Dy. C.I.T.4(1), Agra V. M/s Pee Cee Soap & Chemicals Pvt. Ltd., Agra

MA 15/AGR/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0120 (ITAT-AGRA)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2013
• Assessment Year: misc
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: SHRI
• Keywords: Depreciation; Deemed to accrue or arise in india; Difference of opinion; Capital receipt; Change of opinion
• Section: 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER M.A. NO. 14/AGRA/2013 (IN ITA NO. 434/AGRA/2011) ASSTT. YEAR : 2007-08 D.C.I.T., CIRCLE 4 (1), VS. M/S. PEE CEE COSMA SO AP LIMITED, AGRA. D-10/8, PADAMDEEP TOWER, SANJAY PLACE, AGRA. (PAN : AAACP 7280L) M.A. NO. 15/AGRA/2013 (IN ITA NO. 29/AGRA/2012) ASSTT. YEAR : 2007-08 D.C.I.T., CIRCLE 4 (1), VS. M/S. PEE CEE SOAP & CH EMICALS (P) LTD., AGRA. D-10/8, PADAMDEEP TOWER, SANJAY PLACE, AGRA. (PAN : AAACP 7281 M) M.A. NO. 16/AGRA/2013 (IN ITA NO. 28/AGRA/2012) ASSTT. YEAR : 2007-08 D.C.I.T., CIRCLE 4 (1), VS. M/S. SURAJ BHAN AGENC IES PVT. LTD., AGRA. 19/9, KHATENA ROAD, LOHAMANDI, AGRA. (PAN : AABCS 9058 E) M.A. NO. 17/AGRA/2013 (IN ITA NO. 124/AGRA/2012) ASSTT. YEAR : 2008-09 D.C.I.T., CIRCLE 4 (1), VS. M/S. RASTOGI ICE & CO LD STORAGE, AGRA. VILLAGE PEELIPOKHAR,, HATHRAS ROAD, AGRA. (PAN : AAHFR 7367 J) (APPLICANT) (RESPONDENTS) M.A. NO. 14, 15, 16 & 17/AGRA/2013 2 APPLICANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENTS BY : SHRI PANKAJ GARGH, ADVOCATE DATE OF HEARING : 24.05.2013 DATE OF PRONOUNCEMENT OF ORDER : 24.05.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS ORDER SHALL DISPOSE OF ALL THE ABOVE MISCELLA NEOUS APPLICATIONS FILED BY THE REVENUE DEPARTMENT FOR SEEKING RECTIFICATION IN EARLIER ORDERS OF THE TRIBUNAL DATED 11.05.2012, 31.08.2012 AND 14.09.2012. FOR TH E SAKE OF CONVENIENCE, WE FIRST DISPOSE OF M.A. NO. 14/AGRA/2013 IN THE CASE OF M/S. PEE CEE COSMA SOAP LIMITED AS UNDER : M.A. NO. 14/AGRA/2013 : 2. THE DEPARTMENT HAS FILED PRESENT MISCELLANEOUS APPLICATION ON THE GROUND THAT WHILE DECIDING THE APPEAL OF THE ASSESSEE WITH REGARD TO DEDUCTION U/S. 40(A)(IA) OF THE IT ACT, THE TRIBUNAL FOLLOWED THE DECISION OF ITAT, SPECIAL BENCH, VISHAKHAPATNAM IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT, VISHAKHAPATNAM AND DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE. THE TRIBUNAL PASSED THE ORDER ON 11.05.2012. THE LD. DR CONTENDE D THAT THE HONBLE A.P. HIGH COURT VIDE THEIR SUBSEQUENT ORDER DATED 08.10.2012 HAS GRANTED INTERIM SUSPENSION OF ORDER OF THIS SPECIAL BENCH AND THERE IS MISTAKE APPARENT ON RECORD AND THE ORDER MAY BE SUITABLY RECTIFIED. M.A. NO. 14, 15, 16 & 17/AGRA/2013 3 3. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, CONTE NDED THAT THE APPEAL OF THE ASSESSEE WAS DECIDED ON THE BASIS OF THE LAW PREVAI LING AT THAT TIME, WHICH HAS BEEN PRONOUNCED BY THE SPECIAL BENCH OF TRIBUNAL. T HEREFORE, THERE IS NO MISTAKE APPARENT ON RECORD AND HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SHREE CHAMUNDI MOPEDS LTD. VS. CHURCH O R SOUTH INDIA TRUST ASSN. CSI CINODSECRETARITE, MADR, 1992 AIR 1439, 1992 SCR (2) 999, IN WHICH IT WAS HELD AS UNDER : WHILE CONSIDERING THE EFFECT OF AN INTERIM ORDER S TAYING THE OPERATION OF THE ORDER UNDER CHALLENGE, A DISTINCTI ON HAS TO BE MADE BETWEEN QUASHING OF AN ORDER AND STAY OF OPERATION OF AN ORDER QUASHING OF AN ORDER RESULTS IN THE RESTORATION OF THE POSITION AS IT STOOD ON THE DATE OF THE PASSING OF THE ORDER WHICH HAS BEEN QUASHED. THE STAY OF OPERATION OF AN ORDER DOES NOT, HOWEVER , LEAD TO SUCH A RESULT. IT ONLY MEANS THAT THE ORDER WHICH HAS BEEN STAYED WOULD NOT BE OPERATIVE FROM THE DATE OF THE PASSING OF THE ST AY ORDER AND IT DOES NOT MEAN THAT THE SAID ORDER HAS BEEN WIPED OUT FRO M EXISTENCE. THIS MEANS THAT IF AN ORDER PASSED BY THE APPELLATE AUTH ORITY IS QUASHED AND THE MATTER IS REMANDED, THE RESULT WOULD BE THA T THE APPEAL WHICH HAD BEEN DISPOSED OF BY THE SAID ORDER OF THE APPEL LATE AUTHORITY WOULD BE RESTORED AND IT CAN BE SAID TO BE PENDING BEFORE THE APPELLATE AUTHORITY AFTER THE QUASHING OF THE ORDER OF THE APPELLATE AUTHORITY. THE SAME CANNOT BE SAID WITH REGARD TO A N ORDER STAYING THE OPERATION OF THE ORDER OF THE APPELLATE AUTHORI TY BECAUSE IN SPITE OF THE SAID ORDER, THE ORDER OF THE APPELLATE AUTHO RITY CONTINUES TO EXIST IN LAW SO LONG AS IT EXISTS, IT CANNOT BE SAI D THAT THE APPEAL WHICH HAS BEEN DISPOSED OF BY THE SAID ORDER HAS NOT BEEN DISPOSED OF AND IS STILL PENDING. WE ARE, THEREFORE, OF THE OPINION TH AT THE PASSING OF THE INTERIM ORDER DATED FEBRUARY 21, 1991 BY THE DELHI HIGH COURT STAYING THE OPERATION OF THE ORDER OF THE APPELLATE AUTHORITY DATED JANUARY 7, 1991 DOES NOT HAVE THE EFFECT OF REVIVIN G THE APPEAL WHICH HAD BEEN DISMISSED BY THE APPELLATE AUTHORITY BY IT S ORDER DATED JANUARY 7, 1991 AND IT CANNOT BE SAID THAT AFTER FE BRUARY 21, 1991, THE SAID APPEAL STOOD REVIVED AND WAS PENDING BEFOR E THE APPELLATE AUTHORITY. IN THAT VIEW OF THE MATTER, IT CANNOT BE SAID THAT ANY M.A. NO. 14, 15, 16 & 17/AGRA/2013 4 PROCEEDINGS UNDER THE ACT WERE PENDING BEFORE THE B OARD OR THE APPELLATE AUTHORITY 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. HONBLE SUPREME COURT IN THE CASE OF MEPCO INDUSTRI ES LTD. VS. CIT, 319 ITR 208 HELD AS UNDER:- THE ASSESSEE, WHICH WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF POTASSIUM CHLORATE, RECEIVED POWER S UBSIDY FOR TWO YEARS, WHICH IT INITIALLY OFFERED AS A REVENUE RECE IPT IN ITS RETURNS OF INCOME. IN PETITIONS FILED FOR REVISION UNDER SECTI ON 264 OF THE INCOME- TAX ACT, 1961, THE ASSESSEE PLEADED THAT THE SUBSID Y WAS A CAPITAL RECEIPT, AND FOLLOWING A DECISION OF THE SUPREME CO URT THE COMMISSIONER ALLOWED THE REVISION APPLICATIONS. THE REAFTER, THE SUPREME COURT DECIDED IN SAHNEY'S CASE [1997] 228 I TR 253 (SC) THAT INCENTIVE SUBSIDY ADMISSIBLE TO THE ASSESSEE I N THAT CASE WAS A REVENUE RECEIPT AND TAXABLE UNDER SECTION 28. FOLLO WING THAT DECISION THE COMMISSIONER PASSED AN ORDER OF RECTIFICATION U NDER SECTION 154 ON THE SOLE GROUND THAT THE POWER TARIFF SUBSIDY GI VEN TO THE ASSESSEE WAS ADMISSIBLE ONLY AFTER COMMENCEMENT OF PRODUCTIO N. ON A WRIT PETITION, THE HIGH COURT HELD THAT THE DEPARTMENT W AS ENTITLED TO INVOKE SECTION 154. ON APPEAL TO THE SUPREME COURT : HELD, REVERSING THE DECISION OF THE HIGH COURT, THA T THE RIGHT TO RECTIFY MISTAKES UNDER SECTION 154 COULD NOT BE INV OKED IN A CASE OF MERE CHANGE OF OPINION. A RECTIFIABLE MISTAKE WAS A MISTAKE WHICH WAS OBVIOUS AND NOT SOMETHING WHICH HAD TO BE ESTAB LISHED BY A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS WE RE POSSIBLE. A DECISION ON A DEBATABLE POINT OF LAW COULD NOT BE T REATED AS A 'MISTAKE APPARENT FROM THE RECORD. 4.1 HONBLE MADRAS HIGH COURT IN THE CASE OF M/S. P ALANI ANDAVAR COTTON AND SYNTHETIC SPINNERS LTD., 326 ITR 339 HELD AS UNDER : AN IMPRESSION FORMED ON THE SCOPE OF THE PROVISIONS COULD NOT BE A MISTAKE OR AN ERROR APPARENT FROM THE RECORD S O AS TO JUSTIFY THE EXERCISE OF JURISDICTION UNDER SECTION 154 OF THE I NCOME-TAX ACT, 1961. M.A. NO. 14, 15, 16 & 17/AGRA/2013 5 THE INVOKING OF THE PROVISIONS OF SECTION 154 PRESU PPOSES A MISTAKE OR AN ERROR WHICH IS PATENT OR OBVIOUS AND DOES NOT INVOLVE A LONG DRAWN PROCESS OF REASONING. THE EXPOSITION OF LAW S UBSEQUENTLY BY THE SUPREME COURT DOES NOT MAKE AN ERROR ONE APPARE NT FROM THE RECORD FOR THE AUTHORITY TO ASSUME JURISDICTION UND ER SECTION 154. THE ASSESSEE FILED RETURNS FOR THE ASSESSMENT YEARS 1988-89, 1989-90 AND 1990-91 DISCLOSING LOSS AND A BOOK PROF IT UNDER SECTION 115J. THE RETURNS WERE CONSIDERED AND PROCESSED UND ER SECTION 143(1)(A). ON GOING THROUGH THE RECORDS, THE DEPUTY COMMISSIONER FOUND THAT THE PROFIT AVAILABLE FOR ADJUSTMENT HAD BEEN TAKEN INTO ACCOUNT AFTER REDUCING 30 PER CENT. OF THE BOOK PRO FIT BY WRONGLY APPLYING SECTION 115J(2). TREATING THIS AS A MISTAK E APPARENT ON RECORD, PROCEEDINGS WERE INITIATED UNDER SECTION 15 4. ORDERS OF RECTIFICATION WERE PASSED AND THESE WERE CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE PREFERRED APPEALS BEFORE THE TRIBUNAL CONTENDING THAT WHILE C OMPUTING THE PROFIT FOR THE PURPOSES OF SECTION 115J, DEPRECIATI ON CLAIMED WAS NOT ALLOWED, WHICH RESULTED IN AN ASSESSMENT ON A HIGHE R DEEMED INCOME. THE ASSESSEE SUBMITTED THAT THE EXTENT OF DEPRECIAT ION CLAIMED NOT ALLOWED FOR THE PURPOSE OF SECTION 115J MUST BE ALL OWED TO BE CARRIED FORWARD IN THE SUBSEQUENT YEAR. THE ASSESSEE ALSO C ONTENDED THAT THE ISSUE SOUGHT TO BE TOUCHED IN AN INTIMATION UNDER S ECTION 143(1)(A) BY RECOURSE TO PROCEEDINGS UNDER SECTION 154 WAS AN AR GUABLE ISSUE AND THAT THE ORDERS OF THE ASSESSING OFFICER AND THE CO MMISSIONER OF INCOME-TAX (APPEALS) WERE TOTALLY ERRONEOUS. THE TR IBUNAL SET ASIDE THE ORDER OF RECTIFICATION. ON APPEALS TO THE HIGH COURT : HELD, DISMISSING THE APPEALS, THAT ON THE DATE OF THE PROCEEDINGS TAKEN UNDER SECTION 143(1)(A) AS WELL A S UNDER SECTION 154, ADMITTEDLY, THERE WAS A DISPUTE WITH REFERENCE TO THE COMPUTATION OF BOOK PROFIT AND THE CARRY FORWARD OF LOSS AND TH E DEPRECIATION FOR THE PURPOSES OF SECTION 115J. THE LAW ON THE QUESTI ON WAS SETTLED BY THE COURT AND AGAIN BY THE SUPREME COURT. ALTHOUGH THE LAW SO DECLARED WOULD DATE BACK TO THE INCEPTION OF THE PR OVISIONS, WITH THE UNCERTAINTY EXISTING AS ON THE DATE WHEN THE PROCEE DINGS UNDER SECTION 143(1)(A) WERE SUBJECTED TO SECTION 154, TH E JURISDICTION UNDER SECTION 154 WAS NOT AVAILABLE TO CORRECT THE ILLEGA LITY IN AN ASSESSMENT. THE ORDERS OF RECTIFICATION WERE NOT VA LID. THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE P ETITION FILED BY THE DEPARTMENT AGAINST THE JUDGMENT : SEE (2009) 317 ITR (SR.) 3 ED. M.A. NO. 14, 15, 16 & 17/AGRA/2013 6 4.2 HONBLE MADRAS HIGH COURT SUBSEQUENTLY IN THE C ASE OF CIT VS. THAMBI MODERN SPINNING MILLS LTD., 341 ITR 229 HELD AS UNDER : THE RECTIFICATION CONTEMPLATED UNDER SECTION 154 OF THE INCOME-TAX ACT, 1961, MUST BE A RECTIFIABLE MISTAKE . A DECISION ON A DEBATABLE POINT OF LAW CANNOT BE TAKEN AS A MISTAKE APPARENT FROM RECORD. A SUBSEQUENT DECISION OF THE SUPREME COURT WOULD NOT OBLITERATE THE CONFLICT OF OPINION WHICH EXISTED AS ON THE DATE OF PASSING OF THE ASSESSMENT ORDER. HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE RECTIFICATION UNDER SECTION 154 WA S NOT VALID ON THE ISSUE OF CARRY FORWARD OF ALLOWANCES WHILE COMPLETI NG THE ASSESSMENT UNDER SECTION 115J AS THE ISSUE WAS DEBATABLE AND T HE TRIBUNAL WAS RIGHT IN ALLOWING THE CLAIM OF THE ASSESSEE TO CARR Y FORWARD THE LOSSES AND ALLOWANCES. 5. THE JURISDICTION U/S. 254(2) CAN BE EXERCISED BY THE TRIBUNAL IF THERE IS ANY MISTAKE APPARENT FROM THE RECORD OF THE TRIBUNAL. T HIS PROVISION IS ANALOGOUS TO THE PROVISIONS OF SECTION 154 OF THE IT ACT, IN WHI CH POWER OF RECTIFICATION HAS BEEN GIVEN TO INCOME TAX AUTHORITIES. THEREFORE, TH E DECISIONS CITED ABOVE OF HONBLE SUPREME COURT AS WELL AS OF MADRAS HIGH COU RT SQUARELY APPLY IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT MAY ALS O BE NOTED THAT THE ORDER HAS BEEN PASSED BY THE TRIBUNAL ON 11.05.2011 AND AT TH AT TIME THERE WAS NO DECISION PRONOUNCED BY HONBLE A.P. HIGH COURT STAYING THE D ECISION OF SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT (SUPR A). THEREFORE, ANY INTERIM ORDER PASSED SUBSEQUENTLY BY THE HONBLE HIGH COURT WOULD BE OF NO HELP TO THE M.A. NO. 14, 15, 16 & 17/AGRA/2013 7 REVENUE DEPARTMENT. THUS, THERE IS NO MISTAKE APPAR ENT ON RECORD OF THE TRIBUNAL. THE M.A. OF THE REVENUE HAS NO MERIT AND IS ACCORDI NGLY DISMISSED. M.A. NOS. 15, 16 & 17/AGRA/2013 : 6. SINCE THE ISSUE INVOLVED IN THESE MISCELLANEOUS PETITIONS IS SAME AS HAS BEEN CONSIDERED IN MA NO. 14/AGRA/2013 ABOVE, WE, THEREF ORE, FOLLOWING THE SAME REASONS FOR DECISION, DISMISS THESE MISCELLANEOUS A PPLICATIONS FILED BY THE REVENUE AS WELL. IN THE RESULT, ALL THESE THREE MISCELLANEO US APPLICATIONS ARE ALSO DISMISSED. 7. IN THE RESULT, ALL THE MISCELLANEOUS APPLICATION S NOS. 14, 15, 16 & 17/AGRA/2013 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY