Gujarat State Electricity Corp. Ltd., Baroda V. The Commissioner of Income Tax - 1, Baroda

MA 5/AHD/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9584 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: J P SHAH
• Keywords: Depreciation; Additional depreciation; Retrospective amendment
• Section: 32(1)(iia); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER MISC. APPLICATION NO.05/AHD/2017 (IN ITA NO.950/AHD/2015) ( / ASSESSMENT YEAR : 2010-11) GUJARAT STATE ELECTRICITY CORPORATION LTD., VIDYUT BHAVAN, RACE COURSE CIRCLE, BARODA 390 007. / VS. CIT-1 BARODA. ./ ./ PAN/GIR NO. : AAACG 6864 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI J. P. SHAH, A.R. / RESPONDENT BY: SHRI LALIT P. JAIN, SR. D.R. / DATE OF HEARING 05/10/2018 !'# / DATE OF PRONOUNCEMENT 27/11/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: BY THIS MISCELLANEOUS APPLICATION, THE ASSESSEE PRA YS TO RECTIFY THE MISTAKES APPARENT FROM THE RECORD IN THE ORDER PASS ED BY THE ITAT IN ITA NO. 950/AHD/2015 FOR ASSESSMENT YEAR 2010-11 VI DE ORDER DATED 13.12.2016. MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 2 - 2. THE ASSESSEE IN ITS MISCELLANEOUS APPLICATION HA S POINTED OUT TWO MISTAKES IN THE ORDER OF HONBLE ITAT AS MENTIONED BELOW: I) DISALLOWANCE OF ADDITIONAL DEPRECIATION II) DISALLOWANCE OF LOSS ON THE COLLAPSE OF A COOLING T OWER 3. THE ASSESSEE REGARDING THE FIRST MISTAKE HAS SUB MITTED AS UNDER: 2. IN THE ABOVE APPEAL, GROUND NO.2 WAS REGARDING ADDITIONAL DEPRECIATION AS PER SECTION 32(1)(IIA) OF RS.2,03,4 3,49,000/- ON THE MACHINERY PRODUCING ELECTRICITY. THE TRIBUNA L IS KIND ENOUGH TO RECORD IN PARA 6 THAT FOR THE APPLICANT, RELIANCE WAS PUT ON VARIOUS DECISIONS OF THE TRIBUNAL; TWO B EING ASSISTANT COMMISSIONER OF INCOME TAX VS. M. SATISHK UMAR - (2013) 33 TAXMANN.COM 396 (CHENNAI) AND DEPUTY COMMISSIONER OF INCOME TAX VS. HUTTI GOLD MINES CO. LIMITED - (2013) 39 TAXMANN.COM 18 (BANGALORE) AND THEY WERE NOT CONSIDERED TO BE RELEVANT BECAUSE THE ASSE SSMENT YEAR CONCERNED WAS 2010-11 IN THIS MATTER; WHEREAS THOSE DECISIONS WERE PERTAINING TO THE ASSESSMENT YEARS P RIOR TO THE AMENDMENT. 2.1 NOW, IN THE HUMBLE SUBMISSION OF THE APPLICANT HEREIN, AN APPARENT ERROR HAS BEEN COMMITTED BY THE TRIBUNAL I N CONSIDERING THE ABOVE DECISIONS NOT TO BE RELEVANT WHEN IN FACT, BOTH THE DECISIONS THOUGH PERTAINING TO EARLI ER ASST. YEAR 2008-09 DID CONSIDER THE AMENDMENT AND HELD TH AT THE ADDITION OF THE WORDS 'OR IN THE BUSINESS OF GENERA TION OR GENERATION AND DISTRIBUTION OF POWER' W.E.F. 01.04. 2013 INSERTED BY THE FINANCE ACT, 2012 ARE CLARIFICATORY , AND THEREFORE, WILL APPLY TO ASST. YEAR 2008-09. NOW, I F THE AMENDMENT INCLUDING GENERATION OF ELECTRICITY APPLI ES TO ASST. YEAR 2008-09, BY VIRTUE OF THESE DECISIONS, T HESE DECISIONS BECOME TOTALLY RELEVANT SO FAR AS THE ASS T. YEAR 2010-11 OF THE APPLICANT IS CONCERNED. THE COPIES O F ABOVE MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 3 - TWO TRIBUNAL DECISIONS ARE ANNEXED HEREWITH FOR FAC ILITY OF READY REFERENCE. 2.3 IN THE HUMBLE SUBMISSION OF THE APPLICANT, THI S IS AN APPARENT ERROR COMMITTED BY THE HON'BLE TRIBUNAL AN D MAY KINDLY BE AMENDED IN THE INTEREST OF JUSTICE, FOR W HICH ACT OF KINDNESS, THE APPLICANT SHALL FOR EVER PRAY AND REM AIN GRATEFUL. 4. THE LD. AR FURTHER SUBMITTED THAT NONCONSIDERATI ON OF THE ORDER OF THE OTHER HONBLE TRIBUNALS IS A MISTAKE APPARENT F ROM THE RECORD WHICH REQUIRES TO RECTIFIED U/S 254(2) OF THE ACT. THE LD . AR IN SUPPORT OF HIS CLAIM RELIED ON THE JUDGMENT OF HONBLE SUPREME COU RT OF INDIA IN THE CASE OF HONDA SIEL POWERS PRODUCTS LTD. VS. CIT REP ORTED IN 295 ITR 0466. 5. ON THE OTHER HAND, LD. DR VEHEMENTLY SUPPORTED T HE ORDER OF HONBLE ITAT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THIS JUNCTURE, WE ARE INCLI NED TO REPRODUCE THE RELEVANT EXTRACT OF THE ITAT ORDER WHICH READS AS U NDER: 6. THE FIRST ISSUE RELATES TO THE CLAIM OF ADDITION AL DEPRECIATION BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COMPAN Y IS INDUSTRIAL UNDERTAKING ENGAGED IN THE BUSINESS OF GENERATION O F POWER AND ACTIVITY OF POWER GENERATION AND SATISFIES THE COND ITION OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING A S REQUIRED BY THE ACT. RELIANCE WAS PLACED ON THE DECISIONS OF TH E HON'BLE SUPREME COURT IN THE CASE OF MPEB 1970 SC 732 AND S TATE OF AP VS. NTPC 127 STC 280W. RELIANCE WAS ALSO PLACED ON THE DECISIONS OF THE CO-ORDINATE BENCH IN THE CASE OF M . SATISHKUMAR MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 4 - IN ITA NO. 718/MDS/ 2012, HUTTI GOLD MINES CO. LTD. IN ITA NO. 832/BANG/2012 AND NTPC LTD. IN ITA NO. 1438/DEL/200 9. 7. A CAREFUL PERUSAL OF ALL THE DECISIONS RELIED UP ON BY THE LD. COUNSEL BEFORE US PERTAINED TO ASSESSMENT YEARS PRI OR TO THE AMENDMENT BROUGHT IN THE ACT IN SECTION 2(29BA) BY WHICH THE DEFINITION OF MANUFACTURE NOW READS AS UNDER:- S. 2 [(29BA) 'MANUFACTURE', WITH ITS GRAMMATICAL VARIATIONS, MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING,- (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR AR TICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT O BJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSIT ION OR INTEGRAL STRUCTURE;] . 8. THIS AMENDMENT HAS BEEN INSERTED BY THE FINANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2009. WE ARE IN ASSESSMENT YEAR 2010-11. 9. SINCE THE ASSESSING OFFICER HAS NOT CONSIDERED T HE AMENDMENT BROUGHT TO THE DEFINITION OF MANUFACTURE AND HAVE A LLOWED THE CLAIM OF ADDITIONAL DEPRECIATION ON THE BASIS OF EA RLIER DECISIONS MENTIONED HEREINABOVE, IN OUR CONSIDERED OPINION, T HERE IS AN ERROR IN LAW IN THE ASSESSMENT ORDER AND, THEREFORE , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD . PRINCIPAL CIT TO THIS EXTENT. 6.1 ON THE PERUSAL OF THE ABOVE ORDER, WE NOTE TH AT THE ITAT WHILE DECIDING THE ISSUE HAS DULY CONSIDERED THE ORDERS O F THE TRIBUNAL AS DISCUSSED ABOVE AND AFTER THAT, THE ORDER WAS PASSE D BY THE ITAT. MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 5 - THEREFORE, THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE HONBLE ITAT HAD NOT CONSIDERED THESE ORDERS ARE NO T CORRECT. 6.2 THERE CAN BE AN ERROR OF JUDGMENT IN THE ORDER OF ITAT, BUT THE TRIBUNAL CAN NOT RECTIFY THE SAME. OTHERWISE, IT WI LL AMOUNT TO REVIEW ITS OWN ORDER. IN HOLDING SO, WE FIND SUPPORT & GUIDANC E FROM THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT(EX EMPTION) VS. GUJARAT INSTITUTE OF HOUSING ESTATE DEVELOPERS REPO RTED IN 84 TAXMANN.COM 148 WHEREIN IT WAS HELD AS UNDER: 4. IN THE PRESENT CASE, AS NOTED THE TRIBUNAL HAD GIVE N DETAILED REASONS FOR COMING TO THE CONCLUSION THAT THE PRINC IPLE OF MUTUALITY WOULD NOT APPLY. WHILE ACCEPTING THE ASSE SSEE'S RECTIFICATION APPLICATIONS, THE TRIBUNAL UNDERTOOK EQUALLY PAINSTAKING AND ELABORATE CONSIDERATION OF THE VERY SAME ISSUES AND VERY SAME FACTS TO COME TO A CONTRARY CONCLUSIO N. IT IS NOT NECESSARY NOR POSSIBLE FOR US TO HOLD WHETHER THE T RIBUNAL'S FIRST VIEW WAS CORRECT OR THE SUBSEQUENT ONE. IT IS ENOUG H TO HOLD THAT THE TRIBUNAL COULD NOT HAVE UNDERTAKEN SUCH INCISIV E AND DETAILED EXAMINATION OF FACTS AND LAW TO COME TO THE CONCLUS ION WHICH ARE COMPLETELY CONTRARY TO ITS OWN CONCLUSION ARRIVED A T AFTER DETAILED CONSIDERATIONS. SUCH POWERS SIMPLY DO NOT FLOW FROM THE POWER OF RECTIFICATION UNDER SUB-SECTION (2) OF SECTION 254 OF THE ACT. 5. UNDER THE CIRCUMSTANCES, IN OUR OPINION THE TRIBUNA L COMMITTED A SERIOUS ERROR IN ALLOWING THE ASSESSEE'S RECTIFIC ATION APPLICATIONS AND RECALLING ITS EARLIER ORDER OF REJECTION OF APP EALS. THE IMPUGNED ORDER DATED 29.07.2016 IS THEREFORE SET AS IDE. CONSEQUENTLY, THE ORDER PASSED BY THE TRIBUNAL OF A LLOWING ALL THE TAX APPEALS OF THE ASSESSEE BY ORDER DATED 25.11.20 16 WOULD THEREFORE AUTOMATICALLY BE RENDERED NON-EST. RESULT ANTLY, THE TRIBUNAL'S ORIGINAL ORDER DATED 29.09.2015 WOULD BE RESTORED. NEEDLESS TO STATE THAT THE ASSESSEE FEELING AGGRIEV ED BY THE SAID ORDER, IT WILL ALWAYS BE OPEN FOR THE ASSESSEE TO F ILE TAX APPEALS. MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 6 - THE INTERVENING FACTS AND CIRCUMSTANCES WOULD CERTA INLY BE RELEVANT IN THE CONTEXT OF TECHNICAL DELAY IF ANY T HAT MAY ARISE IN THE PROCESS OF FILING SUCH TAX APPEALS. 6.3. IN THIS REGARD WE ALSO PLACE OUR RELIANCE ON THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF RAMESH ELECTRIC & TRADING COMPANY REPORTED IN 77 TAXMAN 43 WHEREIN IT WAS HELD AS UND ER: THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UNDER THE PROVISIONS OF THE INCOME-TAX A CT, 1961. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO RECTI FY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. IN THE INSTANT CASE, IN THE FIRST ORDER OF THE TRIBUNAL DATED 9-6-1975, THERE WAS NO MISTAK E WHICH WAS APPARENT FROM THE RECORD AT ALL. THE TRIBUNAL WAS R EQUIRED TO DECIDE WHETHER THE COMMISSION PAYMENT OF RS. 54,000 WAS DEDUCTIBLE UNDER SECTION 37 AFTER EXAMINING THE CIR CUMSTANCES, THE TRIBUNAL CAME TO THE CONCLUSION THAT IT WAS NOT SO DEDUCTIBLE. THE TRIBUNAL CANNOT, IN EXERCISE OF ITS POWER OF RECTIF ICATION, LOOK INTO SOME OTHER CIRCUMSTANCES WHICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION SO ARRIVED AT. THE MISTAKE WHICH THE TRI BUNAL IS ENTITLED TO CORRECT IS NOT AN ERROR OF JUDGMENT BUT A MISTAKE WHICH IS APPARENT FROM THE RECORD ITSELF. NO SUCH MISTAKE WAS APPARENT FROM THE RECORD. IN FACT, THIS WAS DOUBTFUL, IF THI S SORT OF AN EXERCISE COULD HAVE BEEN DONE BY THE TRIBUNAL EVEN IF IT HAD THE POWER OF REVIEW. THE TRIBUNAL HAD, PATENTLY, FAR EXCEEDED IT S JURISDICTION UNDER SECTION 254(2) IN REDECIDING THE ENTIRE DISPU TE WHICH WAS BEFORE IT IN THIS FASHION, AND THE TRIBUNAL HAD COM MITTED A GROSS AND INEXPLICABLE ERROR FOR REASONS WHICH COULD NOT BE UNDERSTOOD. THE POWER OF RECTIFICATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHERE THE MISTAKE IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH IS REQUIRED TO BE ESTABLISHED BY ARGU MENTS AND A LONG-DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MIGHT CONCEIVABLY BE TWO OPINIONS. FAILURE BY THE TRIBUNA L TO CONSIDER MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 7 - AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING A T A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY HAVE BEEN AN ERROR OF JUDGMENT. IN THE INSTANT CASE, THE ALLE GED FAILURE, AT LEAST ON ONE COUNT, WAS ATTRIBUTED BY THE ASSESSEE TO THE ITO AND NOT THE TRIBUNAL THEREFORE, THE TRIBUNAL HAD NO JUR ISDICTION UNDER SECTION 254(2) TO PASS THE SECOND ORDER. 6.4. THE PROVISIONS OF SECTION 254(2) OF THE ACT CAN BE INVOKED FOR THE MISTAKES WHICH ARE GLARING IN NATURE AND CAN BE POINTED FROM THE FACE OF THE ORDER. THE MISTAKES WHICH REQUIRE THE APPLIC ATION OF MIND AND LONG DRAWN PROCESS TO CONCLUDE CANNOT AMOUNT TO APPARENT MISTAKE. IF THESE TYPES OF MISTAKES ARE CONSIDERED AS APPARENT FROM T HE RECORD, THEN IT WOULD LEAD TO A REVIEW OF THE ORDER. IN THIS REGARD , WE FIND SUPPORT & GUIDANCE FROM THE JUDGMENT OF HONBLE DELHI HIGH CO URT IN THE CASE SMT. BALJEET JOLLY VS. CIT REPORTED IN 113 TAXMAN 3 8 WHEREIN IT WAS HELD AS UNDER: A BARE LOOK AT SECTION 254(2) MAKES IT CLEAR THAT A 'MISTAKE APPARENT FROM THE RECORD' IS RECTIFIABLE. IN ORDER TO ATTRACT THE APPLICATION OF SECTION 254(2), THE MISTAKE MUST EXI ST AND THE SAME MUST BE APPARENT FROM THE RECORD. THE POWER TO RECT IFY THE MISTAKE, HOWEVER, DOES NOT COVER CASES WHERE A REVISION OR R EVIEW OF THE ORDER IS INTENDED. 'MISTAKE' MEANS TO TAKE OR UNDER STAND WRONGLY OR INACCURATELY; TO MAKE AN ERROR IN INTERPRETING; IT IS AN ERROR; A FAULT, A MISUNDERSTANDING, A MISCONCEPTION. 'APPARE NT' MEANS VISIBLE; CAPABLE OF BEING SEEN; EASILY SEEN; OBVIOU S; PLAIN. A MISTAKE WHICH CAN BE RECTIFIED UNDER SECTION 254(2) IS ONE WHICH IS PATENT, WHICH IS OBVIOUS AND WHOSE DISCOVERY IS NOT DEPENDE NT ON ARGUMENT OR ELABORATION. THE LANGUAGE USED IN SECTI ON 254(2) MAKES IT CLEAR THAT ONLY AMENDMENT TO THE ORDER PAS SED UNDER SECTION 254(1) IS PERMISSIBLE WHERE IT IS BROUGHT T O THE NOTICE OF THE TRIBUNAL THAT THERE IS ANY MISTAKE APPARENT FROM TH E RECORD. MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 8 - AMENDMENT OF AN ORDER DOES NOT MEAN OBLITERATION OF THE ORDER ORIGINALLY PASSED AND ITS SUBSTITUTION BY A NEW ORD ER. WHAT THE ASSESSEE INTENDED, TO DO IN THE INSTANT CASE WAS PR ECISELY THE SUBSTITUTION OF THE ORDER, WHICH WAS NOT PERMISSIBL E UNDER THE PROVISIONS OF SECTION 254(2) AND, THEREFORE, THE TR IBUNAL WAS JUSTIFIED IN HOLDING THAT THERE WAS NO MISTAKE APPA RENT ON THE FACE OF THE RECORD. WHERE AN ERROR IS FAR FROM SELF-EVID ENT, IT CEASES TO BE AN APPARENT ERROR. IT IS NO DOUBT TRUE THAT A MISTA KE CAPABLE OF BEING RECTIFIED UNDER SECTION 254(2) IS NOT CONFINE D TO CLERICAL OR ARITHMETICAL MISTAKE. ON THE OTHER HAND, IT DOES NO T COVER ANY MISTAKE WHICH MAY BE DISCOVERED BY A COMPLICATED PR OCESS OF INVESTIGATION, ARGUMENT OR PROOF. AS OBSERVED BY TH E APEX COURT IN MASTER CONSTRUCTION CO. (P.) LTD. V. STATE OF ORISS A [1966] 17 STC 360, AN ERROR WHICH IS APPARENT ON THE FACE OF THE RECORD SHOULD BE ONE WHICH IS NOT AN ERROR WHICH DEPENDS F OR ITS DISCOVERY ON ELABORATE ARGUMENTS ON QUESTIONS OF FACT OR LAW. 6.5 THE CASE LAW RELIED BY THE LD. COUNSEL FOR THE ASSESSEE, I.E., HONDA SIEL POWER PRODUCTS LTD IS NOT APPLICABLE TO THE CASE ON HAND. IT IS BECAUSE IN THAT CASE THE ORDER QUOTED BY THE COUNSE L OF THE ASSESSEE WAS NOT CONSIDERED BY THE ITAT WHILE DELIVERING THE JUD GMENT. THE ITAT DULY ADMITTED THIS FACT. THEREFORE, THERE WAS A MIS TAKE APPARENT FROM THE RECORD. HOWEVER, IN THE CASE BEFORE US THE ORDERS C ITED BY THE LD. COUNSEL FOR THE ASSESSEE WERE DULY CONSIDERED BY TH E ITAT IN ITS ORDER. THEREFORE THERE IS NO MISTAKE IN THE ORDER OF LD. I TAT ON THE GROUND THAT THE ORDERS CITED BY THE LD. COUNSEL FOR THE ASSESSE E HAD NOT BEEN CONSIDERED. THEREFORE WE DO NOT FIND ANY MERIT IN T HE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE. HENCE THE FIRST GROUND RA ISED BY THE ASSESSEE IN ITS MA IS DISMISSED. MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 9 - 7. THE ASSESSEE FOR ITS SECOND MISTAKE IN THE ORDER OF HONBLE ITAT HAS SUBMITTED AS UNDER: 3. THE ANOTHER GROUND IN RESPECT OF WHICH AN APPAR ENT ERROR HAS BEEN COMMITTED, IN THE HUMBLE SUBMISSION OF THE APPLICANT IS GROUND NO.5, IN UPHOLDING THE DISALLOW ANCE OF LOSS OF RS.5,25,87,000/- ON COLLAPSE OF A COOLING T OWER AT KUTCH LIGNITE POWER STATION MADE BY THE COMMISSIONE R OF INCOME TAX BOTH UNDER NORMAL PROVISIONS AS WELL AS UNDER SECTION 115JB. THE COMMISSIONER OF INCOME TAX HELD IN PARA 7.1. 2: 'THE WORDS USED 'ADHOC PROVISION' CLEARLY INDICATES THAT THE PROVISION WAS UNASCERTAINED LIABILITY. FURTHER, THE STATEMENT WAS THAT THE LOSS DETERMINED WAS EXACTLY 50% OF THE W.D.V. INSTEAD OF 'NET REALISABLE VALUE OF THE ASSET' ALSO GOES AGAINST THE CONTENTION OFASSESSEE. 'THE T RIBUNAL UPHELD THIS FINDING OF THE COMMISSIONER OF INCOME T AX. IN THE HUMBLE SUBMISSION OF THE APPLICANT HEREIN, THE FACT IS: THE ENTIRE TOWER COLLAPSED AND WHAT THE REPLY OF TH E APPLICANT TO NOTICE U/S.263 STATED: 'FOR THE PURPOS E OF FINALIZING THE ACCOUNTS OF THE COMPANY, THE USEFULN ESS OF THE REMAINING STRUCTURES WERE DETERMINED AND AFTER DETA ILED VERIFICATIONS, IT WAS DECIDED THAT 50% OF THE COST OF THE COOLING TOWER CAN BE UTILIZED IN THE CONSTRUCTION O F NEW COOLING TOWER. ' WAS NOT DOUBTED OR QUESTIONED BY T HE COMMISSIONER OF INCOME TAX. HE WENT PURELY BY AS-10 . NOW, THE QUESTION IN ANY MATTER U/S.263 IS NOT WHET HER THIS IS MERELY AN ERROR BUT ALSO WHETHER THERE IS PREJUD ICE. NOW, THE COMMISSIONER OF INCOME TAX HAS REVISED THE DECI SION OF THE ASSESSING OFFICER ONLY BECAUSE ACCORDING TO HIM , IT IS NOT IN ACCORDANCE WITH AS-10 BUT HE HAS NOT COME TO THE CONCLUSION THAT THE NET REALISABLE VALUE WOULD BE M ORE THAN 50% OF THE W.D.V., AND THEREFORE, A.O.'S ORDER IS ALSO PREJUDICED. THEREFORE, IN THE HUMBLE SUBMISSION OF THE APPLICANT, THE TRIBUNAL COMMITTED AN APPARENT ERROR IN MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 10 - UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME T AX ON THIS POINT ALSO. IT IS WORTH NOTING THAT TILL THE C OMMISSIONER OF INCOME TAX PASSED THE ORDER, THE APPLICANT HAD N OT BEEN IN A POSITION TO USE ANY PART OF THE DEBRIS OF THE COOLING TOWER, AND THEREFORE, THE APPLICANT'S APPEAL OUGHT TO HAVE BEEN ALLOWED INSTEAD OF BEING DISMISSED. IN THE PREMISES AFORESAID, THE APPLICANT PRAYS THAT THE ABOVE TWO APPARENT ERRORS BE KINDLY RECTIFIED IN TH E INTEREST OF JUSTICE, FOR WHICH ACT OF KINDNESS THE APPLICANT SHALL FOR EVER PRAY AND REMAIN GRATEFUL. 8. THE LD. AR BEFORE US SUBMITTED THAT THE LOSS CL AIMED ON ACCOUNT OF THE COLLAPSE OF THE TOWER WAS ACTUALLY WRITTEN O FF IN THE BOOKS OF ACCOUNTS. THEREFORE THE SAME CANNOT BE TREATED AS A N AD-HOC PROVISION. ACCORDINGLY, THERE CANNOT BE ANY ADDITION TO THE TO TAL INCOME OF THE ASSESSEE UNDER NORMAL AND MAT COMPUTATION OF INCOME . 9 ON THE OTHER HAND, LD. DR VEHEMENTLY SUPPORTED TH E ORDER OF HONBLE ITAT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THIS JUNCTURE, WE ARE INCLI NED TO REPRODUCE THE RELEVANT DISCLOSURE MADE BY THE ASSESSEE IN ITS FIN ANCIAL STATEMENT AS DETAILED UNDER: SCHEDULE-`16' ADMINISTRATION & OTHER EXPENSES: YEAR ENDED PREVIOUS MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 11 - MARCH 31, 2010 YEAR RENT, RATES AND TAXES 294.36 209.43 INSURANCE 415.49 328.80 COMMUNICATION 109.42 146.95 FEES AND LEGAL 946.20 409.93 AUDITORS REMUNERATION 17.65 17.65 TRAVELLING AND CONVEYANCE 126.65 161.50 OTHER EXPENSES 286.76 2584.00 MISC.LOSS WRITE OFF 925.74 0.00 DISCOUNT FOR PROMPT PAYMENT OF BILLS 0.00 17455.10 PROVISION FOR OBSOLENCE OF MATERIAL 1554.26 0.00 PROVISION FOR BAD ADVANCES/LOSS ON DISPUTE 0.00 742.95 7166.53 22056.31 LESS : ALLOCATED TO CAPITAL WORKS 775.66 474 .16 TOTAL 6390.87 21582.15 SCHEDULE-`12' CURRENT LIABILITIES & PROVISION AS AT MARCH 31,2010 AS AT MARCH 31, 2009 CURRENT LIABILITIES LIABILITIES FOR/RELATED TO FUEL 44 046.00 29 886.46 MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 12 - CAPITAL SUPPLIES / WORKS 6 806.88 440.41 O AND M SUPPLIES / WORKS 5181.06 6030.50 STAFF (INCLUSIVE OF WELFARE SCHEMES) 3 014.23 2 821.86 EXPENSES 2 136.82 17 275.85 DEPOSIT AND RETENTION FROM SUPPLIER/CONTRACTOR 23 876.38 36 906.46 INTEREST ACCRUED BUT NOT DUE 8 797.60 8 433.44 INTER COMPANY PAYABLE 194466.11 123171.12 PROVISION FOR EXPENSES 23043.83 28247.11 OTHER LIABILITIES 512.23 168.62 311881.60 253381.83 PROVISIONS FOR LEAVE ENCASHMENT LIABILITY 10 761.05 9 367.59 OBSOLENCE OF ASSET 525.87 0.00 TAXATION INCOME TAX 4 330.00 2 789.91 FRINGE BENEFIT TAX 134.23 134.23 WEALTH TAX 0.00 0.21 TOTAL 327632.75 265673.77 SCHEDULE 20 NOTES TO THE FINANCIAL STATEMENTS FORMING PART OF ACCOUNTS 4. FIXED ASSETS AND DEPRECIATION MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 13 - (A) ADHERING TO SIGNIFICANT ACCOUNTING POLICY, TH E DEPRECIATION ON ASSETS IS PROVIDED AT RATES PRESCRIBED BY CENTRAL ELECTRIC ITY REGULATORY COMMISSION (CERC), WHICH ARE EQUAL TO THE RATES AS REFERRED TO IN SCHEDULE-XIV TO THE COMPANIES ACT, 1956 AFTER ITS R EVISION WITH EFFECT FROM 1-04-2009. (B) DURING THE YEAR, THE COOLING TOWER AT KUTCHH LIGNITE THERMAL POWER STATION COLLAPSED FOR WHICH, AN ADHOC PROVISI ON OF LOSS OF RS.525.87 LAKHS IS MADE IN THE BOOKS OF THE COMPANY I.E AT 50% OF WRITTEN DOWN VALUE INSTEAD OF NET REALISABLE VALUE OF THE ASSET AS PER ACCOUNTING POLICY. 10.1 ON PERUSAL OF THE FINANCIAL STATEMENT OF TH E ASSESSEE AS DISCUSSED ABOVE, WE NOTE THAT THE ASSESSEE IN ITSELF HAS SHOW N THE LOSS ON THE COLLAPSE OF THE TOWER AS AN AD-HOC PROVISION. THUS IT IS CLEAR THAT THERE WAS A CLEAR VIOLATION OF THE PROVISIONS OF AS 10 AS OBSERVED BY THE ITAT IN ITS ORDER. ONCE THE ASSESSEE ITSELF HAS DISCLOSE D IN THE FINANCIAL STATEMENT AS AD-HOC PROVISION AS DISCUSSED ABOVE, T HERE REMAINS NO DOUBT THAT IT WAS NOT REPRESENTING THE NET REALIZABLE VAL UE AS MANDATED UNDER AS 10 ISSUED BY THE ICAI. 10.2. WE ALSO NOTE THAT THERE WAS NO ADJUSTMENT IN THE FIXED ASSET SCHEDULE ON ACCOUNT WRITING OFF THE TOWER AS DISCUS SED ABOVE. 10.3 SIMILARLY WE ALSO FIND THAT THERE WAS A PROVIS ION DISCLOSED IN THE CURRENT LIABILITY ON ACCOUNT OF WRITING OFF THE TOW ER WHICH EVIDENCES THAT THE SAME HAS NOT BEEN WRITTEN AGAINST THE RELEVANT FIXED ASSETS. MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 14 - 10.4 WE ALSO NOTE THAT THERE IS NO SPECIFIC APPAR ENT MISTAKE POINTED OUT BY THE LD. AR IN THE ORDER OF ITAT. THE SCOPE FOR R ECTIFICATION UNDER SECTION 254(2) OF THE ACT CAN BE EXERCISED ONLY WHE N MISTAKE, WHICH IS SOUGHT TO BE RECTIFIED, IS AN OBVIOUS AND PATENT MI STAKE, WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE, WHICH I S REQUIRED TO BE ESTABLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. IN VIEW OF THE ABOVE, WE ARE INCLINED TO REJECT THE GROUND RAISED BY THE ASSESSEE IN ITS MISC. APPLICATION. 11. IN THE RESULT, MA FILED BY THE ASSESSEE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 27/11/2018 SD/- SD/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 27/11/2018 PRITI YADAV, SR.PS MA NO.05/AHD/2017 (IN ITA NO950/AHD/2015) GUJARAT STATE ELECTRICITY CORP.. LTD. A.Y. 2010-11 - 15 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) ( ) / THE CIT(A). 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / !'# (DY./ASSTT.REGISTRAR) #$ %, / ITAT, AHMEDABAD 1. DATE OF DICTATION 16/10/2018(DICTATION PAGE 5) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : .. 12/11/2018 & 26/11/2018 3. OTHER MEMBER.. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT.. 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 10. DATE OF DESPATCH OF THE ORDER