ASST CIT 4(3), V. KOTAK SECURITIES LTD,

MA 246/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1265 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 05-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: FAROOKH IRANI
• Keywords: Retrospective amendment; Question of law
• Section: 260A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDI CIAL MEMBER . / M.A . NO. 246 / MUM./20 13 ( . / ITA NO. 3272 / MUM./ 20 0 6 ) ( / ASSESSMENT YEAR : 20 0 2 03 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4 ( 3), AAYAKAR BHAVAN 101, M.K. ROAD MUMBAI 400 0 20 .. / APP LICANT V/S KOTAK SECURITIES LTD. BAKTHAWAR, 229, NARIMAN POINT MUMBAI 400 021 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACK3436F / REVENUE BY : MR. RAVI PRAKA SH / ASSESSEE BY : MR. FAROOKH IRANI / DATE OF HEARING 2 9 . 11 .2013 / DATE OF ORDER 06.12.2013 / ORDER , / PER AMIT SHUKLA , J.M. BY WAY OF THIS MISCELLANE OUS APPLICATION, THE REVENUE SEEKS RECALL / RECTIFICATION OF THE IMPUGNED ORDER DATED 27 TH JULY 2011 , PASSED BY THE TRIBUNAL, MUMBAI BENCH, IN ITA NO. 3272 /MUM./20 06, 1501 & 1052/MUM./ KOTAK SECURI TIES LTD. 2 2007 , FOR ASSESSMENT YEAR S 2002 06, 2003 04 AND 2004 05 . THE SOLE ISSUE RAISED BY THE REVENUE IN ITS APPLICATION IS THAT THE LEVY OF INTEREST UNDER SECTION 234D , HAS WRONGLY BEEN DELETED BY THE TRIBUNAL IN THE WAKE OF THE RECENT JURISDICTIONAL HIGH COURT DECISION. 2 . THE REVENUES CASE IS THAT THE TRIBUNAL, WHILE DELETING THE I NTEREST UNDER SECTION 234D, HAS FOLLOWED THE DECISION OF THE DELHI HIGH COURT IN DIT V/S JAKOBS CIVIL INCORPORATED, 333 ITR 578 (DEL.) , WHICH CANNOT BE SUSTAINED AS THE JURISDICTIONAL HIGH COURT IN INDIAN OIL CORPORATION LTD., [ 1012 ] 25 TAXMAN .COM 284 (BOM .) HAS HELD THAT LEVY OF INTEREST UNDER SECTION 234D IS APPLICABLE EVEN FOR THE PERIOD PRIOR TO ASSESSMENT YEAR 2004 05. IN VIEW OF THIS LATEST DECISION OF THE JURISDICTIONAL HIGH COURT, THE DECISION OF THE TRIBUNAL DATED 27 TH JULY 2011, DELETING THE LEVY OF INTEREST UNDER SECTION 234D CANNOT BE SUSTAINED. 3 . LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ONCE THE DECISION OF THE JURISDICTIONAL HIGH COURT WHICH WAS RENDERED SUBSEQUENT TO PASSING OF THE ORDER BY THE TRIBUNAL, THE SAME CONSTITUTES MISTAKE A PPARENT FROM RECORD WITHIN THE MEANING OF SECTION 254(2) IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN ACIT V/S SAURASHTRA KUTCH STOCK EXCHANGE LTD., [2008] 305 ITR 227 (SC) . 4 . PER CONTRA, THE LEARNED COUNSEL, MR. FAROOKH IRANI, ON BEHALF OF THE A SSESSEE, SUBMITTED THAT ONCE THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HIGH COURT WHICH WAS FAVOURABLE TO THE ASSESSEE AND NO CONTRARY DECISION BY THE JURISDICTIONAL HIGH COURT OR BY THE HON'BLE SUPREME COURT WAS AVAILABLE, THEN, IN SUCH CIRCUMSTANCES, IT CANNOT BE HELD THAT THERE IS MISTAKE IN THE ORDER OF THE TRIBUNAL WHICH CAN BE RECTIFIED WITHIN THE SCOPE OF SECTION 254(2). HE SUBMITTED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE, THE TRIBUNAL HAS NOT FOLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT WHICH WAS AVAILABLE AT THE TIME OF PASSING OF THE IMPUGNED ORDER BY KOTAK SECURI TIES LTD. 3 THE TRIBUNAL AND IN THIS CASE THE DECISION OF THE JURISDICTIONAL HIGH COURT HAS BEEN RENDERED A FTER ONE YEAR OF THE PASSING OF THE IMPUGNED ORDER. THEREFORE, THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL. HE FURTHER SUBMITTED THAT THE DECISION OF THE TRIBUNAL WAS SUBJECT MATTER OF APPEAL UNDER SECTION 260A AND THE SAID APPEAL WAS DISPOSED OFF BY THE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 3 RD APRIL 2012. IN SUCH A SITUATION, THE ORDER OF THE TRIBUNAL CAN BE SAID TO BE MERGED WITH THE ORDER PASSED BY THE JURISDICTIONAL HIGH COURT AND, THEREFORE, THE TRIBUNAL CANNOT RECTIFY ITS ORDER UNDER SECTIO N 254(2). IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CIT V/S PAUL BROTHERS, [1995] 79 TAXMAN 378 (BOM.). 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDINGS AND THE OBSERVATIONS OF THE DECISIONS RELIED UPON BEFORE US. IN THE PRESENT CASE, THE TRIBUNAL HAS DELETED THE LEVY OF INTEREST UNDER SECTION 234D ON THE GROUND THAT THE SAID SECTION HAS BEEN BROUGHT IN STATUTE FROM THE ASSESSMENT YEAR 2004 05 AND IN VIEW OF THE DECISION OF DELHI SPECIAL BENCH IN ITO V/S EKTA PROMOTIONS LTD., 113 ITD 719 (DEL.) (SB) AND THE DELHI HIGH COURT DECISION IN JAKOBS CIVIL INCORPORATED (SUPRA), INTEREST CANNOT UNDER SECTION 234D CANNOT BE LEVIED FOR THE ASSESSMENT YEAR PRIOR TO THE ASSESSMENT YEAR 2004 05 . SUBSEQUENTLY, THE JURISDICTIONAL HIGH COURT IN INDIAN OIL CORPORATION LTD. (SUPRA), VIDE ITS JUDGMENT DATED 12 TH SEPTEMBER 2012, HAS HELD THAT INTEREST UNDER SECTION 234D CAN BE CHARGED EVEN FOR THE PERIOD PRIOR TO THE ASSESSMENT YEAR 2004 05. NOW IN SUC H A SITUATION, WHETHER IT CAN BE HELD THAT THE IMPUGNED ORDER OF THE TRIBUNAL CAN BE RECALLED / RECTIFIED WITHIN THE MEANING OF SECTION 254(2) . THE HON'BLE SUPREME COURT IN SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) , OBSERVED THAT IF A SUBSEQUENT DECISIO N HAS BEEN RENDERED BY THE JURISDICTIONAL HIGH COURT OR THE SUPREME COURT, THEN IT APPLIES RETROSPECTIVELY BECAUSE THE COURTS DO NOT PRONOUNCE A NEW LAW BUT ONLY A DISCOVERS THE CORRECT INTERPRETATION OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. IN THE WAKE OF KOTAK SECURI TIES LTD. 4 SUCH A PROPOSITION, IT CAN BE HELD THAT EVEN BY VIRTUE OF SUBSEQUENT ORDER, RECTIFICATION CAN BE MADE UNDER SECTION 254(2). THE RELEVANT OBSERVATION OF THE HON'BLE SUPREME COURT ARE AS UNDER: 40. THE CORE ISSUE, THEREFORE, IS WHETHER NON - CONSIDE RATION OF A DECISION OF JURISDICTIONAL COURT (IN THIS CASE A DECISION OF THE HIGH COURT OF GUJARAT) OR OF THE SUPREME COURT CAN BE SAID TO BE A 'MISTAKE APPARENT FROM THE RECORD' ? IN OUR OPINION, BOTH - THE TRIBUNAL AND THE HIGH COURT - WERE RIGHT IN HOLDING THAT SUCH A M ISTAKE CAN BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD WHICH COULD BE RECTIFIED U/S 254(2). 41. A SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFORE THE HIGH COURT OF GUJARAT IN SUHRID GEIGY LTD. VS. COMMR. OF SURTAX (SUPRA). IT WAS HEL D BY THE DIVISION BENCH OF THE HIGH COURT THAT IF THE POINT IS COVERED BY A DECISION OF THE JURISDICTIONAL COURT RENDERED PRIOR OR EVEN SUBSEQUENT TO THE ORDER OF RECTIFICATION, IT COULD BE SAID TO BE 'MISTAKE APPAR E NT FROM THE RECORD' UNDER S. 254(2) OF T HE ACT AND COULD BE CORRECTED BY THE TRIBUNAL. 42. IN OUR JUDGMENT, IT IS ALSO WELL - SETTLED THAT A JUDICIAL DECISION ACTS RETROSPECTIVELY. ACCORDING TO BLACKSTONIAN THEORY, IT IS NOT THE FUNCTION OF THE COURT TO PRONOUNCE A 'NEW RULE' BUT TO MAINTAIN AND EXPOUND THE 'OLD ONE'. IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY ONLY DISCOVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN THE SAME. IF A SUBSEQUENT DECISION ALTERS THE EARLIER ONE, IT (THE LATER DECISION) DOES NOT MAKE NEW LA W. IT ONLY DISCOVERS CORRECT PRINCIPLE OF L AW WHICH HAS TO BE APPLIED RETROSPECTIVE LY . TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOME TIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOO D. 43. SALMOND IN HIS WELL - KNOWN WORK STATES; '(T)HE THEORY OF CASE LAW IS THAT A JUDGE DOES NOT MAKE LAW; HE MERELY DECLARES IT; AND THE OVERRULING OF A PREVIOUS DECISION IS A DECLARATION THAT THE SUPPOSED RULE NEVER WAS LAW. HENCE ANY INTERMEDIATE TRANSACTIONS MADE ON THE STRENGTH OF THE SUPPOSED RULE ARE GOVERNED BY THE LAW ESTABLISHED IN THE OVERRULING DECISION. THE OVERRULING IS RETROSPECTIVE, EXCEPT AS REGARDS MATTERS THAT ARE RES JUDICATAE OR ACCOUNTS THAT HAVE BEEN SETTLED IN THE MEANTIME'. 44. IT IS NO DOUBT TRUE THAT AFTER A HISTORIC DECISION IN GOLAK NATH VS. UNION OF INDIA, (1967) 2 SCR 762, THIS COURT HAS ACCEPTED THE DOCTRINE OF 'PROSPECTIVE OVERRULING'. IT IS BASED ON THE PHILOSOPHY: 'THE PAST CANNO T ALWAYS BE ERASED BY A NEW JUDICIAL DECLARATION'. IT MAY, HOWEVER, BE STATED THAT THIS IS AN EXCEPTION TO THE GENERAL RULE OF THE DOCTRINE OF PRECEDENT. KOTAK SECURI TIES LTD. 5 45. RECTIFICATION OF AN ORDER STEMS FROM THE FUNDAMENTAL PRINCIPLE THAT JUSTICE IS ABOVE ALL. IT IS E XERCISED TO REMOVE THE ERROR AND TO DISTURB THE FINALITY. 6 . THE AFORESAID OBSERVATIONS OF THE HON'BLE SUPREME COURT ARE THOUGH IN THE NATURE OF OBITER DICTA BUT HAVE A BINDING PRECEDENCE TO ALL THE COURTS. THUS, I N VIEW OF THE AFORESAID OBSERVATIONS OF T HE HON'BLE APEX COURT, WE HOLD THAT THE SUBSEQUENT DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN INDIAN OIL CORPORATION LTD. (SUPRA) WILL APPLY RETROSPECTIVELY AND THE DECISION RENDERED IN VIOLATION OF THE LAW LAID DOWN BY THE JURISDICTIONAL HIGH CO URT HAS TO BE MODIFIED AND HAS TO BE BROUGHT IN CONSONANCE WITH THE SAID PROPOSITION OF LAW. I N OUR OPINION, THE DECISION OF THE TRIBUNAL TO THE EXTENT OF DELETING THE LEVY OF INTEREST UNDER SECTION 234D CONSTITUTES MISTAKE WHICH CAN BE RECTIFIED UNDER SEC TION 254(2). 7 . NOW COMING TO THE OTHER LIMB OF THE ARGUMENT AS CONVASSED BY THE LEARNED COUNSEL THAT WHETHER THE ORDER OF THE TRIBUNAL CAN BE SAID TO BE MERGED WITH THE ORDER OF THE HIGH COURT PASSED IN APPEAL FILED BY THE DEPARTMENT UNDER SECTION 260A. IN OUR OPINION, SUCH AN ARGUMENT CANNOT BE SUSTAINED BECAUSE UNDER SECTION 260A, AN APPEAL LIES BEFORE THE HIGH COURT AGAINST THE ORDER PASSED BY THE TRIBUNAL ONLY IF THE HIGH COURT IS SATISFIED THAT THE CASE INVOLVES SUBSTANTIAL QUESTION OF LAW . ON A PERU SAL OF THE HIGH COURT APPEAL RECORDS AS FILED BEFORE US, IT IS SEEN THAT THE ISSUE OF LEVY OF INTEREST UNDER SECTION 234D WAS NEITHER A SUBJECT MATTER OF SUBSTANTIAL QUESTION OF LAW PROPOSED BY THE DEPARTMENT NOR IT WAS FORMULATED BY THE HIGH COURT. ONCE NO SUBSTANTIAL QUESTION OF LAW HAS BEEN FRAMED AND NO DECISION HAS BEEN RENDERED ON THIS ISSUE, THEN IT CANNOT BE HELD THAT THE ORDER OF THE TRIBUNAL QUA THIS ISSUE HAS BEEN MERGED WITH THE ORDER OF THE HIGH COURT. THUS, THE PLEA OF THE LEARNED COUNSEL IS HEREBY REJECTED. 8 . CONSEQUENTLY, WE HOLD THAT THE FINDINGS GIVEN IN PARA 24 AND 25 OF THE IMPUGNED ORDER DATED 27 TH JULY 2011, PASSED BY THE TRIBUNAL, WHICH RELATES TO DELETION OF INTEREST UNDER SECTION 234D CONSTITUTES MISTAKE APPARENT FROM KOTAK SECURI TIES LTD. 6 RECORD WITH IN THE MEANING OF SECTION 254(2), AND THEREFORE, THE SAID FINDING IS HEREBY RECALLED FOR DENOVO ADJUDICATION. ACCORDINGLY, THE IMPUGNED ORDER DATED 27 TH JULY 2011 IS HEREBY RECALLED TO THE ABOVE EXTENT ONLY. THE REGISTRY IS DIRECTED TO FIX THE APPEAL FOR H EARING IN DUE COURSE AFTER PROPER SERVICE OF NOTICE TO THE RIVAL PARTIES. 9 . 6. IN THE RESULT, REVENUES M.A. IS TREATED AS ALLOWED. 6 TH DECEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER 2013 SD/ - . D. KARU NAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 6 TH DECEMBER 2013 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI