KPR Mill Ltd., Coimbatore V. DCIT, Coimbatore

MA 146/CHNY/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4939 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 23-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income; Speculation loss
• Section: 43(5); 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER M.P.NOS.145 & 146/MDS./2016 (ITA NOS. 775 & 2685 /MDS/2014 ASSESSMENT YEARS : 2010-11 & 2011-12) M/S. KPR MILL LIMITED , NO.9, GOKUL BUILDING, ASK NAGAR, THADAGAM ROAD, COIMBATORE 641 001. PAN AACCK0893N (/ APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(3) COIMBATORE. ( / RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE D EPARTMENT BY : SHRI SUPRIYOPAL, JCIT / DATE OF HEARING : 23.09.2016 / DATE OF PRONOUNCEMENT : 28.10.2016 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO MISCELLANEOUS PETITIONS ARE FILED BY THE ASSESSEE PRAYING FOR RECTIFICATION OF THE ORDER OF THE TRIBUNAL IN ITA - - MP NO.145 & 146/MDS./16 2 NOS.775 & 2685/MDS./2014 DATED 18.03.2016 FOR THE A SSESSMENT YEARS 2010-11 & 2011-12. 2. THE LD.A.R SUBMITTED THAT THE ASSESSEE CAME IN A PPEAL BEFORE THIS TRIBUNAL CHALLENGING THE ADDITION MADE BY THE AO BY TREATING THE BUSINESS LOSS AS SPECULATION LOSS IN RESPECT OF FOREIGN CURR ENCY TRANSACTIONS. ACCORDING TO LD.A.R, BUSINESS LOSS IN RESPECT OF TH ESE TWO ASSESSMENT YEARS IS RELATING TO THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WITH THE STATE BANK OF INDIA (SBI). THE ASSESSEE ENTERED IN TO VARIOUS SWAP OPTIONS CONTRACT WITH SBI AND THE SWAPS WERE MADE AGA INST SWISS FRANC (CHF). WHILE ARGUING THE CASE OF THE ASSESSEE, IT WA S SUBMITTED BEFORE THIS TRIBUNAL THAT THE CONTRACT PURCHASE AND SALE OF US$ / SWISS FRANC (CHF) WAS ADMITTED BY BOTH THE PARTIES, THAT IT IS N OT A COMMODITY. FURTHER AT THE TIME OF ARGUMENT BEFORE THE BENCH, T HE ASSESSEE SPECIFICALLY RELIED ON THE FOLLOWING ORDERS OF CO-ORDINATE BENCH IN SUPPORT OF THE ISSUE IN DISPUTE. I) M/S.MAJESTIC EXPORTS, TIRUPUR VS. JCIT IN ITA NO .1336 & 3072/MDS./2014 VIDE ORDER DATED 24.07.2015. II) M/S.AISHWARYA & CO. LTD IN ITANO.860/MDS./2014 V IDE ORDER DATED 29.05.2015. III) M/S.COTTON BLOSSOM (INDIA) P. LTD IN ITA NO.16 42/MDS./2013 VIDE ORDER DATED 30.01.2015. - - MP NO.145 & 146/MDS./16 3 ACCORDING TO LD.A.R, NON CONSIDERATION OF ABOVE ORD ERS OF THE TRIBUNAL IS A MISTAKE APPARENT FROM RECORD AND THE TRIBUNAL COMMIT TED AN ERROR IN NOT FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH WHICH REQUIRES RECTIFICATION OF THE ORDER OF THE TRIBUNAL. 3. ON THE OTHER HAND, LD.D.R SUBMITTED THAT THE TRI BUNAL HAS NOT COMMITTED ANY ERROR IN FOLLOWING THE ORDER OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. BHARAT R. RUIA (HUF) IN 337 ITR 452. ACCORDINGLY, HE SUPPORTED THE ORDER OF THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE IS ENGAGE D IN PURCHASE AND SALE OF US$ / SWISS FRANC (CHF) AND IT IS ALSO ADMITTED FACT THAT IN THE CASE OF M/S.SCM GARMENTS (P) LTD. VS. DCIT IN ITA NO.1645/MD S./2013 & 2275/MDS./2014 VIDE ORDER DATED 12.01.2015 HELD THA T THESE TRANSACTIONS CARRIED OUT BY THE ASSESSEE IN ORDER TO REDUCE THE RISK OF FOREIGN CURRENCY FLUCTUATION DURING THE COURSE OF THE ORDINARY BUSIN ESS OF THE ASSESSEE CANNOT BE CONSIDERED AS BUSINESS BY ITSELF BRING IT INTO THE AMBIT OF SECTION 73(1) OF THE ACT AND ALSO FORTIFIED BY THE FOLLOWING DECISIONS. A) CIT VS. BADRIDAS GAURIDU (P) LTD [2003] 261 ITR 256 (BOM),. B) CIT VS. SOORAJ MULL NAGARMULL [1981] 129 ITR 1 69 (CAL) C) MUNJAL SHOWA LTD VS. DCIT [2005] 94 TTJ (DEL) 227 D) RAJSHREE SUGARS & CHEMICALS LTD. VS. AXIS BANK 8 MLJ 261 MADRAS HIGH COURT. E) RAMACHANDAR SHIVNARAYAN VS. CIT (111 ITR 263) F) SUTLEJ COTTON MILLS LTD VS.CIT(116 ITR 1) - - MP NO.145 & 146/MDS./16 4 5.1 FURTHER, THE CO-ORDINATE BENCH IN THE CASE OF M/S.MAJESTIC EXPORTS, TIRUPUR (SUPRA) HELD THAT: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE WAS ENGAGED IN T HE BUSINESS OF MANUFACTURING AND EXPORT OF HOSIERY GARMENTS. DURI NG THE COURSE OF EXPORT, THE ASSESSEE ENTERED INTO DERIVATIVE CONTRA CT. THE ASSESSEE INCURRED LOSS IN THIS TRANSACTION. THE ASSESSEE CL AIMED IT AS BUSINESS LOSS. ACCORDING TO THE ASSESSING OFFICER THIS LOSS WAS NOT BUSINESS LOSS AND IT IS A SPECULATIVE LOSS AND THIS TRANSACTION IS SPECULATIVE IN NATURE AS SUCH THE LOSS INCURRED ON THIS TRANSACTION CANNO T BE SET OFF AGAINST BUSINESS INCOME OF THE ASSESSEE. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE, THE DERIVATIVE TRANSAC TION CANNOT FALL UNDER SEC.73. EXPLANATION TO SEC.73 CREATES A DEEMI NG FICTION BY WHICH AMONG THE ASSESSEE, WHO IS A COMPANY, AS INDI CATED IN THE SAID EXPLANATION DEALING WITH THE TRANSACTION OF SHARE AN D SUFFER LOSS, SUCH LOSS SHOULD BE TREATED TO BE SPECULATIVE TRANSACTIO N WITHIN THE MEANING OF SEC.73 OF THE ACT, NOTWITHSTANDING THE FACT THAT THE DEFINITION OF SPECULATIVE TRANSACTION MENTIONED IN SEC.43(5) OF T HE ACT, THE TRANSACTION IS NOT OF THAT NATURE AS THERE HAS BEEN ACTUAL DELIVERY OF THE SCRIPS OF SHARE. AS PER THE DEFINITION OF SEC. 43(5), TRADING OF SHARES WHICH IS DONE BY TAKING DELIVERY DOES NOT CO ME UNDER THE PURVIEW OF THE SAID SECTION. SIMILARLY, AS PER CLA USE (D) OF SEC.43(5), DERIVATIVE TRANSACTION IN SHARES IS ALSO NOT SPECUL ATION TRANSACTION AS DEFINED IN THE SAID SECTION. THEREFORE, BOTH PROFI T/LOSS FROM ALL THE SHARE DELIVERY TRANSACTIONS AND DERIVATIVE TRANSACT IONS ARE HAVING THE SAME MEANING, SO FAR AS SEC.43(5) OF THE ACT IS CON CERNED. AGAIN, IN VIEW OF THE FACT THAT BOTH DELIVERY TRANSACTIONS AN D DERIVATIVE - - MP NO.145 & 146/MDS./16 5 TRANSACTIONS ARE NON-SPECULATIVE AS FAR AS SEC.43(5 ) IS CONCERNED, IT FOLLOWS THAT BOTH WILL HAVE THE SAME TREATMENT AS F AR AS APPLICATION OF EXPLANATION TO SEC.73 IS CONCERNED. THEREFORE, AGGR EGATION OF THE SHARE TRADING PROFIT AND LOSS FROM DERIVATIVE TRANS ACTIONS SHOULD BE DONE BEFORE THE EXPLANATION TO SEC.73 IS APPLIED. THE ABOVE VIEW HAS BEEN TAKEN BY SPECIAL BENCH OF THIS TRIBUNAL, MUMBA I BENCH, IN THE CASE OF CIT V. CONCORD COMMERCIAL PVT. LTD. (2005) 95 ITD 117 (MUM)(SB). IN THIS CASE, THE SPECIAL BENCH HELD TH AT : BEFORE CONSIDERING WHETHER THE ASSESSEES CASE IS HIT BY THE DEEMING PROVISION OF EXPLANATION TO SEC. 73 OF THE ACT, THE AGGREGATE OF THE BUSINESS PROFIT / LOSS HAS TO BE W ORKED OUT BASED ON THE NON-SPECULATIVE PROFITS; EITHER IT IS FROM S HARE DELIVERY OR FROM SHARE DERIVATIVE . 8. FROM THE ABOVE, IT IS CONCLUDED THAT BOTH TRADING O F SHARES AND DERIVATIVE TRANSACTIONS ARE NOT COMING UNDER THE PU RVIEW OF SECTION 43(5) OF THE ACT WHICH PROVIDES DEFINITION OF SPEC ULATIVE TRANSACTION EXCLUSIVELY FOR PURPOSES OF SECTION 28 TO 41 OF THE ACT. AGAIN, THE FACT THAT BOTH DELIVERY BASED TRANSACTION IN SHARES AND DERIVATIVE TRANSACTIONS ARE NON-SPECULATIVE AS FAR AS SECTION 43(5) IS CONCERNED GOES TO CONFIRM THAT BOTH WILL HAVE SAME TREATMENT AS REGARDS APPLICATION OF THE EXPLANATION TO SECTION 73 IS CONC ERNED, WHICH CREATES A DEEMING FICTION. NOW, BEFORE APPLICATION OF THE S AID EXPLANATION, AGGREGATION OF THE BUSINESS PROFIT/LOSS IS TO BE WO RKED OUT IRRESPECTIVE OF THE FACT, WHETHER IT IS FROM SHARE DELIVERY TRAN SACTION OR DERIVATIVE TRANSACTION. 8.1 NOW, THIS VIEW HAS BEEN TAKEN BY CO-ORDINATE, CHENNAI IN THE CASE M/S. AISHWARYA & CO P. LTD IN ITA NO.860/MDS/ 2014, DATED 29.05.2015, WHEREIN THEY FOLLOWED THE JUDGMENT OF T HE CALCUTTA HIGH - - MP NO.145 & 146/MDS./16 6 COURT IN THE CASE OF M/S. BALJIT SECURITIES PVT. LT D. (88 CCH 313) WHEREIN HELD AS UNDER:- CLAUSE (D) OF SECTION 43(5) BECAME EFFECTIVE WITH EFFECT FROM 1ST APRIL, 2006. THEREFORE, PRIOR TO 1ST APRIL, 2006 AN Y TRANSACTION IN WHICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY CO MMODITY INCLUDING STOCKS AND SHARES WAS PERIODICALLY OR ULT IMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER O F THE COMMODITY OR SCRIP WAS A SPECULATIVE TRANSACTION. SUB-SECTION 1 OF SECTION 73 PROVIDES AS FOLLOWS: (1) ANY LOSS, COMPUTED IN RESPECT OF A SPECULATIO N BUSINESS CARRIED ON BY THE ASSESSEE, SHALL NOT BE SET OFF EX CEPT AGAINST PROFITS AND GAINS, IF ANY, OF ANOTHER SPECULATION BUSINESS. THE RESULTANT EFFECT WAS THAT ANY LOSS ARISING OUT OF SPECULATIVE TRANSACTION COULD ONLY HAVE BEEN SET OFF AGAINST PR OFITS ARISING OUT OF SPECULATIVE TRANSACTION. IN THE PRESENT CASE, TH E ASSESSEE, AS ALREADY INDICATED, HAS BEEN DEALING IN SHARES WHERE DELIVERY WAS IN FACT TAKEN AND ALSO IN SHARES WHERE DELIVERY WAS NO T ULTIMATELY TAKEN. IN OTHER WORDS, THE ASSESSEE HAS BEEN DEALIN G IN ACTUAL SELLING AND BUYING OF SHARES AS ALSO DEALING IN SHA RES ONLY FOR THE PURPOSE OF SETTLING THE TRANSACTION OTHERWISE THAN BY ACTUAL DELIVERY. THE QUESTION ARISE WHETHER THE LOSSES ARI SING OUT OF THE DEALINGS AND TRANSACTION IN WHICH THE ASSESSEE DID NOT ULTIMATELY TAKE DELIVERY OF THE SHARES OR GIVE DELIVERY OF THE SHARES COULD BE SET OFF AGAINST THE INCOME ARISING OUT OF THE DEALI NGS AND TRANSACTIONS IN ACTUAL BUYING AND SELLING OF SHARES . AN ANSWER TO THIS QUESTION IS TO BE FOUND IN THE EXPLANATION APP ENDED TO SECTION 73 WHICH READS AS FOLLOWS: EXPLANATION: WHERE ANY PART OF THE BUSINESS OF A C OMPANY OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MA INLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTERES T ON SECURITIES, OR A COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BU9SINESS OF BANKING OR THE GRANTING OF LOANS AND A DVANCES) CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHE R COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTIO N, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE. IN ORDER TO RES OLVE THE ISSUE BEFORE US, THE SECTION HAS TO BE READ IN THE MANNER AS FOLLOWS: EXPLANATION : WHERE ANY PART OF THE BUSINESS OF A COMPANY ( . . . .. .. .. .. .. .. .. . - - MP NO.145 & 146/MDS./16 7 .. .. . ) CONSIST IN THE PURC HASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHA LL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSIS TS OF THE PURCHASE AND SALE OF SUCH SHARES. IT WOULD, THUS, APPEAR THAT WHERE AN ASSESSEE, BEIN G THE COMPANY, BESIDES DEALING IN OTHER THINGS ALSO DEALS IN PURCH ASE AND SALE OF SHARES OF OTHER COMPANIES, THE ASSESSEE SHALL BE DE EMED TO BE CARRYING ON A SPECULATION BUSINESS. THE ASSESSEE, I N THE PRESENT CASE, PRINCIPALLY IS A SHARE BROKER, AS ALREADY IND ICATED. THE ASSESSEE IS ALSO IN THE BUSINESS OF BUYING AND SELL ING OF SHARES FOR SELF WHERE ACTUAL DELIVERY IS TAKEN AND GIVEN AND A LSO IN BUYING AND SELLING OF SHARES WHERE ACTUAL DELIVERY WAS NOT INT ENDED TO BE TAKEN OR GIVEN. THEREFORE, THE ENTIRE TRANSACTION CARRIED OUT BY THE ASSESSEE, INDICATED ABOVE, WAS WITHIN THE UMBRELLA OF SPECULATIVE TRANSACTION. THERE WAS, AS SUCH, NO BAR IN SETTING OFF THE LOSS ARISING OUT OF DERIVATIVES FROM THE INCOME ARISING OUT OF BUYING AND SELLING OF SHARES. THIS IS WHAT THE LEARNED TRIBUNA L HAS DONE. 9. FROM THE ABOVE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF BALJIT SECURITIES PVT. LTD. CITED SUPRA, THE ISS UE STANDS COVERED IN FAVOUR OF THE ASSESSEE. HOWEVER, WE MAKE IT CLEAR T HAT TOTAL TRANSACTION CONSIDERED FOR DETERMINING THIS BUSINE SS LOSS FROM DERIVATIVE TRANSACTIONS CANNOT BE MORE THAN THE TO TAL EXPORT TURNOVER OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSI DERATION AND IF THE DERIVATIVE TRANSACTION IS IN EXCESS OF EXPORT T URNOVER, THEN THAT LOSS SUFFERED IN RESPECT OF THAT PORTION OF EXCESS TRANSACTIONS TO BE CONSIDERED AS SPECULATIVE LOSS ONLY AS THAT EXCESS DERIVATIVE TRANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER A ND THE ASSESSING OFFICER IS DIRECTED TO COMPUTE ACCORDINGLY. THIS GR OUND IS ALLOWED AS INDICATED ABOVE . 5.2 THE SAME VIEW WAS TAKEN BY THIS TRIBUNAL IN THE C ASE OF M/S.COTTON BLOSSOM (INDIA) P. LTD (SUPRA). CONTRARY TO THE AB OVE ORDER OF THE - - MP NO.145 & 146/MDS./16 8 TRIBUNAL, THIS TRIBUNAL TOOK A CONTRARY VIEW IGNORING VARIOUS ORDERS CITED BY THE LD.A.R. IN OUR OPINION, THE TRIBUNAL COMMITTE D AN ERROR IN NOT CONSIDERING THE ABOVE BINDING DECISION OF THE CO-OR DINATE BENCH WHILE DISPOSING THE APPEAL OF ASSESSEE. THE TRIBUNAL ONLY CONSIDERED THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF CIT VS . BHARAT R. RUIA (HUF) CITED SUPRA. HOWEVER, IT IS NOT TAKEN INTO AC COUNT THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF M/S.AISHWARYA & CO. LTD (SUPRA), WHICH IS ALSO BASED ON THE DECISION OF KOLKATA HIGH COURT IN THE CASE OF M/S. BALJIT SECURITIES PVT. LTD. (88 CCH 313) AND A LSO JUDGEMENT OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. FIRST S ECRUITIES P. LTD. IN 370 ITR 72. 5.3 ADMITTEDLY JUDGMENT FROM HIGH COURT IS A SUPERI OR FORUM AS COMPARED TO THE ORDER OF TRIBUNAL AND IT IS TO BE FO LLOWED. HOWEVER, IN THESE CASES ON HAND, THERE IS A DECISION FROM THE C O-ORDINATE BENCH WHICH IS BASED ON THE JUDGMENT OF OTHER HIGH COURTS. THE TRIBUNAL MUST HAVE FOLLOWED SUCH BINDING DECISION OF TRIBUNAL WHICH IS BA SED ON THE VARIOUS JUDGEMENTS OF HIGH COURTS. OTHERWISE, IT WOULD PLAY A HAVOC WITH THE PRINCIPLES OF JUDICIAL DISCIPLINE AND CERTAINTY. IF THIS WAS TO BE PERMITTED, THEN DIFFERENT VIEW OF BENCHES OF EQUAL STRENGTH WOUL D HAVE PERMITTED TO BE TAKEN GIVING A COMPLETE GO BY TO THE PRINCIPLES OF JUDICIAL DISCIPLINE AND - - MP NO.145 & 146/MDS./16 9 JUDICIAL CERTAINTY. THUS, THE TRIBUNAL COULD NOT HA VE DISAGREE WITH THE DECISION RENDERED BY A CO-ORDINATE BENCH IN THESE T WO ASSESSMENT YEARS , AND MORE SO, MERELY IN THE LIGHT OF THE JUDGEMENT O F BOMBAY HIGH COURT IN THE CASE OF CIT VS. BHARAT R. RUIA (HUF) (SUPRA) ,THOUGH THERE WERE TWO CONFLICT DECISIONS RENDERED BY TWO HIGH COURTS, IT IS APPROPRIATE FOLLOWED THE DECISION, WHICH IS FAVOURABLE TO THE ASS ESSEE AS HELD BY SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS LTD . (88 ITR 192) AND CIT VS. PODAR CEMENT P.LTD. IN 226 ITR 625(SC). 5.4 FURTHER, RECTIFIABLE MISTAKES ARE THE MISTAKES EVEN IF THERE BE ANY, IS A CONSCIOUS ONE INASMUCH AS THE TRIBUNAL DULY CO NSIDERED ALL ASPECTS OF THE MATTER AND THEN CAME TO A PARTICULAR CONCLUSION. WH ATEVER BE THE MERITS OF SUCH A CONCLUSION, THE CONCLUSIONS SO ARRIVED AT BY THE TRIBUNAL CANNOT BE UNSETTLED AS IT WOULD AMOUNT TO REVIEWING THE ORDER OF THE TRIBU NAL. WE ARE NOT PERSUADED BY THIS LINE OF REASONING. UNDOUBTEDLY, ALL MISTAKES C ANNOT BE RECTIFIED UNDER SECTION 254(2). THE RECTIFIABLE MISTAKES ARE THE MISTAKES W HICH ARE OBVIOUS, PATENT, AND GLARING MISTAKES ON WHICH NO TWO VIEWS ARE POSSIBLE . ONCE A MISTAKE FITS IN THIS CATEGORY, AS IS THE CASE BEFORE US, IT IS IMMATERIA L WHETHER IT IS A CONSCIOUS MISTAKE OR UNCONSCIOUS MISTAKE. IF A JUDICIAL BODY LIKE THIS TRIBUNAL APPLIES ITS MIND TO A SITUATION BUT REACHES A WRONG CONCLUSION BECAUSE OF A SIMPLE MISTAKE COMMITTED IN THE PROCESS ON REASONING, ON WHICH NO TWO VIEWS ARE POSSIBLE, IT WILL INDEED BE UNREASONABLE TO SUGGEST THAT ONLY BE CAUSE THIS MISTAKE IS COMMITTED AFTER APPLICATION OF MIND ON A SITUATION, THIS IS NOT A MISTAKE APPARENT - - MP NO.145 & 146/MDS./16 10 FROM RECORDS. IT CANNOT BE TERMED AS AN ERROR OF JU DGMENT, BUT, IN OUR HUMBLE UNDERSTANDING, IT HAS TO BE TERMED AS A MISTAKE APP ARENT FROM RECORD RESULTING IN A VITIATED JUDGMENT. THE DIFFERENCE BETWEEN AN E RROR OF JUDGMENT VIS-A-VIS AN ERROR APPARENT FROM RECORD LEADING TO AN ERRONEOUS JUDGMENT MAY BE THIN BUT IS TOO SUBTLE TO BE IGNORED BY A JUDICIAL BODY. THE QU ESTION OF ERROR OF JUDGMENT CAN ONLY ARISE WHEN TWO VIEWS ARE POSSIBLE AND ONE OF THE VIEWS IS ADOPTED. THAT IS NOT THE CASE BEFORE US. IT IS A SIMPLE CASE OF OMISSION TO TAKE NOTE OF THE CONTEXT IN WHICH HON';BLE SUPREME COURT MADE CERTAI N OBSERVATIONS AND THEN INTERPRETING THOSE OBSERVATIONS AS FURTHER, HONBLE SUPREME COURT ITSELF, IN THE CASE OF CIT V. SUN ENGINEERING WORKS (P.) LTD. (1992 ) 198 ITR 297, HAS OBSERVED THAT, 'IT IS NEITHER DESIRABLE NOR PERMISS IBLE TO PICK OUT A WORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION, AND TO TREAT IT TO BE COMPLETE LAW DECLARED BY THIS COURT.' THE TRIBUNAL HAS ENDED UP DOING SOMETHING W HICH, AS IS THE LAW LAID DOWN BY THE HON';BLE SUPREME COURT, IS IMPERMISSIBL E IN LAW. THAT CANNOT BUT BE A GLARING, OBVIOUS AND PATENT ERROR AND, ACCORDINGL Y, LIABLE TO BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. TO SUGGEST THAT A CONSCI OUS MISTAKE, EVEN IF THAT BE A MISTAKE APPARENT FROM RECORD, CANNOT BE RECTIFIED U NDER SECTION 254(2) IS SOMEWHAT DEVOID OF LOGIC AND RATIONALE. IF A CONSCI OUS MISTAKE IS A MISTAKE APPARENT FROM RECORD, THERE IS NO REASON FOR NOT RE CTIFYING THE SAME UNDER THE PROVISIONS OF LAW. TO ERROR IS HUMAN BUT THERE CANN OT BE ANY JUSTIFICATION FOR PERPETUATING AN ERROR. IN HIS INIMITABLE WORDS, JUS TICE BHAGWATI, IN THE CASE OF - - MP NO.145 & 146/MDS./16 11 DISTRIBUTORS (BARODA) (P.) LTD. V. UNION OF INDIA ( 1985) 155 ITR 120(SC), HAD OBSERVED THUS : 'TO PERPETUATE AN ERROR IS NO HEROISM. TO RECTIFY, IT IS THE COMPULSION OF JUDICIAL CONSCIENCE. IN THIS, WE DERI VE COMFORT AND STRENGTH FROM WISE AND INSPIRING WORDS OF JUSTICE B RONSON IN PIERCE V. DELAMETER A JUDGE OUGHT TO BE WISE ENOUGH TO KN OW THAT HE IS FALLIBLE, AND, THEREFORE, EVER READY TO LEARN; GREA T AND HONEST ENOUGH TO DISCARD ALL MERE PRIDE OF OPINION AND FOL LOW THE TRUTH WHEREVER IT MAY LEAD; AND COURAGEOUS ENOUGH TO ACKN OWEDGE HIS ERRORS.';' 5.5 WE ARE, THEREFORE, UNABLE TO ACCEPT REVENUE'S CONTENTION THAT A CONSIDERED OPINION EXPRESSED BY THE TRIBUNAL, AFTER APPLYING ITS MIND TO AN ISSUE IN APPEAL, CANNOT BE UNSETTLED EVEN IF THE MISTAKE IN THE PROCESS OF REASONING IS A SIMPLE MISTAKE APPARENT FROM RECORD ON WHICH NO T WO VIEWS ARE POSSIBLE. 6. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE O F THE CONSIDERED VIEW THAT THE TRIBUNAL DID COMMIT AN ERROR, WHICH IS APPARENT FROM RECORD, IN HOLDING THAT ASSESSEE'S LOSS WAS TO BE TREATED AS SPECULATION LO SS. AS WE HOLD SO, WE AGREE TO THE FACT THAT THE CASE BEFORE US IS A CASE WHERE TH E DISTINCTION BETWEEN RECTIFICATION OF A MISTAKE AND REVIEW OF AN ORDER M AY APPEAR TO BE BLURRED TO SOME EXTENT, BUT THEN, JUST BECAUSE IT IS A CLOSE J UDICIAL DECISION, CANNOT BE A GROUND TO JUSTIFY ANY INERTIA ON OUR PART. MERELY B ECAUSE THE EXERCISE OF POWERS UNDER SECTION 254(2) ON THE FACTS OF THIS CASE IS U NCOMFORTABLY CLOSE TO A REVIEW OF THE TRIBUNAL'S ORDER, WE CANNOT JUSTIFY NEGATION OF A REMEDY PROVIDED TO THE APPLICANT UNDER THE SCHEME OF THE ACT. AS REGARDS L EARNED DEPARTMENTAL - - MP NO.145 & 146/MDS./16 12 REPRESENTATIVE'S ARGUMENT, WE DO NOT FIND MUCH SUBS TANCE IN THE SAME. IN OUR OPINION, THE POWER OF RECTIFICATION UNDER SECTION 2 54(2) OF THE INCOME-TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOU GHT TO BE RECTIFIED IS A OBVIOUS AND PATENT MISTAKE FROM RECORD, AND NOT A M ISTAKE WHICH IS REQUIRED TO BE ESTABLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING ON THE POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. IN OUR CONSIDERED VIEW, THE CASE BEFORE US FALLS IN THE FIRST CATEGORY AND THER E CANNOT CONCEIVABLY BE TWO OPINIONS ON THE QUESTION AS TO TREATMENT OF LOSS. T REATING THE LOSS AS BUSINESS LOSS FOR THE PURPOSES OF SET OFF OF THE SAME WITH B USINESS INCOME IS A MISTAKE WHICH IS NOT CAPABLE OF TWO VIEWS BEING TAKEN IN TH AT RESPECT. THE STAND TAKEN BY THE TRIBUNAL BEING DIRECTLY CONTRARY TO THE LAW SETTLED BY THE CO-ORDINATE BENCH AND DIRECTLY OPPOSED TO THE CLEAR PROVISIONS OF LAW, IS SO FUNDAMENTAL THAT IT GOES TO THE ROOT OF THE MATTER AND MAY DIRECTLY AFFECT THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL. THE ONLY GROUND OF APPEAL IN TH E TRIBUNAL'S ORDER IS RELATING TO THIS ISSUE AND, THEREFORE, TO BE RECTIFIED. 7. FURTHER, THE TRIBUNAL HAVING TAKEN VIEW WHICH IS DIRECTLY CONTRARY TO EARLIER DECISION, IT IS AN ERROR WHICH IS APPAR ENT FROM RECORD LIABLE TO RECTIFIED U/S.254(2) OF THE ACT; ONCE THE MISTAKE I S BROUGHT TO THE NOTICE OF TRIBUNAL WHETHER IT IS A CONSCIOUS MISTAKE OR UNCONSC IOUS MISTAKE, NON- CONSIDERATION OF DECISION OF CO-ORDINATE BENCH WAS A MISTAKE APPARENT FROM RECORD WITHIN A MEANING OF SEC.254(2) OF THE AC T AS HELD BY THE SUPREME COURT IN THE CASE OF M/S.HONDA SIEL POWER PR ODUCTS LTD. VS. CIT - - MP NO.145 & 146/MDS./16 13 IN [2007] 213 CTR 425(SC) AND ALSO DELHI BENCH OF TH IS TRIBUNAL IN THE CASE OF MOHAN MEAKIN LTD. VS. ITO IN [2004] 84 TTJ 01 (DEL.) (TM) AND MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF PLAZA I NVESTMENTS PVT.LTD. VS. ITO IN [2007] 108 ITD 239 (ITAT[MUM]). 8. ACCORDINGLY, WE DIRECT THE AO TO FOLLOW THE ORDE R OF THE TRIBUNAL IN THE CASE OF M/S.MAJESTIC EXPORTS CITED (SUPRA). ACCORDINGLY, THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE ARE A LLOWED AND EARLIER ORDER OF THE TRIBUNAL IS RECTIFIED ON THIS ISSUE AND IT IS TO BE TREATED AS BUSINESS LOSS ONLY. HOWEVER, THERE IS NO CHANGE IN FINAL RES ULT OF REVENUES APPEALS. 9. IN THE RESULT, MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 28 TH OCTOBER, 2016 AT CHENNAI. SD/- SD/- ( . ) ( !'# $ ) (G. PAVAN KUMAR) (CHANDRA POOJARI) 5 6 78 /JUDICIAL MEMBER 9 78 /ACCOUNTANT MEMBER !95 /CHENNAI, @7' /DATED, THE 28 TH OCTOBER, 2016. KSSUNDARAM A79B 6CD E9D / COPY TO: 1 . / APPELLANT 3. A A F () / CIT(A) 5. DGH 66IJ / DR 2. / RESPONDENT 4. A A F / CIT 6. HKL M / GF