DEPUTY COMMISSIONER OF INCOME TAX -3(1)(1), MUMBAI V. ARANDI INVESTMENTS Private Limited , MUMBAI

MA 514/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7715 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ABI RAMA KARIKEYAM
• Keywords: Rectification of order; Retrospective amendment; Difference of opinion; Change of opinion
• Section: 80IB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM MA NO. 514 /MUM/ 2018 (ARISING OUT OF ITA NO. 2330/MUM/2016) (ASSESSMENT YEAR: 2011 - 12) DY. CIT - 3(1)(1), ROOM NO. 607, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 VS. M/S. ARANDI INVESTMENT PVT. LTD. 408, TULSIANI CHAMBERS, NARIMAN POINT, MUMBAI - 400 021 PAN/GIR NO. AABCA 1755 C ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI S. ABI RAMA KARIKEYAM RESPONDENT BY : NONE DATE OF HEARING : 28.12.2018 DATE OF PRONOUNCEMENT : 14.01 .2019 O R D E R PER SHAMIM YAHYA, A. M.: BY WAY OF THIS MISCELLANEOUS APPLICATION THE REVENUE SEEKS RECALL OF THE ORDER OF THIS TRIBUNAL IN I NCOME T AX A PPEAL NO. 2330/MUM/2016 VIDE ORDER DATED 05.01.2018. 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE. THE NOTICE SENT HAS RETURNED UNSERVED. HENCE, WE PROCEEDED TO ADJUDICATE THE ISSUE BY HEARING THE LD. DR AND PERUSING THE RECORDS. 3. W E FIND IN THIS CASE THE R EVENUE IS URGING THAT IN VIEW OF THE SUBSEQUENT D ECISION OF HONBLE APEX COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT [2018] 402 ITR 640 (SC) , THE SAID DECISION OF THE ITAT SHOULD BE RECALLED. 4. UPON CAREFUL CONSIDERATION WE NOTE THAT IT IS NOT TH E CASE OF THE R EVENUE THAT ABOVE DECISION OF THE HONBLE APEX COURT W AS AVAILABLE WHEN THE ABOVE SAID APPEAL WAS DECIDED BY THE ITAT. HENCE , IT CANNOT BE SA ID THAT THERE WAS A MISTAKE APPA RENT FROM 2 MA NO.514/MUM/2018 RECORD IN THE ORDER OF THE ITAT. THIS VIEW IS SUPPORTED BY THE DECISION OF ITAT KOKATA BENCH IN THE CASE OF LINE PEN & PLASTICS LTD. VS. ACIT (IN ITA NO. 97/KOL/2011 VIDE ORDER DATED 14.07.2014 ). THE ITAT HAD CONSIDERED THE HONBLE APEX COURT DECISION AND HELD AS UNDER: WE NOTE THAT THE HON'BLE APEX COURT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227 (SC)VIDE ORDER DATED SEPTEMBER, 15, 2008 HAS EXPOUNDED IN PARA 40 TO 44 WHICH READ AS UNDER : - '40. THE CORE ISSUE, THEREFORE, IS WHETHER NON - CONSIDERATION OF A DECISION OF JURISDICTIONAL CO URT (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 MISTAKE CAN BE SAID TO BE A :'MISTAKE APPARENT FROM THE RECORD' WHICH COULD BE RECTIFIED UNDER SECTION 254(2) . 41. 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 JURISDICTIONAL COURT RENDERED PRIOR OR EVEN SUBSEQUENT TO THE ORDER OF RECTIFICATION, IT COULD BE SAID TO THE 'MISTAKE APPARENT FROM THE RECORD' UNDER SECTION 254(2) OF THE 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 FUNCT ION OF THE COURT OT 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 LAW. IT ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT ITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002 - 03 OPERATED FOR QUITE SOMETIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. 43. SALMOND IN HIS WELL - KNOWN WORK STATES : '...(T)HE THEORY OF CASE LAW IS THAT A JUDGE D OES 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 T HE OVERRULING DECISION. THE OVERRULING IS RETROSPECTIVE, EXCEPT AS REGARDS MATTERS THAT ARE RES JDICATA OR ACCOUNTS THAT HAVE BEEN SETTLED IN THE MEANTIME'[EMPHASIS SUPPLIED] 44. IT IS NO DOUBT TRUE THAT AFTER A HISTORIC DECISION IN GOLAK NATH V. STATE OF PUNJAB AIR 1967 SC 1643, THIS COURT 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, HOWEVE R, BE STATED THIS IS AN EXCEPTION TO THE GENERAL RULE OF THE DOCTRINE OF PRECEDENT.' 7.5. WE FURTHER NOTE THAT THE HON'BLE APEX COURT IN THE CASE OF MEPCO INDUSTRIES LTD. VS CIT AND ANOTHER 319 ITR 208 VI DE ORDER DATED NOVEMBER 19, 2009 HAD AN OCCASION TO CONSIDER THE ISSUE OF RECTIFICATION OF MISTAKE U/S 154 OF THE ACT. IN THE SAID DECISION THE 3 MA NO.514/MUM/2018 HON'BLE APEX COURT HAD HELD THAT SECTION 154 COULD NOT BE IN VOKED IN A CASE OF MERE CHANGE OF OPINION. IT WAS HELD THAT A RECTIFIABLE MISTAKE WAS A MISTAKE WHICH WAS OBVIOUS AND NOT SOMETHING WHICH HAD TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS WERE POSSIBLE. A DECISION ON A DEBATA BLE POINT OF LAW COULD NOT BE TREATED AS A MISTAKE APPARENT FROM THE RECORD. IN THIS CASE THE HON'BLE APEX COURT HAD REVERSED THE DECISION OF THE HON'BLE MADRAS HIGH COURT. IN THE SAID DECISION THE HON'BLE APEX COURT HAS REFERRED WITH APPROVAL OF THE HON'B LE CALCUTTA HIGH COURT IN THE CASE OF JIYAJEERAO COTTON MILS LTD. VS ITO 130 ITR 710. THE HON'BLE APEX COURT HAS OBSERVED AS UNDER : - 'WE MAY NO DEAL WITH THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CAS E OF JIYAJEE COTTON MILLS LTD. V. ITO REPORTED IN [1981] 130 ITR 710. IN THAT CASE, THE APPELLANT - ASSESSEE DERIVED PROFITS FROM THREE INDUSTRIES, ONE WHICH QUALIFIED FOR SPECIAL REBATE UNDER PART I OF SC HEDULE I TO THE FINANCE ACT , 1965, FOR THE ASSESSMENT YEAR 1966 - 67. IN GRANTING THIS SPECIAL REBATE, THE INCOME - TAX OFFICER COMPUTED THE PROFITS ATTRIBUTABLE TO THAT INDUSTRY WITHOUT DEDUCTING DEVELOPMENT REBATE GRANTED TO THE APPELLANT. THE INCOME - TAX OFFICER SOUGHT TO RECTIFY THE MISTAKE UNDER SECTION 154 OF THE ACT BY RECOMPUTING THE PROFITS BY DEDUCTING THE DEVELOPMENT REBATE. THE APPELLANT FILED A WRI T PETITION FOR SETTING ASIDE THE NOTICE OF RECTIFICATION. IT WAS HELD BY THE CALCUTTA HIGH COURT THAT SINCE THERE WAS CONFLICT OF OPINION ON COMPUTATION OF OF PROFITS OF PRIORY INDUSTRY FOR GRANTING TAX RELIEF WHICH CONFLICT AS RESOLVED BY THE SUPREME COUR T LATER ON FOR THE SUBSEQUENT ASSESSMENT YEAR 1977 - 68, SUCH SUBSEQUENT DECISION OF THE SUPREME COURT DID NOT OBLITERATE THE CONFLICT OF OPINION PRIOR TO IT. IT WAS HELD THAT, UNDER SECTION 154 OF THE ACT, RECTIFICATION WAS NOT PERMISSIBLE ON DEBATABLE ISSUE.' 7.6 FROM THE ABOVE WE NOTE THAT WE HAVE A DECISION FROM HON'BLE APEX COURT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) VIDE ORDER SEPTEMBER 15, 2008. THIS DECISION SUPPORTS THE VIEW TAKEN BY THE LD. CIT(A). THE EXPOSITION IS THAT 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 LAW. IT O NLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOMETIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING TH E LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. 7.7. AS AGAINST THE ABOVE, WE HAVE A LATER DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MEPCO INDUSTRIES LTD. (SUPRA) VIDE ORDER DATED 19TH NOVEMBER, 2009. IN THIS DECISION THE HON'BLE APEX COURT HAS REFERRED WITH APPROVAL OF THE HON'BLE CALCUTTA HIGH COURT DECISION THAT SUBSEQUENT DECISION OF THE HON'BLE SUPREME COURT DID NOT OBLITERATE THE CONFLICT OF OPINION PRIOR TO IT. IT WAS HELD THAT U/S SECTION 154 OF THE ACT RECTIFICATION WAS NOT PERMISSIBLE ON DEBATABLE ISSUE.. 7.8. FURTHERMORE IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) THE HON'BLE APEX COURT HAS ITSELF EXPOUNDED THAT EVEN WHERE AN EARLIER DECISION OF THE COURT OP ERATED FOR QUITE SOME TIME THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. 7.9. NOW IF WE APPLY THIS LATER DECISION OF THE HON'BLE APEX COURT WE FIND THAT THERE WAS CO NFLICT OF OPINION AS TO WHETHER DEPB/DUTY DRAWBACK/EXPORT BENEFIT WOULD COME UNDER THE COMPUTATION OF PROFIT ELIGIBLE FOR DEDUCTION OF SECTION 80IB OF THE ACT. THIS CONFLICT OF OPINION WAS RESOLVED BY THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA) . IT IS AN UNDISPUTED FACT THAT AT THE TIME OF FILING OF THE RETURN BY THE ASSESSEE 4 MA NO.514/MUM/2018 THERE WAS CONFLICT OF OPINION. THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF M/S. LIBERTY INDIA LTD. CAME MU CH LATER AND IN THIS VIEW OF THE MATTERITA.NO.971/KOL/2011 LINC PEN & PLASTICS LTD. A.YR.2002 - 03 RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MEPCO INDUSTRIES LTD. (SUPRA) WE HOLD THAT THERE WAS A CONFLICT OF OPINION PRIOR TO THE DECISION AND AS SUCH THE MISTAKE CANNOT BE HELD TO BE A MISTAKE APPARENT FROM THE RECORD TO COME UNDER THE KEN OF SECTION 154 OF THE ACT. HENCE RECTIFICATION OF THE MISTAKE APPARENT FROM RECORD U/S 154 ON THIS ISSUE CANNOT BE UPHELD. IN THIS VIEW OF THE MATTER, IN OUR CONSIDERED OPINION ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE DESERVES TO BE SET ASIDE 5. IN THE RESULT, THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4 . 0 1 . 2 0 1 9 S D / - S D / - ( SANDEEP GOSAIN ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 4 . 0 1 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI