3) HAVING MERGED WITH THE ORDER OF LD. CIT(A) A ND THEN WITH THE ORDER OF THE HONBLE TRIBUNAL, THE A.O. HAD NO JURISDICTION TO R ECTIFY ORDER U/S 254/251/143(3) OF THE INCOME TAX ACT, 1961. WITHOUT PREJUDICE 8. FOR THAT THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE CONTENTIONS RAISED BEFORE HIM WITH REFERENCED TO ITS GROUND NO.6 CHALLENGING OBSE RVATIONS MADE BY THE A.O. IN ORDER U/S 154 TO THE EFFECT THAT THE APPELLANT IS NOT ENT ITLED TO ANY DEDUCTION U/S 80-IB FOR ANY OF ITS UNITS. DEDUCTIONS IN RESPECT OF INCOMES OF K OLKATA UNIT-II & PILERNE UNIT, APART FROM RECEIPTS ON ACCOUNT OF DEPB & EXPORT BENEFITS OUGHT TO HAVE BEEN ALLOWED. 9. FOR THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS, CLAIM OF THE APPELLANT FOR DEDUCTION U/S 80-IB WAS ALLOWABLE FOR INCOMES DERIVED BY THE APPELLANT APART FORM DEPB & EXPORT BENEFIT. 10. FOR THAT FURTHER GROUNDS OF APPEAL MAY KINDLY B E ALLOWED TO BE TAKEN AT THE TIME OF HEARING OF THE APPEAL. 3. IN THIS CASE THE AO PASSED ORDER U/S 154 OF THE ACT. HE OBSERVED THAT THE RETURN OF INCOME WAS FILED ON 30.10.2002 DECLARING A TOTAL INCOME OF RS.82,86,310/-. SUBSEQUENTLY, ASSESSMENT WAS COMPLETED U/S 143(3) O N 22.03.2005 ON A TOTAL INCOME OF RS.93,64,560/-. THE ASSESSMENT ORDER WAS SUBJECT ED TO APPEAL BEFORE CIT(A) AND ITAT AND IN PURSUANCE OF THE ITATS ORDER DT.20-2.1 0.2006, THE ASSESSMENT ORDER WAS REVISED AND ORDER PASSED ON 19.12.2008 U/S 254/251/ 143(3) DETERMINING THE TOTAL INCOME AT RS.87,86,413/-. ON PERUSAL OF THE COMPUTATION OF INCOME P&L ACCOUN T, BALANCE-SHEET AND OTHER DETAILS FILED, A.O. FOUND THAT THE ASSESSEE HAS CLA IMED DEDUCTION U/S 80IB OF THE IT ACT, 1961 FOR RS.42,86,756/-. THE ASSESSEE HAS CLAI MED DEDUCTION U/S 80IB IN RESPECT OF THE FOLLOWING UNITS I) KOLKATA (UNIT-II_-RDS. 7,71,121/-, II) LINCK PEN & PLASTICS LTD., GOA UNIT PILERNE RS.35,15,635/- FROM UNIT -WISE PROFIT AND LOSS ACCOUNT AS ON 31.3.2002 IT WAS SEEN THAT PROFIT ELIGIBLE FOR D EDUCTION U/S 80IB INCLUDED OTHER INCOME CONSISTS OF DEPB/DUTY DRAWBACK/EXPORT BENEFI T ETC. WHICH ARE NOT DERIVED FROM ELIGIBNLE BUSINESS AND THOSE INCOME DO NOT FOR M PART OF THE NET PROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKING. AO FURTHER OBSERVED THAT RE LIANCE MAY BE PLACED IN THIS RESPECT ON A RECENT HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF M/S.LIBERTY INDIA VS COMMISSIONER OF INCOME TAX REPORTED IN 317 ITR 218 (SC) (2009). THE GIST OF JUDGMENT IS THAT DUTY DRAWBACK RECEIPTS AND DEPB B ENEFITS DO NOT FORM PART OF THE NET PROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKINGS FOR THE PURPOSE OF THE DEDUCTION UNDER SECTION 80-I/80-IA/80-IB OF THE INCOME TAX ACT, 196 1. ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 3 3.1. THEREAFTER THE AO REFERRED TO THE DECISION OF THE HONBLE APEX COURT AND HELD THAT THE RATIO OF THE ABOVE JUDGEMENT SQUARELY APPL IES TO THE CASE OF THE ASSESSEE. IN THESE CIRCUMSTANCES THE AO HELD THAT THERE IS A MIS TAKE APPARENT FROM THE RECORD IN AS MUCH AS DEPB EXPORT BENEFITS HAVE BEEN INCLUDED IN THE NET PROFIT FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80IB OF THE ACT HENCE THE AO MADE DISALLOWANCES. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE THE LD. CIT(A). THE ASSESSEE RAISED VARIOUS GROUNDS BEFORE THE LD. CIT( A). AS REGARDS GROUND THAT RECTIFICATION OF THE ORDER PASSED BY THE AO WAS BAR RED BY LIMITATION. THE LD. CIT(A) DISMISSED THE SAID GROUND BY HOLDING AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD.A.R. THE FIRST GROUND OF APPEAL TAKEN BY THE APPELLANT IS THAT THE ORDER IN QUESTIO N IS BARRED BY LIMITATION. IT HAS BEEN SUBMITTED THAT SINCE ASSESSMENT WHICH IS SOUGHT TO BE RECTIFIED WAS MADE ON 22.03.2005 FOR WHICH FINANCIAL YEAR ENDED ON 31.03.2005, PROCE EDINGS FOR RECTIFICATION U/S 154 COULD BE DRAWN AND COMPLETED ON OR BEFORE 31.03.200 9. ACCORDINGLY IT WAS STATED THAT THE A.O. HAD NO JURISDICTION TO ISSUE PURPORTED NOT ICE U/S 154 ON 08.03.2010 WHICH FALLS BEYOND FOUR YEARS FORM THE END OF THE FINANCIAL YEA R OF DATE OF ASSESSMENT. THE CONTENTION RAISED BY THE LD.A.R. HAS NO MERIT BECAU SE THOUGH THE ORIGINAL ORDER IN THIS CASE WAS PASSED ON 22..03.2005 THE SAME WAS REVISED VIDE ORDER DATED 19.12.2006 PASSED UNDER SECTION 245/25/143(3) OF THE ACT. HENC E THE ORDER RECTIFIED BY THE A.O WAS NOT THE ORDER DATED 22.03.2005 PASSED UNDER SECTION 245/251/143(3) OF THE ACT, WHICH IS WELL WITHIN THE LIMITATION SPECIFIED UNDER SECTION 154(7) OF THE ACT. MOREOVER THIS ISSUE AHS ALREADY BEEN SETTLED BY THE APEX COURT IN THE C ASE OF HIND WIRE INDUSTRIES LTD. V. COMMISSIONER OF INCOME-TAX [1995] 80 TAXMAN 79 (SC) WHERE IT HAS BEEN DULY HELD THAT WHAT FALLS FOR CONSIDERATION IN THE PRESENT C ASE IS THE INTERPRETATION OF THE EXPRESSION FROM THE DATE OF THE ORDER SOUGHT TO BE AMENDED IN SUB-SECTION (7) OF SECTION 154 AS IT STOOD THEN. IT IS OBVIOUS THAT TH E WORD ORDER HAS NOT BEEN QUALIFIED IN ANY WAY AND IT DOES NOT NECESSARILY MEAN THE ORIGIN AL ORDER. IT CAN BE ANY ORDER INCLUDING THE AMENDED OR RECTIFIED ORDER. CONSIDER ING ABOVE IT IS HELD THAT THE RECTIFICATION ORDER PASSED BY THE A.O. IS NOT BARRE D BY LIMITATION. 4.1. AS REGARDS GROUND RAISED THAT THERE WAS LACK O F JURISDICTION ON THE PART OF THE AO AS THE MATTER HAS TRAVELED TO THE LD. CIT(A) AND THE ITAT. THE LD. CIT(A) DISMISSED THE GROUND HOLDING AS UNDER :- 4.1. THE SECOND GROUND OF APPEAL TAKEN BY THE APPE LLANT THAT THE ASSUMPTION OF JURISDICTION U/S 154 OF THE INCOME TAX ACT BY THE A O WAS TOTALLY WRONG & UNCALLED FOR AS THERE WAS NO APPARENT MISTAKE IN THE ORDER U/S 2 5/251/143(3) THAT COULD BE RECTIFIED AS THE MATTER HAS TRAVELED UPTO THE HONBLE TRIBUNAL AND NEITHER THE A.O. NOR THE CIT(A) POINTED OUT ANY APPARENT INFIRMITY/MISTAKE ON RECOR D IN THE MATTER OF DEDUCTION U/S 80- IB OF THE INCOME TAX ACT, 1961 AS MADE OUT AND ALLO WED BY THE A.O. WHILE FRAMING ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 4 ASSESSMENT. THE CONTENTION RAISED BY THE LD.A.R HAS NOT MERIT BECAUSE THOUGH THE ORIGINAL ORDER IN THIS CASE PASSED ON 22.03.2005 WA S THE SUBJECT MATTER OF APPEAL BEFORE THE C.I.T.(A) AND I.T.A.T., HOWEVER THE MISTAKE REC TIFIED BY THE A.O WAS NEITHER RAISED NOR DECIDED. HENCE THE MATTER UNDER RECTIFICATION H AS NOT BEEN CONSIDERED AND DECIDED IN ANY PROCEEDING BY WAY OF APPEAL OR REVISION, THE RECTIFICATION ORDER PASSED BY THE A.O WAS WELL WITHIN JURISDICTION AS PER PROVISION O F SECTION 154 OF THE ACT. 4.2. AS REGARDS THE GROUND THAT RECTIFICATION PASS ED U/S 154 OF THE ACT WAS NOT FEASIBLE WITH REFERENCE TO THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF LIBERTY INDIA LIBERTY INDIA VS CIT (SUPRA), THE LD CIT(A) DISMISSED THIS GROUND BY HOLDING AS UNDER :- 4.2. GROUND NO.3,4 AND 5 TAKEN BY THE APPELLANT IS THAT THE PROCEEDING U/S 154 OF THE INCOME TAX ACT, 1961 FOR THE AY COULD NOT HAVE BEEN PROCEEDED WITH REFERENCE TO THE DECISION OF LIBERTY INDIA VS. COMMISSIONER OF INCOM E TAX (SC) (317 ITR 218) SINCE AT THE TIME OF COMPLETION OF THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 THE SAME NOT BEING IN EXISTENCE IT CANNOT BE SAID TO BE AN APPARENT MISTAKE FROM RECORDS SO AS TO GIVE JURISDICTION TO THE A.O INVOKE PROCEEDIN GS U/S 154 OF THE INCOME TAX ACT, 1961. FURTHER THE FACTUAL MATRIX OF THE CASE OF LIB ERTY INDIA VS COMMISSIONER OF INCOME TAX REPORTED IN 317 ITR 218 HAS DISTINGUISHING FEAT URES/FACTS WITH THAT OF THE CASE OF THE APPELLANT AND AS SUCH IT WAS TOTALLY WRONG ON THE P ART OF THE A.O TO PROCEED TO APPLY THE SAME IN THE CASE OF THE APPELLANT BY PROCEEDING U/S 154 OF THE INCOME TAX ACT, 1961. THE CONTENTION RAISED BY THE LD.A.R WAS CONSIDERED AND FOUND TO HAVE NO MERIT. FIRST OF ALL FOR INITIATION OF RECTIFICATION PROCEEDING IT I S NOT RELEVANT THAT THE ORDER OF THE APEX COURT ON THE ISSUE SHOULD BE AVAILABLE ON THE DATE OF THE COMPLETION OF THE ASSESSMENT ORDER. HOWEVER WHAT IS RELEVANT IS THAT THE DECISIO N OF THE APEX COURT ON THE RELEVANT ISSUE SHOULD BE AVAILABLE ON THE DATE OF INITIATION OF RECTIFICATION PROCEEDING UNDER SECTION 154 OF THE ACT. IN THE CASE UNDER CONSIDERA TION THE DECISION OF LIBERTY INDIA VS COMMISSIONER OF INCOME TAX (SC) (317 ITR 218) WAS D ULY IN EXISTENCE AT THE TIME OF INITIATION OF THE PROCEEDING UNDER SECTION 154 OF T HE ACT, HENCE THE MISTAKE IN QUESTION WAS APPARENT MISTAKE FROM RECORDS SO AS TO GIVE JUR ISDICTION TO THE A.O INVOKE PROCEEDINGS U/S 154 OF THE INCOME TAX ACT, 1961. HE NCE SINCE THE ASSESSMENT MADE ON 22.03.2005, WAS ON THE FACE OF THE RECORD NOT IN CO NFORMITY WITH THE LAW LAID DOWN IN THE CASE OF LIBERTY INDIA VS COMMISSIONER OF INCOME TAX (SC) (317 ITR 218) DECIDED ON 31.08.2009. THE RECTIFICATION ORDER PASSED WITH IN THE PERIOD OF LIMITATION FOR GIVING EFFECT TO THAT LAW WAS A PERFECTLY PROPER EXERCISE OF POWER. WHEN A STATUTORY PROVISION IS INTERPRETED BY THE APEX COURT IN A MANNER DIFFER ENT FROM THE INTERPRETATION MADE IN THE EARLIER DECISIONS BY A SMALLER BENCH, THE ORDER WHICH DOES NOT CONFORM TO THE LAW LAID DOWN BY THE LARGER BENCH IN THE LATER DECISION WHICH DECISION WOULD CONSTITUTE THE LAW OF THE LAND AND IS TO BE REGARDED AS THE LAW AS IT ALWAYS WAS, UNLESS DECLARED BY THE COURT ITSELF TO BE PROSPECTIVE IN OPERATION, WOULD CLEARLY SUFFER FROM A MISTAKE WHICH WOULD BE APPARENT FROM THE RECORD. THE RECTIFICATIO N UNDER SECTION 154(1) ON THE GROUND THAT THE ORDER SOUGHT TO BE RECTIFIED IS NOT IN CON FORMITY WITH THE LAW DECLARED BY THE APEX COURT IS REQUIRED TO BE UPHELD. FURTHER THE AS SESSEE HAS FAILED TO PROVE THAT THE FACTUAL MATRIX OF THE CASE OF LIBERTY INDIA VS COMM ISSIONER OF INCOME TAX REPORTED IN 317 ITR 218 HAS DISTINGUISHING FEATURES/FACTS WITH THAT OF THE CASE OF THE APPELLANT. MOREOVER THE FINDING OF THE APEX COURT IN THE ABOVE CITED CASE THAT THE DUTY DRAW BACK RECEIPTS AND DEPB BENEFITS DO NOT FORM PART OF THE NET PROFITS OF THE ELIGIBLE INDUSTRIES ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 5 UNDERTAKING FOR THE PURPOSE OF DEDUCTION UNDER SECT ION 80I/80IA/80IB OF THE ACT IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT CO MPANY. ACCORDINGLY THE GROUND NO. 2 TO 5 TAKEN BY THE APPELLANT IS REJECTED. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. THE LD. COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). HE PLEADED THAT RECTIFICATION ORDER PASSED BY THE AO WAS BARRED BY LIMITATION. HE FURTHER SUBMITTED THAT THE MATTER INVOLVED IN THE ORDER HAD ALREADY T RAVELED TO THE LD. CIT(A) AND THEREAFTER TO THE TRIBUNAL. IN THESE CIRCUMSTANCES THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE PROVISION OF SECTION 154(1)A OF THE ACT WAS APPLICABLE AND THE AOS ORDER HAS MERGED WITH THE APPELLATE ORDERS. TH ESE WERE NOT AMENABLE FOR RECTIFICATION. THE LD. COUNSEL FURTHER SUBMITTED TH AT THE CASE LAWS OF THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA VS CIT CAME MUCH AFTER FILING OF THE RETURN AND COMPLETION OF ASSESSMENT PROCEEDINGS. HENCE HE SUBM ITTED THAT THE SAME CANNOT BE BASED FOR RECTIFICATION OF ORDER AS MISTAKE APPAREN T FROM RECORD. IN THIS CONNECTION THE LD. COUNSEL OF THE ASSESSEE REFERRED TO SEVERAL CAS E LAWS AS UNDER :- A) GEO MILLER & CO.LTD. VS DCIT 262 ITR 237 (CAL) B) COATS OF INDIA LTD. VS DCIT 214 ITR 504 (CAL) C) ITO VS RYAM SUGAR CO.LTD 105 ITR 819 (CAL) D) JEEWAN LAL (1929) LTD. VS ADDL.CIT 108 ITR 407 ( CAL) 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 7. AS REGARDS THE FIRST ISSUE THAT THE RECTIFICATI ON ORDER PASSED BY THE ASSESSEE IS BARRED BY LIMITATION WE FIND THAT THE LD. CIT(A) HA S HELD THAT THE AO HAS NOT REVISED ORDER DATED 22.03.2005 BUT HE HAS REVISED ORDER DAT ED 19.12.2006 PASSED U/S 245/251/143(3) OF THE ACT. IN THIS REGARD THE LD. C IT(A) HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF HIND WIRE INDUSTRIES (SUPRA). WE FIND THAT THE ABOVE ORDER OF THE LD. CIT(A) IS B ASED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF HIND WIRE INDUSTR IES (SUPRA). IN THE SAID CASE IT ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 6 WAS HELD THAT ORDER IN THE EXPRESSION FROM THE D ATE OF THE ORDER SOUGHT TO BE AMENDED IN SECTION 154(7) WAS NOT QUALIFIED IN ANY WAY, IT DID NOT NECESSARILY MEAN THE ORIGINAL ORDER IT COULD BE ANY ORDER INCLUDING THE AMENDED OR RECTIFIED ORDER. IN THIS VIEW OF THE MATTER WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. IN VIEW OF THE APEX COURT DECISION ABOVE IT CAN BE ACCEPTED THAT THE REVISION WAS MADE WITH RESPECT TO THE ORDER DATED 19.12.2006. HE NCE THIS PLEA RAISED BY THE ASSESSEE IS DISALLOWED. 7.1. ANOTHER LIMB OF ASSESSEES PLEA IS THAT PROVIS IONS OF SECTION 154(1)(A) ARE APPLICABLE AS THE AOS ORDER HAS MERGED WITH THE AP PELLATE ORDERS. IN THIS REGARD WE NOTE THAT PROVISION OF SECTION 154 (1)(A) PROVIDES THAT WHERE ANY MATTER HAS BEEN CONSIDERED AND DECIDED IN ANY PROCEEDING BY WAY OF APPEAL OR REVISION RELATING TO AN ORDER REFERRED TO IN SUB-SECTION (1), THE AUTHORITY PASSING SUCH ORDER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY LAW FOR T HE TIME BEING IN FORCE, AMEND THE ORDER UNDER THAT SUB-SECTION IN RELATION TO ANY MAT TER OTHER THAN THE MATTER WHICH HAS BEEN SO CONSIDERED AND DECIDED. 7.2. NOW WE NOTE THAT THE ABOVE PROVISION BARS THE RECTIFICATION OF THE ORDER ON THE MATTER WHICH IS THE SUBJECT MATTER OF THE APPEAL BE FORE THE APPELLATE AUTHORITIES. IN THIS CASE WE NOTE THAT THE MATTER IN APPEAL BEFORE THE A UTHORITIES BELOW RELATED TO ALLOWABILITY OF DEDUCTION U/S 80IB IN RESPECT OF IN COME ARISING FROM FOREIGN EXCHANGE FLUCTUATION, DISCOUNT ON PURCHASE, INTEREST RECEIVE D ON FDR WITH BANK, INTEREST RECEIVED FROM SUPER STOCKIST FOR LATE PAYMENT, RENT RECEIVED FROM STAFF AND JOB CHARGES RECEIVED. AS AGAINST THE ABOVE THE MATTER WHICH HAS BEEN RECTIFIED PERTAINS TO ALLOWANCES OF 80IB DEDUCTION WITH RESPECT TO DEPB/D UTY DRAW BACK/EXPORT BENEFIT. THUS IT IS CLEAR THAT THIS ASPECT OF THE MATTER WHI CH HAS BEEN RECTIFIED WAS NOT AT ALL THE SUBJECT MATTER OF THE APPEAL BEFORE THE AUTHORITIES BELOW. IN THIS VIEW OF THE MATTER SECTION 154(1)(A) OF THE ACT CANNOT COME TO THE RES CUE OF THE ASSESSEE AND IN THIS VIEW OF THE MATTER WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 7 7.3. ANOTHER ASPECT OF ASSESSEES PLEA IS THAT ORDE R OF THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA LTD. (SUPRA) WAS DECIDED ON 3 1.08.2009 AND IT CAME UP SUBSEQUENTLY MUCH AFTER FILING OF THE RETURN OF THE ASSESSEE AND HENCE IT CANNOT BE MADE THE BASIS FOR RECTIFICATION OF AN APPARENT MIS TAKE U/S 154 OF THE ACT. IN THIS REGARD IT IS AN UNDISPUTED THAT THE DECISION OF THE HONBLE APEX COURT CAME MUCH AFTER FILING OF THE RETURN OF THE ASSESSEE. IN THIS REGARD WE NOTE THAT THE LD. CIT(A) HAS OBSERVED THAT WHEN A STATUTORY PROVISION IS INTERPR ETED BY THE APEX COURT IN A MANNER DIFFERENT FROM THE INTERPRETATION MADE IN THE EARLI ER DECISIONS BY A SMALLER BENCH, THE ORDER WHICH DOES NOT CONFORM TO THE LAW LAID DOWN B Y THE LARGER BENCH IN THE LATER DECISION WHICH DECISION WOULD CONSTITUTE THE LAW O F THE LAND AND IS TO BE REGARDED AS THE LAW AS IT ALWAYS WAS, UNLESS DECLARED BY THE CO URT ITSELF TO BE PROSPECTIVE IN OPERATION, WOULD CLEARLY SUFFER FROM A MISTAKE WHIC H WOULD BE APPARENT FROM THE RECORD. 7.4. ON THE BASIS OF THE ABOVE REASONING THE LD. C IT(A) HAS UPHELD THAT RECTIFICATION OF ORDER U/S 154 OF THE ACT BY THE AO ON THE BASIS OF THE SUBSEQUENT DECISION OF THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA (SU PRA). WE NOTE THAT THE HONBLE APEX COURT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227 (SC)VIDE ORDER DATED SEPTEMBER, 15, 2008 HAS EX POUNDED IN PARA 40 TO 44 WHICH READ AS UNDER :- 40. THE CORE ISSUE, THEREFORE, IS WHETHER NON-CONS IDERATION OF A DECISION OF JURISDICTIONAL COURT (IN THIS CASE A DECISION OF TH E HIGH COURT OF GUJARAT) OR OF THE SUPREME COURT CAN BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD? IN OUR OPINION, BOTH THE TRIBUNAL AND THE HIGH COURT WERE RIGHT I N HOLDING THAT SUCH A MISTAKE CAN BE SAID TO BE A :MISTAKE APPARENT FROM THE RECORD WH ICH COULD BE RECTIFIED UNDER SECTION 254(2). 41. A SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFORE THE HIGH COURT OF GUJARAT IN SUHRID GEIGY LTDS CASE (SUPRA). IT WAS HELD BY THE DIVISION BENCH OF THE HIGH COURT THAT IF THE POINT IS COVERED BY A DECISION OF THE J URISDICTIONAL COURT RENDERED PRIOR OR EVEN SUBSEQUENT TO THE ORDER OF RECTIFICATION, IT C OULD BE SAID TO THE MISTAKE APPARENT FROM THE RECORD UNDER SECTION 254(2) OF THE ACT AN D COULD BE CORRECTED BY THE TRIBUNAL. 42. IN OUR JUDGMENT, IT IS ALSO WELL-SETTLED THA T A JUDICIAL DECISION ACTS RETROSPECTIVELY. ACCORDING TO BLACKSTONIAN THEORY, IT IS NOT THE FUN CTION OF THE COURT OT PRONOUNCE A NEW RULE BUT TO MAINTAIN AND EXPOUND THE OLD ONE . IN OTHER WORDS JUDGES DO NOT MAKE LAW, THEY ONLY DISCOVER OR FIND THE CORRECT LA W. THE LAW HAS ALWAYS BEEN THE SAME. IF A SUBSEQUENT DECISION ALTERS THE EARLIER ONE, IT (THE LATER DECISION) DOES NOT MAKE NEW LAW. IT ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 8 OPERATED FOR QUITE SOMETIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARL IER NOT CORRECTLY UNDERSTOOD. 43. SALMOND IN HIS WELL-KNOWN WORK STATES : (T)HE THEORY OF CASE LAW IS THAT A JUDGE DOES NOT MAKE LAW; HE MERELY DECLARES IT; AND THE OVERRULING OF A PREVIOUS DECISION IS A DECL ARATION THAT THE SUPPOSED RULE NEVER WAS LAW. HENCE ANY INTERMEDIATE TRANSACTIONS MADE O N THE STRENGTH OF THE SUPPOSED RULE ARE GOVERNED BY THE LAW ESTABLISHED IN THE OVERRULI NG DECISION. THE OVERRULING IS RETROSPECTIVE, EXCEPT AS REGARDS MATTERS THAT ARE R ES JDICATA OR ACCOUNTS THAT HAVE BEEN SETTLED IN THE MEANTIME[EMPHASIS SUPPLIED] 44. IT IS NO DOUBT TRUE THAT AFTER A HISTORIC DE CISION IN GOLAK NATH V. STATE OF PUNJAB AIR 1967 SC 1643, THIS COURT HAS ACCEPTED THE DOCTR INE OF PROSPECTIVE OVERRULING. IT IS BASED ON THE PHILOSOPHY.: THE PAST CANNOT ALWAY S BE ERASED BY A NEW JUDICIAL DECLARATION. IT MAY, HOWEVER, BE STATED THIS IS AN EXCEPTION TO THE GENERAL RULE OF THE DOCTRINE OF PRECEDENT. 7.5. WE FURTHER NOTE THAT THE HONBLE APEX COURT IN THE CASE OF MEPCO INDUSTRIES LTD. VS CIT AND ANOTHER 319 ITR 208 VIDE ORDER DATE D NOVEMBER 19, 2009 HAD AN OCCASION TO CONSIDER THE ISSUE OF RECTIFICATION OF MISTAKE U/S 154 OF THE ACT. IN THE SAID DECISION THE HONBLE APEX COURT HAD HELD THAT SECTI ON 154 COULD NOT BE INVOKED IN A CASE OF MERE CHANGE OF OPINION. IT WAS HELD THAT A RECTIFIABLE MISTAKE WAS A MISTAKE WHICH WAS OBVIOUS AND NOT SOMETHING WHICH HAD TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS WERE POS SIBLE. A DECISION ON A DEBATABLE POINT OF LAW COULD NOT BE TREATED AS A MISTAKE APPA RENT FROM THE RECORD. IN THIS CASE THE HONBLE APEX COURT HAD REVERSED THE DECISION OF THE HONBLE MADRAS HIGH COURT. IN THE SAID DECISION THE HONBLE APEX COURT HAS REF ERRED WITH APPROVAL OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF JIYAJEERAO COTTO N MILS LTD. VS ITO 130 ITR 710. THE HONBLE APEX COURT HAS OBSERVED AS UNDER :- WE MAY NO DEAL WITH THE JUDGMENT OF THE CALCUTTA H IGH COURT IN THE CASE OF JIYAJEE COTTON MILLS LTD. V. ITO REPORTED IN [1981] 130 ITR 710. IN THAT CASE, THE APPELLANT- ASSESSEE DERIVED PROFITS FROM THREE INDUSTRIES, ONE WHICH QUALIFIED FOR SPECIAL REBATE UNDER PART I OF SCHEDULE I TO THE FINANCE ACT, 1965 , FOR THE ASSESSMENT YEAR 1966-67. IN GRANTING THIS SPECIAL REBATE, THE INCOME-TAX OFFICE R COMPUTED THE PROFITS ATTRIBUTABLE TO THAT INDUSTRY WITHOUT DEDUCTING DEVELOPMENT REBATE GRANTED TO THE APPELLANT. THE INCOME-TAX OFFICER SOUGHT TO RECTIFY THE MISTAKE UN DER SECTION 154 OF THE ACT BY RECOMPUTING THE PROFITS BY DEDUCTING THE DEVELOPMEN T REBATE. THE APPELLANT FILED A WRIT PETITION FOR SETTING ASIDE THE NOTICE OF RECTIFICAT ION. IT WAS HELD BY THE CALCUTTA HIGH COURT THAT SINCE THERE WAS CONFLICT OF OPINION ON C OMPUTATION OF OF PROFITS OF PRIORY INDUSTRY FOR GRANTING TAX RELIEF WHICH CONFLICT AS RESOLVED BY THE SUPREME COURT LATER ON FOR THE SUBSEQUENT ASSESSMENT YEAR 1977-68, SUCH SU BSEQUENT DECISION OF THE SUPREME COURT DID NOT OBLITERATE THE CONFLICT OF OPINION P RIOR TO IT. IT WAS HELD THAT, UNDER SECTION 154 OF THE ACT, RECTIFICATION WAS NOT PERMI SSIBLE ON DEBATABLE ISSUE. ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 9 7.6. FROM THE ABOVE WE NOTE THAT WE HAVE A DECISION FROM HONBLE APEX COURT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) VIDE ORDER SEPTEMBER 15, 2008. THIS DECISION SUPPORTS THE VIEW TAKEN BY THE LD. CIT(A). THE EXPOSITION IS THAT JUDGES DO NOT MAKE LAW, THEY ONL Y DISCOVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN THE SAME. IF A SUBSEQUENT D ECISION ALTERS THE EARLIER ONE, IT (THE LATER DECISION) DOES NOT MAKE NEW LAW. IT ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SO METIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE L EGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. 7.7. AS AGAINST THE ABOVE, WE HAVE A LATER DECISION OF T HE HONBLE APEX COURT IN THE CASE OF MEPCO INDUSTRIES LTD. (SUPRA) VIDE ORDER D ATED 19 TH NOVEMBER, 2009. IN THIS DECISION THE HONBLE APEX COURT HAS REFERRED WITH A PPROVAL OF THE HONBLE CALCUTTA HIGH COURT DECISION THAT SUBSEQUENT DECISION OF THE HONBLE SUPREME COURT DID NOT OBLITERATE THE CONFLICT OF OPINION PRIOR TO IT. IT WAS HELD THAT U/S SECTION 154 OF THE ACT RECTIFICATION WAS NOT PERMISSIBLE ON DEBATABLE ISSU E.. 7.8. FURTHERMORE IN THE CASE OF SAURASHTRA KUTCH ST OCK EXCHANGE LTD. (SUPRA) THE HONBLE APEX COURT HAS ITSELF EXPOUNDED THAT EVEN W HERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOME TIME THE DECISION REN DERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. 7.9. NOW IF WE APPLY THIS LATER DECISION OF THE HON BLE APEX COURT WE FIND THAT THERE WAS CONFLICT OF OPINION AS TO WHETHER DEPB/DU TY DRAWBACK/EXPORT BENEFIT WOULD COME UNDER THE COMPUTATION OF PROFIT ELIGIBLE FOR D EDUCTION OF SECTION 80IB OF THE ACT. THIS CONFLICT OF OPINION WAS RESOLVED BY THE H ONBLE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA) . IT IS AN UNDISPUTED FACT TH AT AT THE TIME OF FILING OF THE RETURN BY THE ASSESSEE THERE WAS CONFLICT OF OPINION. THE DEC ISION OF THE HONBLE APEX COURT IN THE CASE OF M/S. LIBERTY INDIA LTD. CAME MUCH LATER AND IN THIS VIEW OF THE MATTER ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 10 RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF MEPCO INDUSTRIES LTD. (SUPRA) WE HOLD THAT THERE WAS A C ONFLICT OF OPINION PRIOR TO THE DECISION AND AS SUCH THE MISTAKE CANNOT BE HELD TO BE A MISTAKE APPARENT FROM THE RECORD TO COME UNDER THE KEN OF SECTION 154 OF THE ACT. HENCE RECTIFICATION OF THE MISTAKE APPARENT FROM RECORD U/S 154 ON THIS ISSUE CANNOT BE UPHELD. IN THIS VIEW OF THE MATTER, IN OUR CONSIDERED OPINION ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE DESERVES TO BE SET ASIDE 8. AS REGARDS GROUND NO.8 RAISED BY THE ASSESSEE T HAT LD.CIT(A) HAS NOT ADJUDICATED GROUND NO.6 RAISED BEFORE HIM WE SET AS IDE THE ISSUE TO THE FILE OF THE LD. CIT(A). LD. CIT(A) IS DIRECTED TO ADJUDICATE UPON T HE GROUND RAISED BY THE ASSESSEE WHICH HAS NOT BEEN CONSIDERED BY HIM. NEEDLESS TO A DD ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT THE APPEAL BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14.07.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 14.07.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S.LINC PEN & PLASTICS LIMITED, C/O S.L.KOCHAR, AD VOCATE, 86, CANNING STREET, KOLKATA-700001. 2 A.C.I.T., CENTRAL CIRCLE-VII, KOLKATA 3 . CIT(A)-CENTRAL-I, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002-03 11