EVEREST CJA,BERS CO OP HSG SOC.LTD, V. IOTO WD 16(1)(3),

MA 295/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9476 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2004-2005
• Appeal Filed On: 20-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Depreciation; Retrospective amendment; Difference of opinion; Capital receipt; Change of opinion

Judgement Text

MA 295 OF 2011 EVEREST CHAMBERS COOP. HOUSING SOCIE TY LTD MUMBAI PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER M.A. 295/MUM/2012 (ARISING OUT OF ITA NO.6451/MUM/2007) (ASSESSMENT YEAR: 2004-05) EVEREST CHAMBERS COOP. HOUSING SOCIETY LTD., 10-B GROUND FLOOR, BHAUSAHEB HIRE MARG (OFF MOUNT PLEASANT ROAD), MALABAR HILLS, MUMBAI 400007 PAN: AAAAE 0543 K) VS. INCOME TAX OFFICER WARD 16(1)(3) MATRU MANDIR, MUMBAI 400050 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI K. GOPAL & JITENDRA SINGH DEPARTMENT BY: SHRI RAJARSHI DWIVEDY, DR DATE OF HEARING: 02/11/2012 DATE OF PRONOUNCEMENT: 16/11/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS MISCELLANEOUS APPLICATION WAS PREFERRED BY AS SESSEE AGAINST THE ORDERS OF THE ITAT IN ITA NO.6451/MUM/2 007 DATED 13.03.2008. DURING THE COURSE OF HEARING IT WAS STA TED THAT ASSESSEE HAS NOT PREFERRED ANY APPEAL TO THE HON'BL E HIGH COURT AND THE M.A. WAS FILED WITHIN THE TIME. 2. ASSESSEES PRAYER IS AS UNDER: 1. THE HON'BLE BENCH PARTLY ALLOWED THE APPEAL FIL ED BY THE REVENUE BY ITS ORDER DATED 13.03.2008 WHICH WAS SERVED ON 05.02.2011. 2. THE ISSUE RAISED IN THE APPEAL WAS WHETHER THE LEARNED CIT (A) WAS RIGHT IN CONFIRMING THE ACTION OF THE LEARNED AO IN MAKING AN ADDITION OF ` .2,40,000/- BEING TRANSFER FEES RECEIVED FROM THE MEMBERS OF THE SOCI ETY. 3. HON'BLE APPELLATE TRIBUNAL FOLLOWING THE DECISIO N IN THE CASE OF WALKESHWAR TRIVENI COOPERATIVE HOUSING SOCI ETY MA 295 OF 2011 EVEREST CHAMBERS COOP. HOUSING SOCIE TY LTD MUMBAI PAGE 2 OF 6 LTD VS. ITO (2003) 88 ITD 159 (MUM) (SB) HAS PARTIA LLY ALLOWED THE APPEAL FILED BY THE APPLICANT. 4. THE APPLICANT SUBMITS THAT THE HON'BLE BOMBAY HI GH COURT HAS OVERRULED THE DECISION OF THE SPECIAL BEN CH OF TRIBUNAL IN THE CASE OF SIND COOPERATIVE HOUSING SO CIETY VS. ITO (2009) 317 ITR 47 (BOM.). THE APPLICANT THE REFORE, SUBMITS THAT THE ORDER PASSED BY THE HON'BLE APPELL ATE TRIBUNAL DATED 13.03.2008 SUFFERS FROM MISTAKE AND HENCE THE SAME SHOULD BE RECTIFIED UNDER THE PROVIS IONS OF SECTION 254(2) OF THE ACT. 3. IT WAS PRAYED THAT THE ORDER DATED 13.03.2008 MAY B E RECALLED AND DECIDED AFRESH AS PER THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. 4. WE HAVE HEARD THE LEARNED COUNSEL WHO NOT ONLY RELI ED ON VARIOUS JUDICIAL PRINCIPLES STATED IN THE M.A. BUT ALSO IN THE COORDINATE BENCH DECISION IN THE CASE OF PAS SECURI TIES PVT. LTD IN M.A. NO.772/MUM/2009 DATED 11.02.2010 ON THE ISSUE WHETHER THE M.A. CAN BE MAINTAINED CONSEQUENT TO THE DECISI ON OF THE HIGH COURT/SUPREME COURT MADE AVAILABLE AFTER THE DECISI ON BY THE ITAT IN A GIVEN CASE. IN THE SAID CASE IT WAS HELD AS UN DER: 6. WITH REGARD TO THE FIRST OBJECTION OF LEARNED C OUNSEL FOR ASSESSEE THAT DECISION OF HON'BLE JURISDICTIONAL HI GH COURT RENDERED SUBSEQUENT TO THE DECISION OF THE TRIBUNAL WILL NOT GIVE RISE TO A MISTAKE APPARENT FROM THE RECORD , WE ARE OF THE VIEW THAT THE SAME CANNOT BE ACCEPTED. IN TH E CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD (SUPRA), HON 'BLE SUPREME COURT HELD THAT NON-CONSIDERATION OF DECISI ON OF JURISDICTIONAL HIGH COURT OR OF THE SUPREME COURT C AN BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD. THE CONTENTION OF LEARNED COUNSEL FOR ASSESSEE WAS THAT IN THE AFORESAID CASE, THE TRIBUNAL DECIDED THE MATTER ON 27 TH OCTOBER, 2000 AND THE HON'BLE GUJARAT HIGH COURT DE CIDED AN IDENTICAL CASE OF HIRALAL BHAGWATI A FEW MONTHS PRIOR TO THAT DECISION; BUT IT WAS NOT BROUGHT TO THE ATT ENTION OF THE TRIBUNAL. ACCORDING TO THE LEARNED COUNSEL FOR ASSESSEE, THE DECISION IN THE PRESENT CASE WAS REND ERED PRIOR TO THE DECISION OF HON'BLE BOMBAY HIGH COURT AND THEREFORE NO RECTIFICATION WAS POSSIBLE ON THE BASI S OF A SUBSEQUENT DECISION OF JURISDICTIONAL HIGH COURT. W E ARE OF THE VIEW THAT IT MAKES NO DIFFERENCE WHETHER THE DECISION OF THE JURISDICTIONAL HIGH COURT IS RENDER ED PRIOR OR SUBSEQUENT TO THE ORDER OF THE TRIBUNAL. IN FACT , THIS ASPECT HAS BEEN DEALT WITH BY THE HON'BLE SUPREME C OURT MA 295 OF 2011 EVEREST CHAMBERS COOP. HOUSING SOCIE TY LTD MUMBAI PAGE 3 OF 6 IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD (SUPRA) IN THE FOLLOWING WORDS: THE CORE ISSUE, THEREFORE, IS WHETHER NON-CONSIDER ATION 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 - W ERE RIGHT IN HOLDING THAT SUCH A MISTAKE CAN BE SAID TO BE A 'MISTAKE APPARENT FROM THE RECORD' WHICH COULD BE RECTIFIED UNDER SECTION 254(2). A SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFORE THE HIGH COURT OF GUJARAT IN SUHRID GEIGY LTD.S CASE ( SUPRA). IT WAS HELD BY THE DIVISION BENCH OF THE HIGH COURT THAT IF THE POINT IS COVERED BY A DECISION OF THE JURISDICT IONAL COURT RENDERED PRIOR OR EVEN SUBSEQUENT TO THE ORDE R OF RECTIFICATION, IT COULD BE SAID TO BE 'MISTAKE APPA RENT FROM THE RECORD' UNDER SECTION 254(2) OF THE ACT AND COU LD BE CORRECTED BY THE TRIBUNAL. IN OUR JUDGMENT, IT IS ALSO WELL-SETTLED THAT A JUD ICIAL DECISION ACTS RETROSPECTIVELY. ACCORDING TO BLACKST ONIAN THEORY, IT IS NOT THE FUNCTION OF THE COURT TO PRON OUNCE A NEW RULE BUT TO MAINTAIN AND EXPOUND THE OLD ONE . IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY ONLY DISC OVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN TH E SAME. IF A SUBSEQUENT DECISION ALTERS THE EARLIER O NE, IT (THE LATER DECISION) DOES NOT MAKE NEW LAW. IT ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVE N WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOMETIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. SALMOND IN HIS WELL-KNOWN WORK STATES : '. . . (T)HE THEORY OF CASE LAW IS THAT A JUDGE DOE S NOT MAKE LAW; HE MERELY DECLARES IT; AND THE OVERRULING OF A PREVIOUS DECISION IS A DECLARATION THAT THE SUPPOSE D RULE NEVER WAS LAW. HENCE ANY INTERMEDIATE TRANSACTIONS MADE ON THE STRENGTH OF THE SUPPOSED RULE ARE GOVER NED BY THE LAW ESTABLISHED IN THE OVERRULING DECISION. THE OVERRULING IS RETROSPECTIVE, EXCEPT AS REGARDS MATT ERS THAT ARE RES JUDICATA OR ACCOUNTS THAT HAVE BEEN SETTLED IN THE MEANTIME.' [EMPHASIS SUPPLIED] IT IS NO DOUBT TRUE THAT AFTER A HISTORIC DECISION IN GOLAK NATH V. STATE OF PUNJAB AIR 1967 SC 1643, THIS COUR T HAS ACCEPTED THE DOCTRINE OF PROSPECTIVE OVERRULING. IT IS BASED ON THE PHILOSOPHY: 'THE PAST CANNOT ALWAYS BE ERASED BY A NEW JUDICIAL DECLARATION'. IT MAY, HOWE VER, BE MA 295 OF 2011 EVEREST CHAMBERS COOP. HOUSING SOCIE TY LTD MUMBAI PAGE 4 OF 6 STATED THAT THIS IS AN EXCEPTION TO THE GENERAL RUL E OF THE DOCTRINE OF PRECEDENT. RECTIFICATION OF AN ORDER STEMS FROM THE FUNDAMENTA L PRINCIPLE THAT JUSTICE IS ABOVE ALL. IT IS EXERCISE D TO REMOVE THE ERROR AND TO DISTURB THE FINALITY. IN S. NAGARAJ V. STATE OF KARNATAKA 1993 SUPP. (4) SCC 595, SAHAI, J. STATED : '15. JUSTICE IS A VIRTUE WHICH TRANSCENDS ALL BARRI ERS. NEITHER THE RULES OF PROCEDURE NOR TECHNICALITIES O F LAW CAN STAND IN ITS WAY. THE ORDER OF THE COURT SHOULD NOT BE PREJUDICIAL TO ANYONE. RULE OF STARE DECISIS IS ADH ERED FOR CONSISTENCY BUT IT IS NOT AS INFLEXIBLE IN ADMINIST RATIVE LAW AS IN PUBLIC LAW. EVEN THE LAW BENDS BEFORE JUS TICE. ENTIRE CONCEPT OF WRIT JURISDICTION EXERCISED BY TH E HIGHER COURTS IS FOUNDED ON EQUITY AND FAIRNESS. IF THE CO URT FINDS THAT THE ORDER WAS PASSED UNDER A MISTAKE AND IT WO ULD NOT HAVE EXERCISED THE JURISDICTION BUT FOR THE ERR ONEOUS ASSUMPTION WHICH IN FACT DID NOT EXIST AND ITS PERP ETRATION SHALL RESULT IN MISCARRIAGE OF JUSTICE THEN IT CANN OT ON ANY PRINCIPLE BE PRECLUDED FROM RECTIFYING THE ERROR. M ISTAKE IS ACCEPTED AS VALID REASON TO RECALL AN ORDER. DIFFER ENCE LIES IN THE NATURE OF MISTAKE AND SCOPE OF RECTIFICATION , DEPENDING ON IF IT IS OF FACT OR LAW. BUT THE ROOT FROM WHICH THE POWER FLOWS IS THE ANXIETY TO AVOID INJUSTICE. IT IS EITHER STATUTORY OR INHERENT. THE LATTER IS AVAILAB LE WHERE THE MISTAKE IS OF THE COURT. IN ADMINISTRATIVE LAW, THE SCOPE IS STILL WIDER. TECHNICALITIES APART IF THE C OURT IS SATISFIED OF THE INJUSTICE THEN IT IS ITS CONSTITUT IONAL AND LEGAL OBLIGATION TO SET IT RIGHT BY RECALLING ITS O RDER....' (P. 618) IN THE PRESENT CASE, ACCORDING TO THE ASSESSEE, THE TRIBUNAL DECIDED THE MATTER ON OCTOBER 27, 2000. HI RALAL BHAGWATI WAS DECIDED FEW MONTHS PRIOR TO THAT DECIS ION, BUT IT WAS NOT BROUGHT TO THE ATTENTION OF THE TRIB UNAL. IN OUR OPINION, IN THE CIRCUMSTANCES, THE TRIBUNAL HAS NOT COMMITTED ANY ERROR OF LAW OR OF JURISDICTION IN EX ERCISING POWER UNDER SUB-SECTION (2) OF SECTION 254 OF THE A CT AND IN RECTIFYING 'MISTAKE APPARENT FROM THE RECORD'. S INCE NO ERROR WAS COMMITTED BY THE TRIBUNAL IN RECTIFYING T HE MISTAKE, THE HIGH COURT WAS NOT WRONG IN CONFIRMING THE SAID ORDER. BOTH THE ORDERS, THEREFORE, IN OUR OPIN ION, ARE STRICTLY IN CONSONANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. THUS IT IS CLEAR FROM THE AFORESAID OBSERVATIONS TH AT IT MAKES ON DIFFERENCE WHETHER THE DECISION OF JURISDI CTIONAL HIGH COURT WAS RENDERED PRIOR TO AFTER THE ORDER OF THE TRIBUNAL AND THAT SUCH DECISIONS ALWAYS ACT RETROSPECTIVELY. MA 295 OF 2011 EVEREST CHAMBERS COOP. HOUSING SOCIE TY LTD MUMBAI PAGE 5 OF 6 7. WITH REGARD TO THE NEXT CONTENTION THAT THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF MEPCO INDUSTRI ES LTD (SUPRA) IS APPLICABLE TO THE FACTS OF THE PRESENT C ASE. WE ARE OF THE VIEW THAT THE SAME CANNOT BE ACCEPTED. T HE ISSUE IN THE CASE OF MEPCO INDUSTRIES (SUPRA) WAS W ITH REGARD TO A CASE WHERE THE ISSUE BEFORE THE AUTHORI TY EXERCISING POWER OF RECTIFICATION WAS A DEBATABLE I SSUE. IN THE PRESENT CASE, ASSESSEE DOES NOT DISPUTE THAT TH E DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F TECHNO SHARES & STOCKS LTD (SUPRA) ASSESSEE CANNOT CLAIM DEPRECIATION ON BSC CARD. THUS, AS FAR AS THE CASE OF ASSESSEE IS CONCERNED, THERE CAN BE NO DEBATE REGARDING ALLOWABILITY OF CLAIM FOR DEPRECIATION FO R BSC CARD. IN THE CASE OF MEPCO INDUSTRIES (SUPRA) ASSES SEE RECEIVED POWER SUBSIDY FOR TWO YEARS. INITIALLY IT WAS OFFERED AS A REVENUE RECEIPT. ASSESSEE LATER ON FIL ED AN APPLICATION UNDER SECTION 204 PLEADING THAT THE SUB SIDY WAS CAPITAL RECEIPT AND RELIED ON THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF P.J. CHEMICALS LTD, 21 0 ITR 830. ASSESSEES APPLICATION FOR REVISION WAS ALLOWED BY THE COMMISSIONER. THEREAFTER, HON'BLE SUPREME COURT LAID DOWN CERTAIN PRINCIPLES WITH REGARD TO TAXABILITY O F SUBSIDY IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD, ETC 228 ITR 253. IN THE LIGHT OF THE LATER DECISION OF HON'BLE SUPREME COURT, COMMISSIONER RECTIFIED HIS O RDER HOLDING THAT THE POWER SUBSIDY WAS TAXABLE AS REVEN UE RECEIPT. HON'BLE SUPREME COURT HELD THAT EXERCISING POWER OF RECTIFICATION WAS IMPROPER FOR TWO REASONS. FIRS TLY, HON'BLE COURT HELD THAT POWER OF RECTIFICATION WAS INVOKED ON MERE CHANGE OF OPINION. SECONDLY, COURT HELD THA T MISTAKE SOUGHT TO BE RECTIFIED WAS NOT A MISTAKE AP PARENT FROM THE FACT OF THE RECORD IN THE SENSE THAT IT WA S NOT OBVIOUS AND THAT IT REQUIRED A LONG DRAWN PROCESS REASONING OR WHERE TWO OPINIONS WERE POSSIBLE. AS ALREADY STATED, IN THE PRESENT CASE AFTER DECISION OF HON'BLE BOMBAY HIGH COURT, THERE IS NO DISPUTE OR D EBATE WITH REGARD TO ALLOWABILITY OF DEPRECIATION ON BSE CARD. WE ARE, THEREFORE, OF THE VIEW THAT DECISION IN THE CASE OF MEPCO INDUSTRIES LTD (SUPRA) WILL NOT BE OF ANY ASS ISTANCE TO THE PLEA OF ASSESSEE BEFORE US. WE ARE THEREFORE , OF THE VIEW THAT MISCELLANEOUS APPLICATION OF THE REVENUE SHOULD BE ALLOWED AND ACCORDINGLY THE SAME IS ALLOWED. RESPECTFULLY FOLLOWING THE PRINCIPLES, WE ARE OF TH E OPINION THAT THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF S IND COOPERATIVE HOUSING SOCIETY LTD VS. INCOME TAX OFFICER 317 ITR 47 HAS TO BE EXAMINED AS THE HON'BLE BOMBAY HIGH COURT HELD THAT THE PROVISIONS OF MUTUALITY WILL APPLY WHEN THERE IS NO ELEMENT OF MA 295 OF 2011 EVEREST CHAMBERS COOP. HOUSING SOCIE TY LTD MUMBAI PAGE 6 OF 6 TRADING AND COMMERCIALITY. THIS ASPECT OF THE JUDGM ENT OF THE HONBLE HIGH COURT HAS TO BE EXAMINED AFRESH, IN TH E LIGHT OF FACTS AS STATED IN THE EARLIER ORDER. THEREFORE, IN THE I NTEREST OF JUSTICE WE RECALL THE ORDER DATED 13.03.2008. THE REGISTRY IS DIRECTED TO POST THE APPEAL AFRESH AFTER GIVING DUE NOTICE TO THE PA RTIES. 5. IN THE RESULT MISCELLANEOUS APPLICATION FILED BY AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2012. SD/- SD/- (VIJAY PAL RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16 TH NOVEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI