JT. CIT 8(3), V. SULZER INDIA LTD.,

MA 135/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9115 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 01-06-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 28-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR
• Assessee Lawyers: S E DASTUR SHRI NIRAJ SHETH
• Keywords: Business income; Depreciation; Principle of natural justice; Question of law; Difference of opinion; Capital receipt
• Section: 43B; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, E, SPECIAL BENCH BEFORE S/SHRI D. MANMOHAN, V.P., DINESH KUMAR AGARWAL, JM AND P.M. JAGTAP. AM. M.A. NO. 135/MUM/2011 ARISING OUT OF ITA NO. 2944 & 2871/MUM/2007 (ASSESSMENT YEAR 2003-04) DY. COMMISSIONER OF INCOME TAX 8(3), 2204, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. M/S SULZER INDIA LIMITED, SULZER HOUSE, BANER ROAD, AUNDH, PUNE 411 007. PAN: AAACS7876U APPLICANT V/S RESPONDENT DATE OF HEARING : 20- 7-2012 DATE OF PRONOUNCEMENT : 03-8-2012 APPLICANT BY : SHRI B. JAYAKUMAR RESPONDENT BY : SHRI S.E. DAST UR SHRI NIRAJ SHETH O R D E R PER DINESH KUMAR AGARWAL (JM) THIS MISC. APPLICATION FILED BY THE REVENUE IS DIRE CTED AGAINST THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 2944 AND 28 71/MUM/2007 FOR THE A.Y. 2003-04 DTD. 10-11-2010 REPORTED IN (2010) 6 I TR (TRIB) 604 (MUMBAI) [SB]. 2. IN THE MISC. APPLICATION DTD. 28-2-2011 IT HAS B EEN STATED BY THE REVENUE AS UNDER:- THE HONBLE E BENCH SPECIAL BENCH OF THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI HAS PASSED A COMMON ORDER IN THE A BOVE MENTIONED CASE ON 10-11-2010 IN ASSESSEES APPEAL BEING ITA N O. 2944/MUM/2007 & REVENUES APPEAL BEING ITA NO. 2871/MUM/2007 FOR A. Y. 2003-04. ON PERUSAL OF THE SAME, IT IS FOUND THAT THE SAID ORDE R IS LIABLE TO BE RECTIFIED U/S 252(2) OF THE INCOME TAX ACT, 1961 AS IT SUFFER S FROM A LARGE NUMBER OF MISTAKES AS FOLLOWS; MA 135/MUM/2011 2 2. IT IS EVIDENT FROM THE ORDER DATED 10-11-2010 OF THE HONBLE SPECIAL BENCH THAT THE PRESIDENT HAS CONSTITUTED THE SPECIA L BENCH TO HEAR AND DECIDE THE FOLLOWING QUESTION IN ACCORDANCE WITH LA W; WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE REMISSION OF DEFERRED SALES TAX LIABILITY IS CHARGEABLE TO TA X AS BUSINESS INCOME OF THE ASSESSEE U/S 41(1) BEING REMISSION OF TRADIN G LIABILITY OR THE SAME IS EXEMPT FROM TAX AS CAPITAL RECEIPT BEING RE MISSION OF LOAN LIABILITY. 2.1 IT WAS SUGGESTED BY THE LEARNED SR. COUNSEL FO R THE ASSESSEE THAT THE QUESTION SHOULD BE REDRAFTED TO READ AS FOLLOWS:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS.4,14,87,985/- HAS RIGHTLY BEEN CHARGED TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961? 2.2 THE HONBLE SPECIAL BENCH HAS STATED THAT IT F INDS FORCE IN THE SUBMISSIONS OF THE LEARNED SR. COUNSEL THAT THE QUE STION NEEDS TO BE RE- DRAFTED BECAUSE THE PRESENT QUESTION BEFORE THE HON BLE SPECIAL BENCH STANDS WITH THE PRESUMPTION THAT IT IS A CASE OF RE MISSION AND THE LEARNED SR. COUNSEL HAS STRESSED THAT MOST OF HIS ARGUMENTS WILL BE ON THE FACTS OF THE CASE THAT NO REMISSION AT ALL IS INVOLVED AND C ONSEQUENTLY THERE IS NO BENEFIT ENVISAGED BY SECTION 41(1)(A) OF THE ACT. T HE HONBLE SPECIAL BENCH HAS ALSO NOTED THAT THE LEARNED CIT(DR) HAS STATED THAT THE QUESTION REFERRED TO THE SPECIAL BENCH, WHICH IS BORNE OUT F ROM THE RECORDS, MAY BE DECIDED WITHOUT ANY CHANGE. THE HONBLE SPECIAL BEN CH HAS, HOWEVER, NOT NOTED THE REASONS GIVEN BY THE CIT (DR) FOR HIS SUB MISSIONS AND HAS ACCORDINGLY NOT DEALT WITH THE OBJECTIONS. SURPRISI NGLY, IN THE ORDER, THE HONBLE SPECIAL BENCH HAS STATED THAT INSTEAD OF TH E ORIGINAL QUESTION OF LAW, THE FOLLOWING QUESTION SHOULD BE CONSIDERED BY THE SPECIAL BENCH; WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE SUM OF RS.4,14,87,985/- BEING THE DIFFEREN CE BETWEEN THE PAYMENT OF NET PRESENT VALUE OF RS.3,37,13,393/- AG AINST THE FUTURE VALUE OF RS.3,37,13,393/- AGAINST THE FUTURE LIABIL ITY OF RS.7,52,O1,378/- HAS RIGHTLY BEEN CHARGED TO TAX UN DER SECTION 41(1) OF THE INCOME TAX ACT, 1961? 2.3 THE ACTION OF THE SPECIAL BENCH OF CONSIDERING A TOTALLY NEW QUESTION IS NOT AS PER LAW SINCE IT WAS CONSTITUTED AND MANDATED TO HEAR AND DECIDE, THE QUESTION REFERRED TO IT BY THE HON BLE PRESIDENT. THE SPECIAL BENCH IS A CREATION OF THE PRESIDENT AND IT S POWERS ARE LIMITED TO DECIDING THE QUESTION REFERRED TO IT BY THE HONBLE PRESIDENT. THE SPECIAL BENCH CANNOT USURP THE POWER OF FRAMING AND DECIDIN G THE QUESTION, WHICH POWER IS ONLY WITH THE PRESIDENT U/S.255(3) O F THE INCOME TAX ACT, 1961. A LOOK AT THE CHANGED QUESTION ALSO SHOWS TH AT THE ENTIRE FACTUAL MATRIX AS FOUND BY THE LOWER AUTHORITIES I.E. ASSES SING OFFICER, CIT (APPEALS) AND DIVISION BENCH OF THE ITAT (WHICH HAD PROPOSED THE QUESTION TO THE PRESIDENT), AND THE FACTS, AS EXAMI NED BY THE HONBLE PRESIDENT, ON THE BASIS OF WHICH THE QUESTION WAS R EFERRED TO THE SPECIAL BENCH HAS BEEN CHANGED. IT IS OUTSIDE THE SCOPE OF THE SPECIAL BENCH TO MA 135/MUM/2011 3 FRAME A QUESTION FOR DECISION ON ITS OWN. THE SPECI AL BENCH HAS COMMITTED A MISTAKE WHICH IS APPARENT FROM THE RECORDS. 2.4 FURTHER, THE ORIGINAL QUESTION REFERRED BY THE HONBLE PRESIDENT CONTAINED A FINDING OF FACT THAT THERE WAS BOTH A R EMISSION OF DEFERRED SALES TAX LIABILITY AS WELL AS BENEFIT WHICH HAD ACCRUED TO THE ASSESSEE. THE ONLY ISSUE WHICH WAS TO BE DECIDED BY THE HONBLE SPECIA L BENCH WAS, WHETHER SUCH REMISSION WAS CHARGEABLE TO TAX AS BUSINESS IN COME OF THE ASSESSEE U/S.41(1) BEING REMISSION OF TRADING LIABILITY OR T HE SAME WAS EXEMPT FROM TAX AS CAPITAL RECEIPT BEING REMISSION OF LOAN LIAB ILITY AS CLAIMED BY THE ASSESSEE BEFORE ALL THE LOWER AUTHORITIES. THE QUES TION WAS TO BE ANSWERED IN THE ABOVE FACTUAL MATRIX. THE WHOLE QUESTION AND ISSUE HAS BEEN CHANGED BY THE SPECIAL BENCH, WHICH IT IS NOT EMPOW ERED TO DO UNDER THE PROVISIONS OF THE ACT. THIS IS A MISTAKE APPARENT F ROM RECORDS. THE HONBLE SPECIAL BENCH SHOULD, THEREFORE, RECALL ITS ORDER A ND PASS FRESH ORDERS ON THE QUESTION REFERRED TO IT BY THE HONBLE PRESIDEN T. 2.5 THE HONBLE SPECIAL BENCH HAS ALSO COMMITTED A MISTAKE IN NOT INCORPORATING THE SUBMISSIONS OF THE CIT (DR) ON TH E ABOVE ISSUE OBJECTING TO THE CHANGE OF QUESTION REQUESTED BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE AND IN NOT DEALING WITH SUCH OBJECTIONS. 2.6 FURTHER, EVEN THE CHANGED QUESTION WAS NEVER F ORMULATED IN THE COURSE OF THE HEARING. THE CHANGED QUESTION HAS APP EARED FOR THE FIRST TIME ONLY IN THE ORDER PASSED BY THE HONBLE SPECIA L BENCH. 3. IN PARA 75 OF THE ORDER, IT HAS BEEN HELD BY TH E HONBLE SPECIAL BENCH THAT FROM THE DEFINITION AND EQUATION OF PV A ND FV, IT IS CLEAR THAT THE PRESENT VALUE OF A FUTURE SUM IS THE SAME. THIS CONCEPT OF NPV AND FV AS APPLIED BY THE HONBLE SPECIAL BENCH IN THE CONT EXT OF THE CASE, IS NOT CORRECT IN VIEW OF THE FACTS ON RECORD AS WELL AS T HE ARGUMENTS OF THE LEARNED CIT(DR) WHICH HAVE NOT BEEN CONSIDERED AT A LL BY THE HONBLE SPECIAL BENCH ALTHOUGH THE SAME HAVE BEEN INCORPORA TED IN THE ORDER. IF THE ARGUMENTS OF THE CIT (DR) ARE CONSIDERED, IT WI LL BE CLEAR THAT THE FINDING OF THE HONBLE SPECIAL BENCH IS NOT CORRECT . 4. IN PARA 76 OF THE ORDER, THE HONBLE SPECIAL BE NCH HAS STATED AS UNDER; ... THE ASSESSEE HAD COLLECTED TOTAL AMOUNT OF RS. 7,52,01,378/- TOWARDS SALES TAX DURING THE YEAR 1989-90 TO 2001-0 2. IT WAS TREATED AS A LOAN LIABILITY PAYABLE AFTER 12 YEARS IN SIX A NNUAL / EQUAL INSTALLMENTS AND THUS, THE ASSESSEE TREATED THE SAI D LIABILITY AS UNSECURED LOANS IN ITS BOOKS OF ACCOUNT. THE ABOVE STATEMENT OF THE HONBLE SPECIAL BENCH IS FACTUALLY INCORRECT SINCE IT IS AN ADMITTED POSITION OF THE ASSESSEE TH AT IT HAD APPLIED FOR CONVERSION OF DEFERRED SALES TAX LIABILITY INTO INT EREST-FREE LOAN LIABILITY ONLY IN THE YEAR 2002. IF THE APPLICATION FOR CONVERSION ITSELF WAS MADE IN THE YEAR 2002, THE QUESTION OF TREATING THE AMOUNT AS L OAN LIABILITY IN THE BOOKS BY THE ASSESSEE DOES NOT ARISE. THE HONBLE BENCH H AS ALSO NOT CONSIDERED THE ARGUMENTS OF THE LEARNED CIT(DR) ON THIS ISSUE. MA 135/MUM/2011 4 5. IN PARA 77 OF THE ORDER, THE HONBLE SPECIAL BE NCH HAS HELD AS UNDER; THE REVENUE HAS PLACED NO MATERIAL ON RECORD TO SH OW THAT THE PRESENT VALUE (NPV) OF A FUTURE SUM IS NOT THE SAME OR IN THE PROCESS OF CALCULATION OF PRESENT VALUE OF A FUTURE SUM THE RE IS ANY CONVERSION GAIN TO THE ASSESSEE. IT IS ALSO NOT THE CASE OF TH E REVENUE THAT THERE IS NO SUCH CONVERSION PROVIDED UNDER THE BST ACT, OR T HE TABLE PROVIDED FOR DETERMINATION OF NPV IS NOT APPLICABLE IN THE C ASE OF THE ASSESSEE. IN THE ABSENCE THEREOF IT IS NOT POSSIBLE FOR US TO ACCEPT THE CONTENTION OF THE LD. DR THAT THERE WAS A REMISSION OR CESSATI ON OF THE TRADING LIABILITY. THE ABOVE POSITION TAKEN BY THE HONBLE BENCH IS NO T CORRECT IN VIEW OF THE ELABORATE ARGUMENTS AND SUBMISSIONS MADE BY THE LEA RNED CIT(DR) WHICH HAVE BEEN INCORPORATED IN PARA 43 TO 45 OF THE ORDE R ITSELF. SINCE THE MATERIAL AND ARGUMENTS WERE ALREADY ON RECORD, THE HONBLE SPECIAL BENCH OUGHT TO HAVE CONSIDERED IT, BUT IT FAILED TO DO SO . IT HAS ALSO ERRED IN IGNORING THE MATERIAL WHICH IS AVAILABLE ON RECORD. THE HONBLE SPECIAL BENCH HAS, THEREFORE, COMMITTED A MISTAKE IN HOLDIN G THAT THE REVENUE HAS PLACED NO MATERIAL TO SHOW THAT THE NET PRESENT VAL UE (NPV) OF A FUTURE SUM IS NOT THE SAME OR IN THE PROCESS OF CALCULATION OF PRESENT VALUE OF A FUTURE SUM THERE IS A CONVERSION GAIN TO THE ASSESSEE, WHI CH IS A MISTAKE APPARENT FROM THE RECORDS. 6. IN PARA 104 OF THE ORDER, THE HONBIE SPECIAL BE NCH HAS HELD AS UNDER; ... TO INVOKE THE PROVISIONS OF SECTION 41(1) OF T HE ACT, THE FIRST REQUIREMENT IS AS TO WHETHER IN THE ASSESSMENT OF T HE ASSESSEE, AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN RESPECT OF LOSS, EXPENDITURE OR THE TRADING LIABILITY INCURRED BY THE ASSESSEE. ... IN THE SAID PARA, IT HAS BEEN MENTIONED THAT THE BE NEFIT OF DEDUCTION WAS ALLOWED FOR THE PURPOSE OF SECTION 43B OF THE ACT O NLY AND NOT UNDER ANY OTHER PROVISIONS OF THE ACT. HOWEVER, THE HONBLE S PECIAL BENCH HAS GONE TO HOLD THAT THE FIRST REQUIREMENT OF SECTION 41(1) HA S NOT BEEN FULFILLED IN THE FACTS OF THE PRESENT CASE. SECTION 43B IS A PART OF THE ACT ITSELF. ONCE THE HONBLE SPECIAL BENCH HAS HELD THAT THE BENEFIT OF DEDUCTION HAS BEEN ALLOWED U/S.43B, THE ONLY FINDING OF THE BENCH, AS PER ITS OWN ADMISSION, AND AS PER SETTLED LAW, SHOULD HAVE BEEN THAT THE F IRST REQUIREMENT OF SECTION 41(1) HAS BEEN FULFILLED. THE FINDING OF TH E SPECIAL BENCH ON THIS ISSUE CONSTITUTES MISTAKE APPARENT FROM THE RECORDS . 7. IN PARA 105 OF THE ORDER, THE HONBLE SPECIAL B ENCH HAS GIVEN ITS FINDING AS UNDER; ... IN THE CASE BEFORE US, WE FIND THAT THE SALES TAX COLLECTED BY THE ASSESSEE DURING THE YEARS 1989-1990 TO 2002-2002 AM OUNTING TO RS.7,52,01,378/- WAS TREATED BY THE STATE GOVERNMEN T AS A LOAN LIABILITY PAYABLE AFTER 12 YEARS IN SIX ANNUAL / EQ UAL INSTALLMENTS. IT IS RESPECTFULLY SUBMITTED THAT THIS FINDING OF T HE HONBLE SPECIAL BENCH IS INCORRECT ONE IN VIEW OF THE ADMITTED POSITION OF T HE ASSESSEE THAT IT WAS MA 135/MUM/2011 5 ONLY THE ASSESSEE COMPANY WHO HAD ITSELF CONVERTED ITS TRADING LIABILITY INTO A LOAN LIABILITY. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS NOT THE STATE GOVERNMENT WHICH HAS TREATED THE SALES TAX CO LLECTED BY THE ASSESSEE AMOUNTING TO RS.7,52,01,378/- OR ANY OTHER SUM AS A LOAN LIABILITY AS THERE IS NO DOCUMENTARY EVIDENCE TO TH AT EFFECT ON RECORD. FURTHER, IF THE STATE GOVERNMENT HAD TREATED THE SA LES TAX COLLECTED AS A LOAN LIABILITY, WHAT WAS THE NECESSITY OF THE ASSES SEE FOR MAKING AN APPLICATION OF TREATING THE DEFERRED SALES TAX LIAB ILITY INTO LOAN IN THE YEAR 2002. 8. IT IS RESPECTFULLY SUBMITTED THAT THE DISCUSSIO N IN PARA 108 OF THE ORDER RELATES TO THE PROVISION OF SECTION 63 OF THE INDIAN CONTRACTS ACT, WHICH WAS NEVER A SUBJECT MATTER OF DISCUSSION BEFO RE THE HONBLE TRIBUNAL. SINCE THIS PROVISION WAS NOT A SUBJECT-MA TTER OF ANY DISCUSSION OR ARGUMENT BY THE APPELLANT OR THE RESPONDENT IN T HE ABOVE MATTER AND SINCE THE SAID PROVISIONS HAS BEEN INVOKED TO SUPPO RT THE CASE OF THE ASSESSEE, PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE DEPARTMENT OUGHT TO HAVE BEEN GIVEN AN OPPORTUNITY TO PRESENT ITS CA SE ON THE SAID PROVISION. EVEN THE FINDING OF THE HONBLE SPECIAL BENCH ON TH IS ISSUE SHOWS THAT IN THE CASE OF THE ASSESSEE, REMISSION DID TAKE PLACE. 9. IN PARA 107 OF THE ORDER, THE HONBLE BENCH HAS RIGHTLY MENTIONED THAT THE LD.CIT(DR) HAS PUT GREAT EMPHASIS ON THE N OTES TO ACCOUNTS WHICH HAVE BEEN REPRODUCED IN PARA 43 AT PAGE 43 OF THE O RDER WHEREIN THE ASSESSEE ITSELF HAS USED THE EXPRESSION REMISSION . HOWEVER, IN PARA 105 AT PAGE 90 OF THE ORDER, THE HONBLE ITAT HAS CONCLUDE D AS UNDER; ... FURTHER THERE IS NO IOTA OF EVIDENCE TO SHOW T HAT THERE HAS BEEN ANY REMISSION OR CESSATION OF LIABILITY BY THE STAT E GOVERNMENT. THUS, ONE OF THE REQUIREMENTS SPELT OUT FOR THE APPLICABI LITY OF SECTION 41(1)(A) HAS NOT BEEN FULFILLED IN THE FACTS OF THE PRESENT CASE. IT IS MOST RESPECTFULLY SUBMITTED THAT THIS FINDING OF THE HONBLE BENCH IS SELF- CONTRADICTORY AND PERVERSE. AS DISCUSSED ABOV E, THE EVIDENCE HAS ALREADY BEEN FURNISHED BY THE REVENUE WHICH HAS BEE N RIGHTLY MENTIONED BY THE HONBLE BENCH IN PARA 43 OF THE ORDER. FURTH ER, THE CIT (DR) HAS ALSO MADE ELABORATE ARGUMENTS TO SHOW THAT BOTH REM ISSION AND CESSATION HAD TAKEN PLACE AND, WHICH HAS BEEN INCORPORATED IN PARAS 43 TO 46 OF THE ORDER. BUT THE HONBLE SPECIAL BENCH HAS FAILED TO CONSIDER THE ARGUMENTS AND EVIDENCES AT ALL. 10. THE HONBLE SPECIAL BENCH HAS HELD THAT THE AS SESSEE CAN BE DEEMED TO HAVE CONVERTED ITS DEFERRED SALES TAX LIA BILITY INTO A LOAN LIABILITY. THIS IS AGAINST THE FACTS AND MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS ITSELF ADMITTED THAT IT HAD APPLIED FOR CONVERSION OF DEFERRED SALES TAX LIABILITY INTO INTEREST-FREE LOAN LIABILITY IN 2002 . IT HAS ALSO ADMITTED THAT IT HAS NOT COMPLIED WITH ITS PROCEDURES AND PROVISIONS REQUIRED FOR SUCH CONVERSION. IT WAS ALSO AN ADMITTED POSITION OF THE ASSESSEE THAT NO CONVERSION OF DEFERRED SALES TAX LIABILITY INTO LOA N HAD TAKEN PLACE AND SICOM HAD NOT SANCTIONED LOAN EQUIVALENT TO THE AMO UNT OF DEFERRED SALES TAX LIABILITY. FURTHER, THE PREPAYMENT OF THE DEFER RED SALES TAX LIABILITY AS PER THE AMENDED 4TH PROVISO TO SECTION 38 ITSELF PR OVES THAT THE PREPAYMENT WAS OF DEFERRED SALES TAX LIABILITY AND NOT OF ANY LOAN LIABILITY. THE ISSUE WAS DISCUSSED IN DETAIL IN THE COURSE OF THE HEARING. HOWEVER, MA 135/MUM/2011 6 THE SPECIAL BENCH HAS FAILED TO CONSIDER THE ARGUME NTS AND SUBMISSIONS ON RECORD. THEY HAVE ALSO NOT GIVEN ANY REASON AS T O WHY THE SUBMISSIONS ARE NOT WORTH EVEN CONSIDERING. ALL EVIDENCES ON RE CORD UNEQUIVOCALLY SHOW THAT THE ASSESSEE HAD NEVER CONVERTED ITS DEFERRED SALES TAX LIABILITY INTO A LOAN LIABILITY. IT ALSO PREPAID ONLY ITS DEFERRED S ALES TAX LIABILITY AND ACCEPTED THE PREPAYMENT OF ONLY THE DEFERRED SALES TAX LIABILITY AND NOT LOAN LIABILITY. THE HONBLE SPECIAL BENCH ALSO FAIL ED TO TAKE NOTICE OF THE CERTIFICATE ISSUED BY THE SALES TAX AUTHORITIES, WH ICH IS ON RECORD, AND WAS DISCUSSED IN DETAIL IN THE COURSE OF THE ARGUMENTS, WHICH UNEQUIVOCALLY EVIDENCES THE FACT THAT WHAT WAS PREPAID WAS DEFERR ED SALES TAX LIABILITY AND NOT LOAN LIABILITY. HOWEVER, THE HONBLE BENCH HAS ERRONEOUSLY APPLIED THE DEEMING PROVISION AS REGARDS THE ASSESSEES UNILATERAL ACT OF TREATING ITS TRADING LIABILITY INTO A LOAN LIABILITY WHEREAS THERE IS NO SUCH DEEMING PROVISION IN LAW. THE HONBLE SPECIAL BENCH HAS ALSO COMPLETELY FAILED TO CONSIDER THE RATIO OF THE DECISION RELIED UPON AND DISCUSSED BY THE CIT (DR) IN THE CASE OF SOUTHERN TECHNOLOGIES LIMITED VS. JT.CIT (2010) 320 ITR 577 (SC). THE HONBLE SPECIAL BENCH HAS ALSO COMPLETELY FAILED TO CONSIDER THE ARGUMENTS OF THE CIT (DR) ON THIS ISSUE. 11. THE HONBLE SPECIAL BENCH HAS ERRONEOUSLY HELD THAT NPV IS EQUAL TO FUTURE VALUE WITHOUT ASSIGNING ANY REASON FOR THE S AME AND WITHOUT CONSIDERING THE DETAILED ARGUMENTS OF THE LEARNED C IT (DR) AT ALL ON THIS ISSUE. IT HAS ALSO APPLIED THE CONCEPT OF NPV AND F V ERRONEOUSLY WITHOUT CONSIDERING THE ARGUMENTS OF THE CIT(DR). IT HAS AL SO FAILED TO TAKE NOTE OF THE FACT THAT NPV AND FV ARE RELATED TO THE ASSETS OF THE STATE GOVERNMENT LYING WITH THE ASSESSEE. AS FAR AS THE ASSESSEE IS CONCERNED, ITS LIABILITY, AS PER ITS OWN ADMISSION AND AS REFLECTED IN ITS BOOKS OF ACCOUNTS, WAS RS.7.52 CRORE AND NOT RS.3.37 CRORE. THE AMOUNT OF RS.3.37 CRORE WAS THE NPV I.E. THE PRESENT WORTH OF THE ASSETS OF THE STA TE GOVERNMENT AS PER ITS OWN CALCULATION, WHICH THE STATE GOVERNMENT WAS TO RECEIVE IN THE FUTURE AS PER THE DEFERRAL SCHEME. THIS IMPORTANT FACT, WH ICH IS AVAILABLE ON RECORDS, HAS BEEN OMITTED TO BE CONSIDERED BY THE H ONBLE SPECIAL BENCH. THE DETAILED SUBMISSIONS OF THE CIT (DR) ON THIS IS SUE HAVE NOT BEEN CONSIDERED AT ALL BY THE HONBLE SPECIAL BENCH. THE HONBLE SPECIAL BENCH HAS ALSO NOT GIVEN ANY FINDING AS TO HOW AND WHY TH E SUBMISSIONS MADE BY THE CIT (DR) CANNOT BE ACCEPTED AND ARE NOT RELEVAN T. FURTHER, AS STATED EARLIER, THE LIABILITY OF THE ASSESSEE IS ITS CURRE NT / PRESENT LIABILITY AS ADMITTED BY THE ASSESSEE ITSELF IN ITS BOOKS OF ACC OUNTS AND BALANCE SHEET. THIS PRESENT LIABILITY WAS ONLY TO BE DISCHARGED AT DIFFERENT FUTURE DATES AS PER THE PACKAGE OF INCENTIVES FRAMED BY THE STATE GOVERNMENT. THE CIT (DR) HAS RAISED A QUESTION IN HIS SUBMISSIONS, WHET HER, IN ABSENCE OF THE AMENDMENT BROUGHT IN THE SALES TAX ACT, THE ASSESSE E COULD HAVE PREPAID ITS LIABILITY OF RS.7.52 CRORE BY PAYING A MERE RS. 3.37 CRORE. THE HONBLE BENCH HAS NOT ONLY NOT ANSWERED THIS QUESTION, IT H AS COMPLETELY OMITTED TO EVEN CONSIDER IT WHILE PASSING THE ORDER. FURTHE R, PROVISIONS OF SALES TAX ACT ITSELF SHOW THAT THE NPV IS DIFFERENT FROM THE ACTUAL LIABILITY OF THE ASSESSEE. THIS WAS BROUGHT TO THE NOTICE OF THE SPE CIAL BENCH BUT THE SPECIAL BENCH HAS COMPLETELY IGNORED THE SUBMISSION AND NOT CONSIDERED IT. THE NPV OF THE ASSETS OF THE STATE GOVERNMENT I S NOT THE SAME AS THE PRESENT LIABILITY OF THE ASSESSEE, WHICH IS ELEMENT ARY ECONOMICS. MA 135/MUM/2011 7 12. THE HONBLE SPECIAL BENCH HAS INCORPORATED THE SUBMISSIONS MADE BY THE CIT (DR) IN ITS ORDER. HOWEVER, PERUSAL OF T HE ORDER MAKES IT CLEAR THAT HIS SUBMISSIONS HAVE BEEN TOTALLY OMITTED TO B E CONSIDERED BY THE BENCH. NON-CONSIDERATION OF THE ARGUMENTS OF THE CI T (DR) MAKES THE ORDER LIABLE TO BE RECTIFIED U/S.254(2) OF THE INCO ME TAX ACT, 1961. IN VIEW OF THESE SUBMISSIONS, IT IS RESPECTFULLY SU BMITTED THAT THE HONBLE ITATS ORDER DATED 10.11.2010 REQUIRES TO BE RECONS IDERED. PRAYER - IN VIEW OF THE AFORESAID FACTS, IT IS HUMBLY PRAYED THAT THE HONBLE ITAT MAY RECALL ITS ORDER DATED 10.11.2010 IN ASSESSEES APPEAL BEING ITA NO.2944/MUM/2007 & REVENUES APPEAL BEING ITA NO.28 71/MUM/2007 FOR A.Y 2003-04 AND RECTIFY THE SAME AFTER TAKING I NTO ACCOUNT THE AFOREMENTIONED FACTS. 3. AT THE TIME OF HEARING THE LD. D.R. WHILE REITER ATING THE SAME PLEA STATED IN THE MISC. APPLICATION FURTHER SUBMITS THA T THE HONBLE PRESIDENT, ITAT HAD CONSTITUTED THE SPECIAL BENCH TO HEAR AND DECIDE THE FOLLOWING QUESTION IN ACCORDANCE WITH LAW:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE REMISSION OF DEFERRED SALES TAX LIABILITY IS CHARGEABLE TO TAX A S BUSINESS INCOME OF THE ASSESSEE U/S 41(1) BEING REMISSION OF TRADING LIABI LITY OR THE SAME IS EXEMPT FROM TAX AS CAPITAL RECEIPT BEING REMISSION OF LOAN LIABILITY. DURING THE COURSE OF HEARING IT WAS SUGGESTED BY TH E LD. SR. COUNSEL FOR THE ASSESSEE THAT THE QUESTION SHOULD BE RE-DRAFTED AS FOLLOWS:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- HAS RIGHTLY BEEN CHARGED TO TAX U NDER SECTION 41(1) OF THE INCOME TAX ACT, 1961. HOWEVER, THE SPECIAL BENCH OF THE TRIBUNAL AFTER CO NSIDERING THE ARGUMENTS OF BOTH THE SIDES, SURPRISINGLY, RE-DRAFT ED THE QUESTION AS UNDER:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- BEING THE DIFFERENCE BETWEEN THE PAYMENT OF NET PRESENT VALUE OF RS. 3,37,13,393/- AGAINST THE FUTURE VALUE OF RS. 3,37,13,393/- AGAINST THE FUTURE LIABILITY OF RS. 7,52,01,378/- H AS RIGHTLY BEEN CHARGED TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961 . MA 135/MUM/2011 8 HE FURTHER SUBMITS THAT THE ACTION OF THE SPECIAL B ENCH TO CONSIDER A TOTALLY NEW QUESTION IS NOT AS PER LAW SINCE IT WAS CONSTITUTED AND MANDATED TO HEAR AND DECIDE THE QUESTION REFERRED T O IT BY THE HONBLE PRESIDENT, ITAT. HE FURTHER SUBMITS THAT THE POWERS OF THE SPECIAL BENCH ARE LIMITED TO DECIDE THE QUESTION REFERRED TO IT B Y THE HONBLE PRESIDENT, ITAT. THE SPECIAL BENCH CANNOT USURP THE POWER OF FRAMING AND DECIDING THE QUESTION, WHICH POWER IS ONLY WITH THE PRESIDEN T U/S 255(3) OF THE ACT. HE FURTHER SUBMITS THAT A LOOK AT THE CHANGED QUEST ION ALSO SHOWS THAT THE ENTIRE FACTUAL MATRIX AS FOUND BY THE LOWER AUTHORI TIES I.E. THE A.O. AND CIT(A) AND DIVISION BENCH OF THE TRIBUNAL, WHICH HA D PROPOSED THE QUESTION TO THE HONBLE PRESIDENT AND THE FACTS AS EXAMINED BY THE HONBLE PRESIDENT ON THE BASIS OF WHICH THE QUESTION WAS RE FERRED TO THE SPECIAL BENCH HAS BEEN CHANGED. IT IS OUTSIDE THE SCOPE OF THE SPECIAL BENCH TO FRAME A QUESTION FOR DECISION ON ITS OWN. THUS THE SPECIAL BENCH HAS COMMITTED A MISTAKE WHICH IS APPARENT FROM THE RECO RD. IN SUPPORT, THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE SPE CIAL BENCH OF THE TRIBUNAL IN DY. COMMISSIONER OF INCOME TAX VS. PADA M PRAKASH (HUF) (2007) 104 ITD 1 (DELHI [SB] AND IN DY. COMMISSIONE R OF INCOME TAX VS. OMAN INTERNATIONAL BANK SAOG (2006) 100 ITD 285 (MU M)[SB] TO CONTEND THAT THE OPINION OF THE THIRD MEMBER IS EQUIVALENT TO THE DECISION OF THE SPECIAL BENCH HAVING A SAME FORCE OF BINDING NATURE . HE FURTHER SUBMITS THAT IN THE CASE OF DYNAVISION LTD. VS. ITAT (2008) 171 TAXMAN 486(MAD.), IT HAS BEEN HELD THAT THE THIRD MEMBER MUST CONFINE HIMSELF TO ORDER OF REFERENCE; HE HAS NO RIGHT TO GO BEYOND THE SCOPE O F REFERENCE IN A MATTER OF DIFFERENCE OF OPINION BETWEEN MEMBERS OF BENCH AND HAS NO RIGHT TO MA 135/MUM/2011 9 ENLARGE, RESTRICT, MODIFY AND/OR FORMULATE ANY QUES TION OF LAW ON HIS OWN ON DIFFERENCE OF OPINION REFERRED TO BY MEMBERS OF TRIBUNAL. IN THE LIGHT OF THE ABOVE DECISIONS, THE LD. D.R. SUBMITS THAT THE SPECIAL BENCH HAS COMMITTED A MISTAKE IN FRAMING A QUESTION ON ITS OW N, THEREFORE, THE ORDER PASSED BY THE SPECIAL BENCH OF ITAT BE RECTIFIED. 4. WITH REGARD TO OTHER ISSUES RAISED IN THE MISC. APPLICATION (SUPRA), THE LD. D.R. SUBMITS THAT THE OBJECTIONS HAVE BEEN ELABORATELY DISCUSSED IN THE MISC. APPLICATION FILED BY THE REVENUE AND THE SAME BE RECTIFIED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 254(2) OF THE ACT AND FOR THIS PROPOSITION, THE RELIANCE WAS ALSO PLACED ON THE FO LLOWING DECISIONS:- (I) LACHMAN DASS BHATIA HINGWALA (P.) LTD. VS. ASSISTAN T COMMISSIONER OF INCOME TAX (2011) 196 TAXMAN 563 ( DEL)[FB] : (2011) 330 ITR 243 (DEL) [FB], (II) HONDA SIEL POWER PRODUCTS LTD. VS. CIT (2007) 165 TAXMAN 307[SC] : (2007) 295 ITR 466 (SC), AND (III) CIT VS. RAMESH CHAND MODI (2001) 116 TAXMAN 123 (RA J.) : (2001) 249 ITR 323 (RAJ.) HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE SPECIAL BENCH OF THE TRIBUNAL BE SUITABLY RECTIFIED. 5. ON THE OTHER HAND, THE LD. SR. COUNSEL FOR THE A SSESSEE, AT THE OUTSET, SUBMITS THAT THERE IS NO MISTAKE IN THE ORD ER OF THE SPECIAL BENCH OF THE TRIBUNAL. 6. WITH REGARD TO THE ISSUE REGARDING FORMULATION O F QUESTION BY THE SPECIAL BENCH OF THE TRIBUNAL, THE LD. SR. COUNSEL FOR THE ASSESSEE REFERS TO SECTION 255(3) OF THE ACT TO SUBMIT THAT U/S 255(3) IT HAS BEEN INTER ALIA PROVIDED THAT THE PRESIDENT MAY, FOR DISPOSAL OF A NY PARTICULAR CASE, MA 135/MUM/2011 10 CONSTITUTE A SPECIAL BENCH CONSISTING OF THREE OR M ORE MEMBERS, ONE OF WHOM SHALL NECESSARILY BE A JUDICIAL MEMBER AND ONE ACCOUNTANT MEMBER. AT THIS STAGE THE LD. SR. COUNSEL FOR THE ASSESSEE REFERS THE KEY WORDS PROVIDED IN THE SAID SECTION I.E. DISPOSAL O F ANY PARTICULAR CASE AND SUBMITS THAT WHILE CONSTITUTING THE SPECIAL BENCH, THE PRESIDENT HAS POWER TO MODIFY THE QUESTION IF THE QUESTION DOES NOT COV ER THE ENTIRE ASPECT OF THE MATTER. HE FURTHER SUBMITS THAT DURING THE COU RSE OF HEARING IT HAS BEEN NOTED BY THE SPECIAL BENCH OF THE TRIBUNAL IN PARA 2 OF THE ORDER THAT THE LD. COUNSEL FOR THE ASSESSEE HAS SUGGESTED THAT THE QUESTION SHOULD BE RE-DRAFTED TO READ AS FOLLOWS:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- HAS RIGHTLY BEEN CHARGED TO TAX U NDER SECTION 41(1) OF THE INCOME TAX ACT, 1961. HE FURTHER SUBMITS THAT THE SPECIAL BENCH OF THE TR IBUNAL AFTER HEARING BOTH THE PARTIES CONSIDERED IT FAIR AND REASONABLE THAT THE FOLLOWING QUESTION SHOULD BE RE-DRAFTED TO COVER ALL ASPECT O F THE MATTER TO DECIDE THE ISSUE : WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- BEING THE DIFFERENCE BETWEEN THE PAYMENT OF NET PRESENT VALUE OF RS. 3,37,13,393/- AGAINST THE FUTURE LIABI LITY OF RS. 7,52,01,378/- HAS RIGHTLY BEEN CHARGED TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961. HE FURTHER SUBMITS THAT THE ABOVE QUESTION FRAMED B Y THE SPECIAL BENCH OF THE TRIBUNAL IS ALMOST THE SAME AS RE-DRAFTED BY TH E LD. SR. COUNSEL FOR THE ASSESSEE EXCEPT THE WORKING OF THE SUM OF RS. 4,14, 87,985/- BEING THE DIFFERENCE BETWEEN THE PAYMENT OF NET PRESENT VALUE AGAINST THE FUTURE LIABILITY. HE FURTHER SUBMITS THAT THE QUESTION DRA FTED BY THE SPECIAL BENCH MA 135/MUM/2011 11 OF THE TRIBUNAL IN WHICH THE HONBLE PRESIDENT OF T HE TRIBUNAL WAS ALSO A PARTY DOES NOT REQUIRE FRESH REFERENCE TO THE PRESI DENT OF THE TRIBUNAL. HE FURTHER SUBMITS THAT SINCE THE QUESTION DRAFTED BY THE SPECIAL BENCH OF THE TRIBUNAL IS WITHIN THE FOUR CORNERS OF THE ORIGINAL QUESTION HAVING THE APPLICABILITY OR NON-APPLICABILITY OF THE SAME PROV ISION OF SECTION 41(1) OF THE ACT, THEREFORE, THE PLEA OF THE DEPARTMENT THAT QUESTION FRAMED BY THE SPECIAL BENCH OF THE TRIBUNAL WITHOUT GIVING ANY OP PORTUNITY TO THE PARTIES MUST BE REJECTED AND FOR THIS PROPOSITION THE RELIA NCE WAS ALSO PLACED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N NATIONAL THERMAL POWER VS. INSPECTING ASSISTANT COMMISSIONER (1988) 24 ITD 1 (DEL) [SB] WHEREIN IT HAS BEEN HELD THAT THE ENTIRE APPEAL IS OPEN BEFORE THE SPECIAL BENCH, AND IS NOT CONFINED TO THE QUESTION FRAMED. HE FURTHER SUBMITS THAT IN SAIPEM S.P.A. VS. DCIT (2003) 86 ITD 572 (DELHI) IT HAS BEEN HELD THAT BEFORE A SPECIAL BENCH AND A DIVISION BENCH, IT IS THE HEARING ON THE QUESTION POSED AND THE GROUNDS RAISED, RESPECTIVELY , AND THE ENTIRE ISSUE IS OPEN BEFORE THE BENCH. IN THE LIGHT OF THE ABOVE, T HE LD. SR. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE DECISIONS RELIED ON BY TH E LD. D.R. IN PADAM PRAKASH (HUF) (SUPRA) AND OMAN INTERNATIONAL BANK S AOG (SUPRA) ARE ON DIFFERENT ISSUE I.E. THE OPINION OF THE THIRD MEMBE R IS EQUIVALENT TO THE DECISION OF THE SPECIAL BENCH AND NOT ON THE ISSUE OF FRAMING OF A NEW QUESTION BY THE SPECIAL BENCH AND THE DECISION IN D YNAVISION LTD. (SUPRA) RELIED ON BY THE LD. D.R. IS ON THE POWER OF THE TH IRD MEMBER, THEREFORE, ALL THE THREE DECISIONS RELIED ON BY THE LD. D.R. ARE O N DIFFERENT ISSUE AND NOT ON THE ISSUE BEFORE US AND HENCE NOT APPLICABLE. MA 135/MUM/2011 12 7. WITH REGARD TO THE OTHER ALLEGED FACTUAL MISTAKE S POINTED OUT BY THE LD. D.R., THE LD. SR. COUNSEL FOR THE ASSESSEE AFTE R READING LAST EIGHT LINES OF PARA 77 OF THE TRIBUNAL ORDER (SUPRA) SUBMITS THAT THE TRIBUNAL AFTER CONSIDERING THE ENTIRE MATERIAL INCLUDING THE ARGUM ENTS OF BOTH SIDES, PROVISIONS OF SECTION 41(1) OF THE ACT AND THE PROV ISION OF THE SECTION 38 OF THE BOMBAY SALES TAX ACT, 1959, HAS DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE. ON THE ISSUE THAT THE ARGUMENTS ADVANCED BY THE LD. D.R. IN CERTAIN PARAS HAVE NOT BEEN CONSIDERED BY THE TRIBU NAL, THE LD. SR. COUNSEL FOR THE ASSESSEE SUBMITS THAT FAILURE BY THE TRIBUN AL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON RECORD AND FOR THIS PROPOSITION, THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH C OURT IN CIT VS. RAMESH ELECTRIC & TRADING CO. (1994) 77 TAXMAN 43 ( BOM) : (1993) 203 ITR 497 (BOM). HE, THEREFORE, SUBMITS THAT THERE I S NO MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL AND, THEREFORE, THE MISC. AP PLICATION FILED BY THE REVENUE BE REJECTED WITH COST. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE REVENUE HAS FILED THE MISC. APPLICATION MAINLY ON THREE ISSUES IE. (I) THAT THE SPECIAL BENCH OF THE TRIBUNAL HAS FORMULATED THE NEW QUESTI ON WHICH WAS NOT REFERRED BY THE PRESIDENT OF THE TRIBUNAL WHILE CON STITUTING THE SPECIAL BENCH U/S 255(3) OF THE ACT, (II) THAT THE SPECIAL BENCH OF THE TRIBUNAL HAS NOT CONSIDERED CERTAIN ARGUMENTS OF THE LD. D.R. WH ILE ADJUDICATING THE ISSUE IN PARAS 75,76,77,104,105 AND 107 ETC., AND ( III) THAT THE SPECIAL MA 135/MUM/2011 13 BENCH OF THE TRIBUNAL WITHOUT GIVING ANY OPPORTUNIT Y OF BEING HEARD HAS CONSIDERED THE PROVISIONS OF SECTION 63 OF THE INDI AN CONTRACT ACT. 9. AS REGARDS THE FRAMING OF QUESTION BY THE SPECIA L BENCH OF THE TRIBUNAL, WE FIND THAT THE DIVISION BENCH WHILE HEA RING THE APPEAL OBSERVED THAT THERE ARE DIVERGENCE OF OPINION EXPRE SSED BY TWO BENCHES OF THE TRIBUNAL ON THE SIMILAR ISSUE, THEREFORE, THE D IVISION BENCH HAS CONSIDERED IT NECESSARY TO REFER TO THE HONBLE PRE SIDENT, ITAT TO CONSTITUTE SPECIAL BENCH TO RESOLVE THE ISSUE BY DECIDING THE FOLLOWING QUESTION:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE REMISSION OF DEFERRED SALES TAX LIABILITY IS CHARGEABLE TO TAX A S BUSINESS INCOME OF THE ASSESSEE U/S 41(1) BEING REMISSION OF TRADING LIABI LITY OR THE SAME IS EXEMPT FROM TAX AS CAPITAL RECEIPT BEING REMISSION OF LOAN LIABILITY. 10. THE HONBLE PRESIDENT, ITAT AFTER CONSIDERING T HE PROPOSAL OF THE DIVISION BENCH OF THE TRIBUNAL HAS CONSTITUTED THE SPECIAL BENCH TO HEAR THE APPEAL AND PROPOSED QUESTION :- (EMPHASIS SUPPLIED) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE REMISSION OF DEFERRED SALES TAX LIABILITY IS CHARGEABLE TO TAX A S BUSINESS INCOME OF THE ASSESSEE U/S 41(1) BEING REMISSION OF TRADING LIABI LITY OR THE SAME IS EXEMPT FROM TAX AS CAPITAL RECEIPT BEING REMISSION OF LOAN LIABILITY. THEREAFTER, THE LD. SR. COUNSEL FOR THE ASSESSEE HA S SUGGESTED THAT THE QUESTION SHOULD BE REDRAFTED TO READ AS UNDER:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- HAS RIGHTLY BEEN CHARGED TO TAX U NDER SECTION 41(1) OF THE INCOME TAX ACT, 1961. THE SPECIAL BENCH AFTER HEARING BOTH THE PARTIES AN D KEEPING IN VIEW THE PROVISION OF SECTION 41(1) AND THE RECENT DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN SI GROUP INDIA LTD. VS . ACIT (2010) 192 TAXMAN 91 (BOM) HAS CONSIDERED THAT THE QUESTION FR AMED DOES NOT COVER THE ENTIRE ASPECT OF THE MATTER, THEREFORE, IN ORDE R TO BRING OUT THE ISSUE MA 135/MUM/2011 14 WHICH REQUIRES DECISION MORE CLEARLY WITHIN THE PAR AMETERS OF THE ISSUE INVOLVED HAS FRAMED THE FOLLOWING QUESTION KEEPING IN MIND THE PROVISIONS OF SECTION 255(3) OF THE ACT AS FOLLOWS:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- BEING THE DIFFERENCE BETWEEN THE PAYMENT OF NET PRESENT VALUE OF RS. 3,37,13,393/- AGAINST THE FUTURE LIABI LITY OF RS. 7,52,01,378/- HAS RIGHTLY BEEN CHARGED TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961. 11. HOWEVER, THE REVENUE IN THE MISC. APPLICATION ( SUPRA) HAS STATED THAT THE FOLLOWING QUESTION HAS BEEN CONSIDERED BY THE TRIBUNAL: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE SUM OF RS. 4,14,87,985/- BEING THE DIFFERENCE BETWEEN THE PAYMENT OF NET PRESENT VALUE OF RS. 3,37,13,393/- AGAINST THE FUTURE VALUE OF RS. 3,37,13,393/- AGAINST THE FUTURE LIABILITY OF RS. 7,52,01,378/- HAS RIGHTLY BEEN CHA RGED TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961 . (EMPHASIS SUPPLIED) 12. ON COMPARISON OF THE QUESTION NOTED BY THE REVE NUE AND FRAMED AND ANSWERED BY THE SPECIAL BENCH OF THE TRIBUNAL, WE FIND THAT THERE IS A MISTAKE IN THE WORDINGS OF THE QUESTION MENTIONED B Y THE REVENUE INASMUCH AS THE HIGHLIGHTED PORTION OF THE QUESTION MENTIONED BY THE REVENUE DOES NOT EXIST IN THE QUESTION FRAMED BY TH E SPECIAL BENCH OF THE TRIBUNAL (SUPRA) , THEREFORE, THE PRIME OBJECTION R AISED BY THE REVENUE THAT, SURPRISINGLY, THE QUESTION HAS BEEN FRAMED BY THE SPECIAL BENCH OF THE TRIBUNAL IS CONTRARY TO THE FACTS OF THE PRESEN T CASE. 13. IN NATIONAL THERMAL POWER CO. LTD. VS. CIT (199 8) 229 ITR 383 (SC) IT HAS BEEN OBSERVED AND HELD AS UNDER (PAGE 386 PLACI TUM C & D) :- THE TRIBUNAL HAS FRAMED AS MANY AS FIVE QUESTIONS WHILE MAKING A REFERENCE TO US. SINCE THE TRIBUNAL HAS NOT EXAMIN ED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON THE MERITS, WE DO NOT PROPOSE TO ANSWER THE QUESTIONS RELATING TO THE MERITS OF THOSE CO NTENTIONS. WE REFRAME THE MA 135/MUM/2011 15 QUESTION WHICH ARISES FOR OUR CONSIDERATION IN ORDE R TO BRING OUT THE POINT WHICH REQUIRES DETERMINATION MORE CLEARLY. IT IS AS FOLLOWS : WHERE ON THE FACTS FOUND BY THE AUTHORITIES BELOW A QUESTION OF LAW ARISES (THOUGH NOT RAISED BEFORE THE AUTHORITIES) W HICH BEARS ON THE TAX LIABILITY OF THE ASSESSEE, WHETHER THE TRIBUNAL HAS JURISDICTION TO EXAMINE THE SAME ? 14. IN STEEL AUTHORITY OF INDIA LTD. VS. CIT (2012) 206 TAXMAN 574 (DEL) IT HAS BEEN OBSERVED AND HELD AS UNDER (PAGE 582 PA RA 11) :- SINCE THE SUBSTANTIAL QUESTIONS OF LAW FRAMED DO N OT COVER THIS ASPECT, WE HAVE CONSIDERED IT APPROPRIATE TO FRAME THE FOLLOWI NG SUBSTANTIAL QUESTION OF LAW, IN ADDITION TO THE QUESTIONS ALREADY FRAMED : - 'WHETHER IN THE FACTS OF THE PRESENT CASE WAIVER OF LOAN WOULD RESULT IN REDUCTION OF ACTUAL COST UNDER SECTION 43(1) OF THE INCOME TAX, 1961?' 15. IN NATIONAL THERMAL POWER VS. INSPECTING ASSISTANT COMMISSIONER (1988) 24 ITD 1 (DELHI) [SB] IT HAS BEEN OBSERVED A ND HELD AS UNDER( PARA 4): THE SECOND OBJECTION ABOUT THE FRAMING OF QUESTION TOO IS BASED ON A MISUNDERSTANDING ABOUT THE SCOPE OF THE CONTROVERSY WHICH EXISTED AT THE BACK OF THE BRIEF GROUND OF APPEAL. THE QUESTION RE FERRED FOR THE CONSIDERATION OF THE LARGER BENCH HIGHLIGHTS THE VA RIOUS ASPECTS INCLUDING ITS FACTUAL BACKGROUND ON WHICH THE ASSESSES BASED ITS CLAIM THAT THE SUM OF RS. 1,07,29,848 WAS NOT INCOME AT ALL. THE STAND OF THE REVENUE IS ALSO REFLECTED IN THE QUESTION WHEN REFERENCE IS MADE TO THE ASSESSABILITY OF THE AFOREMENTIONED AMOUNT UNDER THE HEAD 'INCOME FROM O THER SOURCES'. THE QUESTION IS FRAMED IN ORDER TO ENABLE THE POSSIBLE INTERVENERS TO UNDERSTAND THE ISSUE OR THE RANGE OF CONTROVERSY GO ING TO BE CONSIDERED BY THE SPECIAL BENCH, SO THAT THEY COULD ASSIST THE BE NCH BY PLACING THEIR VIEWS ON THE ISSUE CONCERNED. HOWEVER THE ENTIRE AP PEAL IS OPEN BEFORE THE SPECIAL BENCH, AND IS NOT CONFINED TO THE QUESTION FRAMED LIKE A QUESTION OF LAW FRAMED AND REFERRED TO THE HIGH COURT U/S 256 O F THE INCOME-TAX ACT, 1961. WE OVERRULE THE PRELIMINARY OBJECTIONS OF THE REVENUE. 16. IN SAIPEM S.P.A. VS. DY. COMMISSIONER OF INCOME TAX (2003) 86 ITD 572 (DELHI) IT HAS BEEN OBSERVED AND HELD AS UNDER (PARA 8): AT THE OUTSET, A DISTINCTION HAS TO BE DRAWN BETWE EN THE PROCEEDINGS BEFORE A SPECIAL BENCH, A DIVISION BENCH AND LASTLY THOSE BEFORE A THIRD MEMBER PURSUANT TO A REFERENCE UNDER SECTION 255(4) . IN THE FIRST TWO, IT IS THE HEARING ON THE QUESTION POSED AND THE GROUNDS R AISED RESPECTIVELY AND THE ENTIRE ISSUE IS OPEN BEFORE THE BENCH WHEREAS I N THE LAST THE HEARING IS PRIMARILY WITH REFERENCE TO THE VIEWS EXPRESSED BY THE TWO LD. MEMBERS CONSTITUTING THE DIVISION BENCH AND WHERE ADMITTEDL Y THERE HAS BEEN A MA 135/MUM/2011 16 DIFFERENCE OF OPINION AMONG THEM AND THE ROLE OF TH E THIRD MEMBER IS LIMITED TO ACTING AS A REFEREE AS HE IS PRECLUDED IN LAW FROM EXPRESSING A THIRD OPINION AND HE HAS TO AGREE WITH ONE VIEW O R THE OTHER. THIS RESTRAINT IS NOT THERE IN THE HEARINGS BEFORE THE SPECIAL BENCH OR THE DIVISION BENCH WHERE THE TRIBUNAL AFTER HEARING THE PARTIES CAN EXPRESS ITS OPINION TAKING INTO ACCOUNT THE FACTS OF THE CASE A S ALSO THE LEGAL POSITION THERETO. 17. APPLYING THE RATIO OF THE ABOVE DECISIONS TO THE IS SUE INVOLVED IN THE PRESENT CASE WE FIND THAT THE ISSUE BEFORE THE SPEC IAL BENCH WAS AS TO WHETHER THE REMISSION OF DEFERRED SALES TAX LIABILI TY IS CHARGEABLE TO TAX AS BUSINESS INCOME OF THE ASSESSEE U/S 41(1) OF THE AC T OR THE SAME IS EXEMPT FOR TAX AS CAPITAL RECEIPT BEING REMISSION OF LOAN LIABILITY. SINCE IN THE ORIGINAL QUESTION THERE WAS NO MENTION OF THE AMOUN T IN DISPUTE AS POINTED OUT BY THE LD. SR. COUNSEL OF THE ASSESSEE IN THE Q UESTION DRAFTED BY HIM AND TO AVOID FURTHER CONTROVERSY IN THE MATTER AND TO UNDERSTAND THE ISSUE OR THE RANGE OF CONTROVERSY AS A WHOLE, THE SPECIAL BENCH OF THE TRIBUNAL, IN WHICH THE HONBLE PRESIDENT, ITAT WAS ALSO A PAR TY AND ALSO KEEPING IN VIEW THAT IN THE REFERENCE IT HAS BEEN MENTIONED BY THE HONBLE PRESIDENT, ITAT THAT TO HEAR THE APPEAL AND PROPOSED QUESTION , HAS DEEMED IT APPROPRIATE TO ELABORATE THE QUESTION CONTAINING TH E AMOUNT OF ADDITION IN DISPUTE AND BREAK UP THEREOF AS TO WHETHER THE SAME IS CHARGEABLE TO TAX U/S 41(1) OF THE ACT AND ALSO IN ORDER TO BRING OUT THE POINT WHICH REQUIRES DETERMINATION MORE CLEARLY, HAS CONSIDERED TO REFRA ME THE QUESTION COVERING THE ORIGINAL QUESTION IN FULL, WHICH AT TH E COST OF REPETITION IS AS FOLLOWS: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE SUM OF RS.4,14,87,985/- BEING THE DIFFERENCE BETWEE N THE PAYMENT OF NET PRESENT VALUE OF RS.3,37,13,393/- AGAINST THE FUTUR E LIABILITY OF RS.7,52,,01,378/- HAS RIGHTLY BEEN CHARGED TO TAX U NDER SECTION 41(1) OF THE INCOME TAX ACT, 1961. MA 135/MUM/2011 17 IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL IN REFRAMING THE QUESTION WHI CH IS WITHIN THE PARAMETERS OF THE REFERENCE MADE BY THE HONBLE PRE SIDENT, ITAT AND THE ORIGINAL QUESTION. 18. AS REGARDS THE DECISIONS RELIED ON BY THE LD. D .R. IN PADAM PRAKASH (HUF) (SUPRA) AND OMAN INTERNATIONAL BANK SAOG (SUP RA) FOR THE PROPOSITION THAT THE SANCTITY OF THIRD MEMBER DECIS ION AND THE SPECIAL BENCH DECISION IS OF THE SAME NATURE, WE ARE OF THE VIEW THAT THERE IS NO QUARREL ON THE PRINCIPLE LAID DOWN BY THE SPECIAL B ENCH OF THE TRIBUNAL IN THE ABOVE CASES. HOWEVER, THE CASE BEFORE US THE I SSUE IS WITH REGARD TO THE FRAMING OF QUESTION WHICH HAS BEEN FRAMED WITHI N THE PARAMETERS OF THE REFERENCE MADE BY THE HONBLE PRESIDENT, ITAT A ND THE ORIGINAL QUESTION, THEREFORE, THE DECISIONS RELIED ON BY THE LD. D.R. ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 19. AS REGARDS THE DECISION IN DYNAVISION LTD. (SUP RA) IT HAS BEEN HELD AS UNDER (HEADNOTE) : THE ORDER OF REFERENCE TO THE THIRD MEMBER SHALL C ONTAIN THE DIFFERENCE OF OPINION BETWEEN THE MEMBERS OF THE BENCH. THE PRESI DENT OR THE THIRD MEMBER HAS NO RIGHT TO GO BEYOND THE SCOPE OF REFER ENCE AND HE HAS TO CONSIDER ONLY THE DIFFERENCE OF OPINION STATED BY T HE MEMBERS OF THE BENCH. SECTION 255(4) DOES NOT VEST SUCH POWER WITH THE PR ESIDENT OR THE THIRD MEMBER. HE HAS ALSO NO RIGHT TO FORMULATE THE QUEST ION OF HIS OWN. FRAMING THE QUESTION ON HIS OWN GOES BEYOND THE JUR ISDICTION. THE THIRD MEMBER MUST CONFINE HIMSELF TO THE ORDER OF REFEREN CE. THEREFORE, HE HAS NO RIGHT TO ENLARGE, RESTRICT, MODIFY AND/OR FORMUL ATE ANY QUESTION OF LAW ON HIS OWN ON THE DIFFERENCE OF OPINION REFERRED TO BY THE MEMBERS OF THE TRIBUNAL. IN THE INSTANT CASE, THE JUDICIAL MEMBER AND THE ACCOUNTANT MEMBER HAD THE DIFFERENCE OF OPINION AND FORMULATED THE QUESTIONS. [PARA 9] MA 135/MUM/2011 18 20. IN THE CASE BEFORE US, SUCH ISSUE IS NOT INVOLV ED AND AS SUCH, THE DECISION RELIED ON BY THE LD. D.R. IS DISTINGUISHAB LE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 21. IN THIS VIEW OF THE MATTER THE REVENUES OBJECT IONS MENTIONED IN PARAS 2, 2.1, 2.2, 2.3, 2.4, 2.5 AND 2.6 OF THE MIS C. APPLICATION (SUPRA) ARE OUTSIDE THE SCOPE OF PROVISIONS OF SECTION 254(2) O F THE ACT AND HENCE THE SAME ARE, THEREFORE, REJECTED. 22. AS REGARD THE OBJECTION OF THE REVENUE IN PARA 3 OF THE MISC. APPLICATION (SUPRA) THAT IN PARA 75 OF THE TRIBUNAL ORDER, THE SPECIAL BENCH HAS NOT CONSIDERED THE ARGUMENTS OF THE LD. D.R., W E FIND THAT FIRST LINE OF PARA 75 OF THE ORDER STARTS WITH THE SUBMISSION OF THE LD. D.R. AND FOR READY REFERENCE PARA 75 OF THE ORDER IS REPRODUCED AS UNDER: ACCORDING TO BUSINESS DICTIONARY.COM, SUBMITTED BY THE LD. DR, THE DEFINITION OF NPV READS AS UNDER :- DIFFERENCE BETWEEN THE PRESENT VALUE (PV) OF THE F UTURE CASH FLOWS FROM AN INVESTMENT AND THE AMOUNT OF INVESTME NT. PRESENT VALUE OF THE EXPECTED CASH FLOWS IS COMPUTE D BY DISCOUNTING THEM AT THE REQUIRED RATE OF RETURN (AL SO CALLED MINIMUM RATE OF RETURN). FOR EXAMPLE, AN INVESTMENT OF $1,000 TODAY AT 10 PERCENT WILL YIELD $1,100 AT THE END OF THE YEAR; THEREFORE, THE PRESENT VALUE OF $1,100 AT THE DESIRED RATE OF RETURN (10 PERCENT) IS $1,000. THE AMOUNT OF INV ESTMENT ($1,000 IN THIS EXAMPLE) IS DEDUCTED FROM THIS FIGU RE TO ARRIVE AT NPV WHICH HERE IS ZERO ($1,000-$1,000). A ZERO N PV MEANS THE PROJECT REPAYS ORIGINAL INVESTMENT PLUS THE REQ UIRED RATE OF RETURN. A POSITIVE NPV MEANS A BETTER RETURN, AN D A NEGATIVE NPV MEANS A WORSE RETURN, THAN THE RETURN FROM ZERO NPV. IT IS ONE OF THE TWO DISCOUNTED CASH FLOW (DCF) TECHNIQUES (THE OTHER IS INTERNAL RATE OF RETURN) U SED IN COMPARATIVE APPRAISAL OF INVESTMENT PROPOSALS WHERE THE FLOW OF INCOME VARIES OVER TIME.[HTTP://WWW. BUSINESSDICTIONARY.COM/DEFINITION/NET-PRESENT-VALUE - NPV.HTML] MA 135/MUM/2011 19 ACCORDING TO WIKIPEDIA THE PRESENT VALUE (PV) FORMULA HAS FOUR VARIABLES, EACH OF WHICH CAN BE SOLVED FOR: 1. PV IS THE VALUE AT TIME=0 2. FV IS THE VALUE AT TIME=N 3. I IS THE RATE AT WHICH THE AMOUNT WILL BE COMPOUNDE D EACH PERIOD 4. N IS THE NUMBER OF PERIODS (NOT NECESSARILY AN INTE GER) 5. FUTURE VALUE OF A PRESENT SUM THE FUTURE VALUE (FV) FORMULA IS SIMILAR AND USES THE SAME VARIABLE S. FROM THE ABOVE DEFINITION AND EQUATION IT IS CLEAR THAT THE PRESENT VALUE OF A FUTURE SUM IS THE SAME AND IF THERE IS A DIFFEREN CE I.E., POSITIVE NPV THEN THE PROJECT REPAYS ORIGINAL INVESTMENT PLUS THE REQ UIRED RATE OF RETURN. IN OTHER WORDS A POSITIVE NPV MEANS A BETTER RETURN AN D NEGATIVE NPV MEANS A WORSE RETURN, THAN THE RETURN FROM ZERO NPV MEANI NG THEREBY THE SIMILAR VALUE OF A FUTURE SUM. 23. IN THIS VIEW OF THE MATTER, THE OBJECTION RAISE D BY THE REVENUE IS DEVOID OF ANY MERIT AND, HENCE, REJECTED. 24. AS REGARDS THE OBJECTION OF THE REVENUE IN PAR A 4 & 7 OF THE MISC. APPLICATION (SUPRA) THAT THE FINDING GIVEN BY THE T RIBUNAL IN PARA 76 & 105 OF THE TRIBUNAL ORDER ARE FACTUALLY IN-CORRECT INAS MUCH AS IT IS NOT CORRECT TO SAY THAT THE STATE GOVERNMENT HAS TREATED THE SA LES TAX COLLECTED BY THE ASSESSEE AMOUNTING TO RS. 7,52,01,378/- AS A LOAN L IABILITY. IN THIS REGARD WE FIND THAT THE TRIBUNAL IN PARA 76 & 105 HAS OBSE RVED AND HELD AS UNDER:- 76. IN THE PRESENT CASE THE ASSESSEE HAD COLLECTED TOTAL AMOUNT OF RS.7,52,01,378/- TOWARDS SALES TAX DURING THE YEAR 1989-90 TO 2001-02. IT WAS TREATED AS A LOAN LIABILITY PAYABLE AFTER 12 YE ARS IN SIX ANNUAL/EQUAL INSTALMENTS AND THUS, THE ASSESSEE TREATED THE SAID LIABILITY AS UNSECURED LOANS IN ITS BOOKS OF ACCOUNT. MA 135/MUM/2011 20 105. THE OTHER REQUIREMENT OF SECTION 41(1) IS THA T THE ASSESSEE MUST HAVE SUBSEQUENTLY (I) OBTAINED ANY AMOUNT IN RESPEC T OF SUCH LOSS AND EXPENDITURE OR (II) OBTAINED ANY BENEFIT IN RESPECT OF SUCH TRADING LIABILITIES BY WAY OF REMISSION OR CESSATION THEREOF. IN THE CA SE BEFORE US WE FIND THAT THE SALES TAX COLLECTED BY THE ASSESSEE DURING THE YEARS 1989-1990 TO 2001-2002 AMOUNTING TO RS.7,52,01,378/- WAS TREATED BY THE STATE GOVERNMENT AS A LOAN LIABILITY PAYABLE AFTER 12 YEA RS IN SIX ANNUAL/ EQUAL INSTALMENTS. SUBSEQUENTLY PURSUANT TO THE AMENDMENT MADE IN THE FOURTH PROVISO TO SECTION 38(4) OF THE BST ACT, 1959 WHICH PROVIDES THAT WHERE AN ENTITLEMENT CERTIFICATE HAS BEEN GRANTED TO THE ELI GIBLE UNIT FOR AVAILING OF THE INCENTIVES BY WAY OF DEFERMENT OF SALES TAX ETC . SUCH ELIGIBLE UNIT MAY IN RESPECT OF THE PERIODS DURING WHICH THE SAID CER TIFICATE IS VALID, AT ITS OPTION, PREMATURELY PAY IN PLACE OF THE AMOUNT OF T AX DEFERRED BY IT AN AMOUNT EQUAL TO THE NET PRESENT VALUE OF THE DEFERR ED TAX AS MAY BE PRESCRIBED AND ON MAKING SUCH PAYMENTS, IN THE PUBL IC INTEREST, THE DEFERRED TAX SHALL BE DEEMED TO HAVE BEEN PAID. IN THE CASE BEFORE US THE ASSESSEE HAS OPTED THE OFFER OF SICOM, AN IMPLEMENT ING AGENCY OF THE STATE GOVERNMENT AND REPAID AN AMOUNT OF RS.3,37,13 ,393/- TO SICOM WHICH ACCORDING TO THE ASSESSEE REPRESENTED THE NPV OF THE FUTURE SUM AS DETERMINED AND PRESCRIBED BY SICOM. THE SAID PAYMEN T WAS MADE TO SICOM ON 30.12.2002 AS PER CERTIFICATES DATED 25.08 .2003. IT HAS ALREADY BEEN DEMONSTRATED IN PARA- 74 OF THIS ORDER THAT NP V IS EQUIVALENT TO FUTURE VALUE OF THE SUM. IN OTHER WORDS, WHAT THE A SSESSEE WAS REQUIRED TO REPAY AFTER 12 YEARS IN SIX ANNUAL/ EQUAL INSTALMEN TS, THE SAME WAS REPAID BY THE ASSESSEE, IN THE PUBLIC INTEREST, AS NPV IS EQUIVALENT TO THE FUTURE VALUE OF THE SUM. FURTHER THERE IS NO IOTA OF EVIDE NCE TO SHOW THAT THERE HAS BEEN ANY REMISSION OR CESSATION OF LIABILITY BY THE STATE GOVERNMENT. THUS, ONE OF THE REQUIREMENTS SPELT OUT FOR THE APP LICABILITY OF SECTION 41(1)(A) HAS NOT BEEN FULFILLED IN THE FACTS OF THE PRESENT CASE. 25. THE ABOVE FINDING OF THE TRIBUNAL ARE BASED ON THE ENTRIES RECORDED IN THE BOOKS OF THE ASSESSEE, FOURTH PROVISO TO SEC TION 38(4) OF THE BST ACT, 1959 AND THE CERTIFICATE DTD. 25-8-2003 ISSUED BY S ICOM AND THE PROVISIONS OF SECTION 41(1)(A) OF THE ACT, THEREFOR E, IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THERE IS ANY DIFFERENCE IN TH E AMOUNT OF LOAN OR THERE IS NO SUCH PROVISO TO SECTION 38(4) OF THE BST ACT, 1959 OR THERE IS NO SUCH CERTIFICATE DTD. 25-8-2003, WE ARE OF THE VIEW THAT THE OBJECTIONS RAISED BY THE REVENUE ARE OUTSIDE THE SCOPE OF SECTION 254(2) OF THE ACT AND ACCORDINGLY THE SAME ARE REJECTED. 26. AS REGARDS THE OBJECTION OF THE REVENUE IN PARA 5 OF THE MISC. APPLICATION (SUPRA) THAT THE TRIBUNAL WHILE DECIDIN G THE ISSUE IN PARA 77 OF MA 135/MUM/2011 21 ITS ORDER HAS FAILED TO CONSIDER THE SUBMISSION OF THE LD. D.R. , WE FIND THAT THE TRIBUNAL AFTER CONSIDERING THE ARGUMENTS OF THE LD. D.R., INCORPORATED IN PARAS 22 TO 47 APPEARING AT PAGE 20 TO 49 OF THE TRIBUNAL ORDER HAS OBSERVED AND HELD IN PARA 77 AS UNDER:- PURSUANT TO THE AMENDMENT MADE UNDER SUB-SECTION(4) OF SECTION 38 OF BST ACT, 1959 BY SUBSTITUTING THE 4 TH PROVISO WHICH PROVIDES FOR PAYMENT OF NET PRESENT VALUE (NPV) OF DEFERRED TAXES UNDER THE PACKAGE SCHEME OF INCENTIVES WHICH IS AS UNDER : PROVIDED ALSO THAT, NOTWITHSTANDING ANYTHING TO TH E CONTRARY CONTAINED IN THE ACT OR IN THE RULES OR IN ANY OF THE PACKAGE SCHEME OF INCENTIVES OR IN THE POWER GENERA TION PROMOTION, PROMOTION POLICY, 1998, THE ELIGIBLE UNI T TO WHOM AN ENTITLEMENT CERTIFICATE HAS BEEN GRANTED FOR AVA ILING OF THE INCENTIVES BY WAY OF DEFERMENT OF SALES TAX, PURCHA SE TAX, ADDITIONAL TAX, TURNOVER TAX OR SURCHARGE, AS THE C ASE MAY BE, MAY, IN RESPECT OF ANY OF THE PERIODS DURING WHICH THE SAID CERTIFICATE IS VALID, AS ITS OPTION, PREMATURELY PA Y IN PLACE OF THE AMOUNT OF TAX DEFERRED BY IT AN AMOUNT, EQUAL TO THE NET PRESENT VALUE OF THE DEFERRED TAX AS MAY BE PRESCRI BED, AND ON MAKING SUCH PAYMENTS, IN THE PUBLIC INTEREST, TH E DEFERRED TAX SHALL BE DEEMED TO HAVE BEEN PAID. THE STATE GOVT. HAS BY NOTIFICATION NO.STR-12.02/CR -102/TAXATION-1 DATED 16.11.2002, INTRODUCED RULE 31D IN THE BOMBAY SALES TAX RULES, 1959 (BST RULES) LAYING DOWN THE PROCEDURE FOR DETERMINA TION OF SUCH NPV. THE PROCEDURE FOR DETERMINATION OF NPV OF THE AMOUNT OF DEFERRED TAXES HAVING BEEN PUBLISHED, THE DEFERRAL UNITS MAY EXERCISE THE OPTION UNDER 4 TH PROVISO OF SUB-SECTION 4 OF SECTION 38 OF THE BST A CT, 1959 OF PRE-MATURELY REPAYING AT NPV, THE AMOUNT OF DEFERRED TAXES. THE RULE 31D OF THE BST RULES HAS BEEN PROVIDED WITH A TABLE AND THE NOTES BELOW IT FOR DETERMINATION OF NPV. FOR EXAMPLE THE PAYMENT OF BS T RS.27,903/- AND CST RS.70,171/- DUE ON 1.5.2003 WAS DEPOSITED ON 30 .12.2002 I.E. FOUR MONTHS BEFORE THE DUE DATE, THE DISCOUNTED PERCENTA GE OF DEFERRED TAX TO BE PAID AS NPV WAS PRESCRIBED IN SAID TABLE AS 96.4955 % AND ACCORDINGLY THE NPV AMOUNT OF BST AND CST WAS WORKED OUT TO RS.26,9 25/ AND RS.67,712/- RESPECTIVELY AS PER CERTIFICATE DATED 27.12.2002 APPEARING AT PAGE 191 OF ASSESSEE'S PAPER BOOK AND THE SAME WAS PAID ON 30.12.2002 AS PER CERTIFICATE DATED 25.8.2003 APPEARING AT PAG E 188 OF ASSESSEE'S PAPER BOOK . THIS AMOUNT WAS PAID BY THE ASSESSEE A S PER OFFER MADE BY THE STATE GOVT. WHO APPOINTED THE STATE INDUSTRIAL & INVESTMENT CORPORATION OF MAHARASHTRA LIMITED (SICOM) FOR SETT LEMENT OF DEFERRED SALES TAX LIABILITY BY AN IMMEDIATE ONE TIME PAYMEN T. ACCORDINGLY THE ASSESSEE HAS PAID AN AMOUNT OF RS.3,37,13,393/- TO SICOM WHICH ACCORDING TO THE ASSESSEE REPRESENTED THE NPV AS DE TERMINED BY SICOM. THE PAYMENT WAS MADE TO SICOM ON 30.12.2002 AS PER CERTIFICATES DATED 25.8.2003 APPEARING AT PAGE 188 AND 207 OF ASSESSEE 'S PAPER BOOK. THE REVENUE HAS PLACED NO MATERIAL ON RECORD TO SHOW TH AT THE PRESENT VALUE MA 135/MUM/2011 22 (NPV) OF A FUTURE SUM IS NOT THE SAME OR IN THE PRO CESS OF CALCULATION OF PRESENT VALUE OF A FUTURE SUM THERE IS ANY CONVERSI ON GAIN TO THE ASSESSEE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THERE I S NO SUCH CONVERSION PROVIDED UNDER THE BST ACT, OR THE TABLE PROVIDED F OR DETERMINATION OF NPV IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IN THE ABSENCE THEREOF IT IS NOT POSSIBLE FOR US TO ACCEPT THE CONTENTION OF THE LD. DR THAT THERE WAS A REMISSION OR CESSATION OF THE TRADING LIABILITY. 27. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE TRIBUNAL HAS NOT CONSIDERED ANY OTHER ARGUMENT OF THE LD. D.R. APART FROM THE ARGUMENTS MENTIONED IN PARAS NOTED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL IN TE RMS OF PROVISIONS OF SECTION 254(2) OF THE ACT AND ACCORDINGLY WE REJECT THE OBJECTION RAISED BY THE REVENUE IN THIS REGARD. 28. AS REGARD THE OBJECTION OF THE REVENUE IN PARA 6 OF THE MISC. APPLICATION (SUPRA) THAT ONCE THE TRIBUNAL HAS HELD THE BENEFIT OF DEDUCTION HAS BEEN ALLOWED U/S 43-B OF THE ACT, THE FINDING O F THE TRIBUNAL IN PARA 104 OF THE ORDER THAT FIRST REQUIREMENT OF SECTION 41(1) HAS NOT BEEN FULFILLED IN THE FACTS OF THE PRESENT CASE, IS CONT RARY WHICH CONSTITUTES MISTAKE APPARENT FROM RECORD, WE FIND THAT THE TRIB UNAL IN PARA 104 AFTER CONSIDERING THE PROVISIONS OF SECTION 43-B, CBDT CI RCULAR NO. 496 DATED 25-9-1987 AND THE DECISIONS OF THE HONBLE APEX COU RT HAS HELD THAT THE FIRST REQUIREMENT OF SECTION 41(1) HAS NOT BEEN FUL FILLED IN THE FACTS OF THE PRESENT CASE VIDE FINDING RECORDED IN PARA 104 OF T HE TRIBUNAL ORDER AS UNDER:- HAVING REGARD TO THE AFORESAID LAW LAID DOWN BY TH E HONBLE SUPREME COURT AND HIGH COURTS, WE FIND THAT TO INVOKE THE P ROVISIONS OF SECTION 41(1) OF THE ACT, THE FIRST REQUIREMENT IS AS TO WH ETHER IN THE ASSESSMENT OF THE ASSESSEE, AN ALLOWANCE OR DEDUCTION HAS BEEN MA DE IN RESPECT OF LOSS, EXPENDITURE OR THE TRADING LIABILITY INCURRED BY TH E ASSESSEE. IN THE CASE OF THE PRESENT ASSESSEE THE REVENUES PLEA IS THAT THE ASSESSEE HAS OBTAINED THE BENEFIT OF DEDUCTION OF SALES TAX LIABILITY U/S . 43 B OF THE ACT AS PER MA 135/MUM/2011 23 CBDT CIRCULAR NO. 496 DATED 25.9.1987. HOWEVER, WE FIND THAT IN THE SAID CIRCULAR IT HAS BEEN CLEARLY STATED VIDE PARA 5 THA T ...THE STATUTORY LIABILITY SHALL BE TREATED TO HAVE BEEN DISCHARGED FOR THE PURPOSES OF SECTION 43 B (EMPHASIS SUPPLIED). THUS, THE BENEFIT OF DEDUCTIO N WAS ALLOWED FOR THE PURPOSE OF SECTION 43 B OF THE ACT ONLY AND NOT UND ER ANY OTHER PROVISIONS OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAS ALSO APPLIED THE AFORESAID BOARD CIRCULAR WHILE GIVING THE BENEF IT OF DEDUCTION U/S. 43 B OF THE ACT. IT IS SETTLED LAW THAT THE CIRCULARS AR E BINDING ON THE DEPARTMENT VIDE NUMBER OF DECISIONS OF THE HONBLE APEX COURT [SEE IN NAVNIT LAL C. JHAVERI VS. K.K. SEN, AAC (1965) 56 ITR 198(SC), EL LERMAN LINES LTD. VS. CIT (1971) 82 ITR 913 (SC), K.P. VARGHESE VS. ITO ( 1981) 131 ITR 597 (SC) AND UCO BANK VS. CIT (1999) 237 ITR 889 (SC)]. IT I S ALSO SETTLED LAW THAT THE COURT CANNOT ADD WORDS TO STATUTE OR READ WORDS INTO IT WHICH ARE NOT THERE VIDE UNION OF INDIA VS. DEOKI NANDAN AGGARWAL (1992) SUPP. 1 SCC 323 (80). THE SIMILAR VIEW HAS BEEN REITERATED RECE NTLY IN CIT VS. TARA AGENCIES (2007) 292 ITR 444 (SC). THIS BEING SO WE ARE OF THE VIEW THE FIRST REQUIREMENT OF SECTION 41(1) HAS NOT BEEN FULFILLED IN THE FACTS OF THE PRESENT CASE. 29. IN VIEW OF THE ABOVE, WE FIND THAT THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL UNDER THE PROVISIONS OF SECTION 254(2) OF THE ACT AND, THEREFORE, WE REJECT THE PLEA OF THE REVENUE IN THI S REGARD. 30. AS REGARDS THE OBJECTION OF THE LD. D.R. THAT THE TRIBUNAL IN PARA 108 OF THE ORDER HAS DISCUSSED THE PROVISIONS OF SECTIO N 63 OF THE INDIAN CONTRACT ACT, 1872 WHICH WAS NEVER A SUBJECT MATTE R OF THE DISCUSSION, WE ARE OF THE VIEW THAT THE TRIBUNAL AFTER HOLDING IN THE PRECEDING PARAS I.E. UPTO PARAS 107 OF THE ORDER THAT THERE WAS NO REMIS SION OF TRADING LIABILITY AS PER THE PROVISIONS OF SECTION 41(1) OF THE ACT H AS EXAMINED THE ISSUE FROM ANOTHER ANGLE IN THE LIGHT OF PROVISIONS OF SE CTION 63 OF THE INDIAN CONTRACT ACT, 1872 AND HAS HELD THAT THE PROVISIONS OF SECTION 41(1)(A) ARE NOT APPLICABLE. THIS EXERCISE OF THE TRIBUNAL IS N OT BEYOND THE QUESTION BEFORE THE SPECIAL BENCH OF THE TRIBUNAL AND, HENCE , THERE IS NO MISTAKE. THIS VIEW ALSO FINDS SUPPORT FROM THE DECISION OF T HE HONBLE DELHI HIGH COURT IN GEOFIN INVESTMENT (P) LTD. VS. CIT & ORS., WRIT PETITION (CIVIL) NO. MA 135/MUM/2011 24 3744 /2011 DTD. 27-5-2011 WHEREIN IT HAS BEEN OBSER VED AND HELD AS UNDER:- ..WHILE ALLOWING THE APPEAL, THE TRIBUNAL ALSO REFERRED TO ANOTHER DECISION OF ITAT, MUMBAI, 'F' BENCH, IN THE CASE OF MACINTOSH FINANCE ESTATES LTD. VS. ACIT. RELIANCE AND REFERENCE TO RE ASONS STATED IN MACINTOSH (SUPRA) CANNOT BE REGARDED AS A MISTAKE A PPARENT FROM THE RECORD. IT IS NOT UNUSUAL OR WPC 3744/2011 PAGE 2 O F 3 ABNORMAL FOR JUDGES OR ADJUDICATORS TO REFER AND RELY UPON JUDGM ENTS/DECISIONS AFTER MAKING THEIR OWN RESEARCH. 31. THUS, WE ARE OF THE VIEW THAT THERE IS NO MISTA KE IN THE ORDER OF THE TRIBUNAL AND, HENCE, THE PLEA TAKEN BY THE REVENUE IS REJECTED. 32. AS REGARDS THE OBJECTION OF THE REVENUE IN PARA 9 O F THE MISC. APPLICATION (SUPRA) THAT THE ASSESSEE ITSELF HAS US ED THE EXPRESSION REMISSION, AND DESPITE THEREOF, THE TRIBUNAL HAS HELD THAT THERE IS NO IOTA OF EVIDENCE TO SHOW THAT THERE HAS BEEN ANY REMISSI ON OR CESSATION OF LIABILITY BY THE STATE GOVERNMENT, WE FIND THAT THE TRIBUNAL IN PARA 107 OF ITS ORDER HAS OBSERVED AND HELD AS UNDER:- THE LD. DR HAS PUT GREAT EMPHASIS ON THE NOTES TO THE ACCOUNTS WHICH HAVE BEEN REPRODUCED BY US IN PARA-43 APPEARING AT PAGE-43 OF THIS ORDER WHEREIN THE ASSESSEE ITSELF HAS USED THE EXPRESSION REMISSION OF THE LOAN LIABILITY. HOWEVER, THE POSITION IN LAW IS WELL SET TLED THAT MAKING OF AN ENTRY OR ABSENCE OF AN ENTRY CANNOT DETERMINE RIGHTS AND LIABILITIES OF PARTIES. IN OTHER WORDS, IF THE LAW DOES NOT LEAD TO INCURRING OF A LIABILITY, OR DOES NOT LEAD TO A CORRESPONDING RIGHT TO INSIST FOR DISCHAR GING SUCH A LIABILITY ANY ACCOUNTING PRACTICE (EVEN IF SUGGESTED BY THE INSTI TUTE OF CHARTERED ACCOUNTANTS OF INDIA) CANNOT LAY DOWN ANYTHING TO T HE CONTRARY. AS HELD BY THE HONBLE APEX COURT IN THE CASE OF TUTICORIN ALK ALI CHEMICALS AND FERTILIZERS LTD. VS. CIT (1997) 227 ITR 172 (PAGE 1 83): IT IS TRUE THAT THIS COURT HAS VERY OFTEN REFERRED TO ACCOUNTING PRACTICE FOR ASCERTAINMENT OF PROFIT MADE BY A COMP ANY OR VALUE OF THE ASSETS OF A COMPANY. BUT WHEN THE QUES TION IS WHETHER A RECEIPT OF MONEY IS TAXABLE OR NOT OR WHE THER CERTAIN DEDUCTIONS FROM THAT RECEIPT ARE PERMISSIBL E IN LAW OR NOT, THE QUESTION HAS TO BE DECIDED ACCORDING TO TH E PRINCIPLES OF LAW AND NOT IN ACCORDANCE WITH ACCOUNTANCY PRACT ICE. ACCOUNTING PRACTICE CANNOT OVERRIDE SECTION 56 OR A NY OTHER PROVISION OF THE ACT AS WAS POINTED OUT BY LORD RUS SELL IN THE MA 135/MUM/2011 25 CASE OF B. S. C. FOOTWEAR LTD. [1970] 77 ITR 857, 860 (CA), THE INCOME-TAX LAW DOES NOT MARCH STEP BY STEP IN T HE FOOTPRINTS OF THE ACCOUNTANCY PROFESSION. 33. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE FINDING GIVEN BY THE TRIBUNAL ARE CONTRARY TO THE SETTLED POSITION OF LA W THAT MAKING OF AN ENTRY OR ABSENCE OF AN ENTRY CANNOT DETERMINE RIGHTS AND LIABILITIES OF THE PARTIES, WE ARE OF THE VIEW THAT THE PLEA TAKEN BY THE REVEN UE IS DEVOID OF ANY MERIT AND ACCORDINGLY THE SAME IS REJECTED. 34. AS REGARDS THE OBJECTION OF THE REVENUE IN PA RA 10,11 AND 12 OF THE MISC. APPLICATION (SUPRA) THAT THE FINDING RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE FACTS AND THE SUBMISSIONS OF THE LD . D.R. HAVE BEEN TOTALLY OMITTED TO BE CONSIDERED BY THE BENCH, WE FIND THAT IN VIEW OF THE REASONED FINDING RECORDED BY THE TRIBUNAL IN PARAS 73,74,75, 76,77,104, 105,106,107, 108 & 109, THERE IS NO APPARENT MISTAK E IN THE ORDER OF THE TRIBUNAL IN TERMS OF SCHEME OF SECTION 254(2) OF TH E ACT AND, HENCE, THE SUBMISSIONS OF THE REVENUE IN PARAS 10,11 AND 12 OF THE MISC. APPLICATION (SUPRA) ARE REJECTED. 35. AS REGARDS THE NON-CONSIDERATION OF THE DECISIO N CITED BY THE LD. D.R. IN THE CASE OF SOUTHERN TECHNOLOGIES LIMITED VS. JT . CIT (2010) 320 ITR 577 (SC) WE FIND THAT THE TRIBUNAL IN PARA 42 OF IT S ORDER HAS DULY NOTED THE ABOVE DECISION RELIED ON BY THE LD. D.R. IN TH E SAID DECISION THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF SECTIO N 43-D AND 36(1)(VIIA) OF THE ACT WAS CHALLENGED BEFORE THE HONBLE SUPREME C OURT. IT HAS BEEN HELD BY THEIR LORDSHIPS THAT THE PROVISIONS ARE FOU ND TO BE CONSTITUTIONALLY VALID IN THAT THEY DO NOT OFFEND ARTICLE 19 OF THE CONSTITUTION OF INDIA. MA 135/MUM/2011 26 THERE IS NO QUARREL ON THE PRINCIPLE OF LAW LAID DO WN BY THE HONBLE APEX COURT. HOWEVER, THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT CASE ARE ENTIRELY DIFFERENT, THEREFORE, THE DECISION RELIED ON BY THE LD. D.R. IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 36. IN LACHMAN DASS BHATIA HINGWALA (P.) LTD. (SUPR A) RELIED ON BY THE LD. D.R., IT HAS BEEN HELD (PAGE 243-244 OF (2011) 330 ITR 243 (DELHI) [FB] : .THE DECISION OF THE SUPREME COURT IN HONDA SIE L POWER PRODUCTS LTD. V. CIT [2007] 295 ITR 466IS AN AUTHORITY FOR T HE PROPOSITION THAT THE TRIBUNAL IN CERTAIN CIRCUMSTANCES CAN RECALL ITS OW N ORDER AND SECTION 254(2) OF THE ACT DOES NOT TOTALLY PROHIBIT SO. DEC ISIONS WHICH LAY DOWN THE PRINCIPLE THAT THE TRIBUNAL UNDER NO CIRCUMSTANCES CAN RECALL ITS ORDER IN ENTIRETY DO NOT LAY DOWN THE CORRECT STATEMENT OF L AW. THE TRIBUNAL, WHILE EXERCISING THE POWER OF RECTIF ICATION UNDER SECTION 254(2) OF THE ACT, CAN RECALL ITS ORDER IN ENTIRETY IF IT IS SATISFIED THAT PREJUDICE HAS RESULTED TO THE PARTY WHICH IS ATTRIB UTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OMISSION AND WHICH ERROR IS A MAN IFEST ERROR AND IT HAS NOTHING TO DO WITH THE DOCTRINE OR CONCEPT OF INHER ENT POWER OF REVIEW. 37. IN HONDA SIEL POWER PRODUCTS LTD. (SUPRA) RELIE D ON BY THE LD. D.R., IT HAS BEEN HELD (HEADNOTE OF (2007) 295 ITR 466 (SC) : HELD, REVERSING THE DECISION OF THE HIGH COURT, TH AT IN ALLOWING THE RECTIFICATION APPLICATION THE TRIBUNAL GAVE A FINDI NG THAT THE EARLIER DECISION OF A CO-ORDINATE BENCH WAS CITED BEFORE IT BUT THRO UGH OVERSIGHT IT HAD MISSED THE JUDGMENT WHILE DISMISSING THE APPEAL FIL ED BY THE ASSESSEE ON THE QUESTION OF ADMISSIBILITY/ALLOWABILITY OF THE C LAIM OF THE ASSESSEE FOR ENHANCED DEPRECIATION UNDER SECTION 43A. ONE OF THE IMPORTANT REASONS FOR GIVING THE POWER OF RECTIFICATION TO THE TRIBUNAL U NDER SECTION 254(2) WAS TO SEE THAT NO PREJUDICE WAS CAUSED TO EITHER OF THE P ARTIES APPEARING BEFORE IT. THE RULE OF PRECEDENT WAS AN IMPORTANT ASPECT O F CERTAINTY IN THE RULE OF LAW, AND PREJUDICE HAD RESULTED TO THE ASSESSEE SIN CE THE PRECEDENT HAD NOT BEEN CONSIDERED BY THE TRIBUNAL. THE TRIBUNAL W AS JUSTIFIED IN RECTIFYING THE MISTAKE ON RECORD. 38. IN RAMESH CHAND MODI (SUPRA) RELIED ON BY THE L D. D.R. IT HAS BEEN HELD (HEADNOTE OF (2001) 249 ITR 323 [RAJ.]) : WHERE THE TRIBUNAL FAILS TO DECIDE SOME OF THE QUE STIONS RAISED BEFORE IT INADVERTENTLY OR BY OVERSIGHT, THE ONLY APPROPRIATE METHOD OF CORRECTING SUCH MISTAKE IS TO RECALL THE ORDER AND MAKE A FRES H ORDER AFTER AFFORDING MA 135/MUM/2011 27 AN OPPORTUNITY OF HEARING TO SUCH PARTY. IN ALL SUC H CASES, ORDINARILY THE COURT OR TRIBUNAL ACTS EX DEBITO JUSTITIAE TO PREVE NT ABUSE OF PROCESS EVEN IN THE ABSENCE OF ANY POWER. ONCE A MISTAKE ON THE FACE OF THE RECORD IS ESTABLI SHED WHAT ORDER SHOULD FOLLOW TO CORRECT THAT MISTAKE SHALL ALWAYS DEPEND ON THE FACTS AND CIRCUMSTANCES REQUIRED TO RECTIFY THE MISTAKE. IF T HE MISTAKE IS ONE WHICH REQUIRES DETERMINATION OF SOME UNDECIDED ISSUE BECA USE IT HAS NOT BEEN DECIDED THOUGH RAISED, THE PROCEDURE THAT WOULD FOL LOW THE DISCOVERY OF SUCH MISTAKES IS TO RECALL THE ORDER AND DECIDE THE CASE AFRESH OR TO DECIDE THAT ISSUE AFTER AFFORDING AN OPPORTUNITY TO THE PA RTIES CONCERNED AND PASS A FRESH ORDER IN THE LIGHT OF FINDING ON SUCH ISSUE . THE ORDER UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961, IS NOT CONFINED TO ARITHMETICAL OR CLERICAL MISTAKES, NOR ONLY TO CORRECT SUBSTANTIVE MISTAKES BUT ALSO PROCEDURAL MISTAKES. 39. IN CIT VS. RAMESH ELECTRIC AND TRADING CO. (199 3) 203 ITR 497 (BOM) RELIED ON BY THE LD. SR. COUNSEL FOR THE ASSE SSEE IT HAS BEEN HELD AS UNDER (PAGE 497 PLACITUM E) :- UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961, THE APPELLATE TRIBUNAL MAY, 'WITH A VIEW TO RECTIFYING ANY MISTAKE APPAREN T FROM THE RECORD', AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION (1) WITHIN THE TIME PRESCRIBED THEREIN. IT IS AN ACCEPTED POSITION THAT THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UN DER THE PROVISIONS OF THE ACT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSE S IS TO RECTIFY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. THE POWER OF RECTIFI CATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTA BLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. FAILURE OF THE TRIBUNA L TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE TRIBUNAL CANNOT, IN THE EXERCISE OF ITS POWER OF RE CTIFICATION, LOOK INTO SOME OTHER CIRCUMSTANCES WHICH WOULD SUPPORT OR NOT SUPP ORT ITS CONCLUSION. 40. THERE IS NO QUARREL WITH THE PRINCIPLES ENUNCIA TED IN THE AFORESAID DECISIONS. HOWEVER, A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS CANNOT BE CONSIDERED AS A MISTAKE APPARENT FROM RECORD. THIS VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN T .S. BALRAM, ITO VS. MA 135/MUM/2011 28 VOLKART BROTHERS AND OTHERS (1971) 82 ITR 50 (SC) W HEREIN IT HAS BEEN OBSERVED AS UNDER:- A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOU S AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LON G DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVAB LY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTA KE APPARENT FROM THE RECORD. THEREFORE, THE DECISIONS RELIED ON BY THE LD. D.R. ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE PRESENT CASE. 41. FOR THE REASONS AS DISCUSSED ABOVE, WE ARE OF T HE VIEW THAT THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL WHICH IS AL SO REPORTED IN (2010) 134 TTJ (MUMBAI)[SB] 385 : (2010) 42 SOT 457 [MUM](SB) : (2010) 47 DTR MUMBAI)[SB](TRIB) 329. THE REVENUE NOT ONLY WANTS R EVIEW BUT ALSO CLAIMS IN PARA 6 OF THE MISC. APPLICATION (SUPRA) THAT THE ISSUE OUGHT TO HAVE BEEN DECIDED IN FAVOUR OF THE REVENUE WHICH IS NOT PERMI SSIBLE UNDER THE SCHEME OF THE PROVISIONS OF SECTION 254(2) OF THE A CT AND, HENCE, THE MISC. APPLICATION (SUPRA) FILED BY THE REVENUE INTER ALIA STATING THAT THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL SUFFERS FROM A LA RGE NUMBER OF MISTAKES IS, THEREFORE, REJECTED. 42. IN THE RESULT, THE MISC. APPLICATION FILED BY T HE REVENUE STANDS DISMISSED. ORDER PRONOUNCED ON 03-08-2012. SD/- SD/- SD/- ( P.M. JAGTAP) (D.MANMOHAN) (DINESH KUMAR AGARWAL) ACCOUNTANT MEMBER VICE PRESIDENT JUDICIAL M EMBER MUMBAI, DATED 3 RD AUGUST. 2012. MA 135/MUM/2011 29 RK.: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT , CONCERNED, MUMBAI 4. CIT(A) CONCERNED, MUMBAI 5. DR G BENCH 6. GUARD FILE. BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI