ACIT CIR 23(1), V. MAHAJAN SILK MILLS,

MA 744/MUM/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6191 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 20-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, J M M.A.NO.744/MUM/2010 (ARISING OUT OF ITA NO.5727/MUM/2009 : ASST.YEAR 20 04-2005) THE DY.COMMISSIONER OF INCOME-TAX- 23(1), MUMBAI. M/S.MAHAJAN SILK MILLS, L.B.S. MARG, VIKHROLI (W), MUMBAI-400 079. PAN: AAAFM 1714 H (APPLICANT) VS. (RESPONDENT) APPLICANT BY : SHRI JITENDRA YADAV. RESP ONDENT BY : NONE. O R D E R PER R.S.SYAL, AM : THIS MISCELLANEOUS APPLICATION U/S.254(2) OF THE IN COME-TAX ACT, 1961 HAS BEEN MOVED BY THE REVENUE PRAYING FOR THE RECTIFICA TION OF THE ORDER OF THE TRIBUNAL DATED 18.06.2010 IN ITA NO.5727/MUM/2009. 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDE D THAT THE TRIBUNAL, WHILE ACCEPTING THE ASSESSEE GROUND ON THE CLAIM OF DEDUC TION U/S.80HHC IN THE CONTEXT OF DEPB, RELIED ON THE SPECIAL BENCH DECISION IN TOPMAN EXPORTS VS. ITO [(2009) 318 ITR (AT) 87 (MUM.) (SB)] . IT WAS STATED THAT THE SAID ORDER HAS BEEN OVERRU LED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS [(2010) 328 ITR 451 (BOM.)] . IT WAS, THEREFORE, PRAYED THAT THE IMPUGNED ORDER HAS NOW BECOME ERRONEOUS IN VIEW OF THE SUBSEQUENT JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WHICH SHOULD BE RECTIFIED ACCORDINGLY IN CONSONANCE WITH THE VIEW OF THE HONBLE HIGH COURT. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE DESPITE REPEATED NOTICES. 3. WE HAVE HEARD THE LD. D.R. AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE TRIBUNAL ORDER ACCEPTING THE ASSESSEE S CLAIM ON DEPB WAS PASSED MA NO.744/MUM/2010 MAHAJAN SILK MILLS. 2 PRIOR TO THE JUDGMENT RENDERED BY THE HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS. KALPATARU COLOURS & CHEMICALS (2010) 328 ITR 45 1 (BOM), REVERSING THE SPECIAL BENCH ORDER IN TOPMAN EXPORTS VS. ITO (2009 ) 318 ITR (AT) 87 (MUM) (SB) . THERE IS NO CONFLICT ON THE POINT THAT AS P ER THIS JUDGMENT, THE VIEWPOINT OF THE AO HAS BEEN VALIDATED. NOW THE QUESTION ARISES AS TO WHETHER A SUBSEQUENT JUDGEMENT RENDERED BY THE HONBLE JURISDICTIONAL HI GH COURT ON THE ISSUE CAN BE CONSIDERED FOR TREATING THE EARLIER CONTRARY ORDER OF THE TRIBUNAL, AS ERRONEOUS AMENABLE FOR RECTIFICATION U/S.254(2) OF THE ACT. 4. IN THIS CONTEXT, IT MAY BE RELEVANT TO NOTICE T HE FOLLOWING OBSERVATION OF THE HONBLE APEX COURT IN THE CASE OF ACIT VS. SAURASHT RA KUTCH STOCK EXCHANGE LTD. [(2008) 305 ITR 227 (SC)]:- THE CORE ISSUE, THEREFORE, IS WHETHER NON-CONSIDER ATION OF A DECISION OF JURISDICTIONAL COURT (IN THIS CASE A DE CISION OF THE HIGH COURT OF GUJARAT) OR OF THE SUPREME COURT CAN BE SA ID 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 S.254(2). A SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFORE THE HIGH COURT OF GUJARAT IN SUHRID GEIGY LTD. VS. COMMR. OF SURTAX (SUPRA). IT WAS HELD BY T HE DIVISION BENCH OF THE HIGH COURT THAT IF THE POINT IS COVER ED BY A DECISION OF THE JURISDICTIONAL COURT RENDERED PRIOR OR EVEN SUB SEQUENT TO THE ORDER OF RECTIFICATION, IT COULD BE SAID TO BE MIS TAKE APPARENT FROM THE RECORD UNDER S.254(2) OF THE ACT AND COULD BE CORRECTED BY THE TRIBUNAL. IN OUR JUDGEMENT, IT IS ALSO WELL-SETTLE D THAT A JUDICIAL DECISION ACTS RETROSPECTIVELY. ACCORDING TO BLACKST ONIAN THEORY, IT IS NOT THE FUNCTION OF THE COURT TO PRONOUNCE A `NEW R ULE BUT TO MAINTAIN AND EXPOUND THE `OLD ONE. IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY ONLY DISCOVER OR FIND THE CORRECT LA W. THE LAW HAS ALWAYS BEEN THE SAME. IF A SUBSEQUENT DECISION ALTE RS 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 RE TROSPECTIVELY. 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 POSI TION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. MA NO.744/MUM/2010 MAHAJAN SILK MILLS. 3 5. FROM THE ABOVE ENUNCIATION OF LAW BY THE HIGHES T COURT OF THE LAND, IT BECOMES DISCERNIBLE THAT THE JUDICIAL DECISIONS OPE RATE RETROSPECTIVELY AND IF A POINT IS COVERED BY THE DECISION OF THE JURISDICTI ONAL HIGH COURT, RENDERED BEFORE OR AFTER THE ORDER, THE CONTRARY VIEW HAS TO MAKE THE SPACE FOR THE HIGHER WISDOM TO PREVAIL BY WAY OF RECTIFICATION OF THE EARLIER ORD ER. IF THE VIEWPOINT OF THE LD. AR IS ACCEPTED THAT THE SUBSEQUENT JUDGMENT BE IGNORED FO R THE PURPOSES OF RECTIFICATION OF THE EARLIER CONTRARY ORDER, IT WOULD MEAN THAT T HE EARLIER ORDER WOULD BE HELD IN ACCORDANCE WITH THE LAW AS ON THE DATE OF PASSING O F ITS ORDER. IT WOULD, THEREFORE, MEAN THAT THE SUBSEQUENT JUDGMENT OF THE HONBLE S UPREME COURT OR THE JURISDICTIONAL HIGH COURT IS NOT DECLARATORY BUT PR OSPECTIVE, WHICH IS CONTRARY TO THE SETTLED LEGAL POSITION. 6. WE ARE NOT OBLIVIOUS OF THE FACT THAT IN CERTAI N CASES IT HAS BEEN HELD THAT THE LATER JUDGMENT CANNOT CONSTITUTE THE BASIS FOR RECTIFICATION OF THE CONTRARY ORDER PASSED PRIOR TO SUCH JUDGMENT. BUT IT IS REL EVANT TO MENTION THAT IT IS NOT THE ONLY VIEW ON THE POINT. THE FULL BENCH OF THE PUN JAB & HARYANA HIGH COURT IN CIT VS. SMT.ARUNA LUTHRA [(2001) 252 ITR 76 (P&H) ( FB)] HAS HELD THAT THE RECTIFICATION OF AN ORDER CAN BE INITIATED ON THE B ASIS OF AN ORDER PASSED BY THE JURISDICTIONAL HIGH COURT OR THE SUPREME COURT SUBS EQUENT TO THE ORDER PASSED BY THE AUTHORITY UNDER THE ACT. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE KERALA HIGH COURT IN KIL KOTAGIRI TEA AND COFFEE ESTATES CO. LTD. VS. INCOME TAX APPELLATE TRIBUNAL AND OTHERS [(1988) 174 ITR 579 ( KER.)] BY HOLDING THAT THE ORDER BASED UPON THE INTERPRETATION OF LAW FOUND WR ONG SUBSEQUENTLY DISCLOSED MISTAKE APPARENT FROM RECORD WHICH IS RECTIFIABLE. IT HAS BEEN HELD THAT WHERE AN ORDER IS PASSED BY AN AUTHORITY ON THE BASIS OF A P ARTICULAR DECISION, REVERSAL OF SUCH DECISION IN FURTHER PROCEEDINGS, WILL JUSTIFY A REC TIFICATION OF ORDER PASSED ON EARLIER DECISION. SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOW ING CASES ALSO : M.K.KUPPURAJ VS. ITO (1995) 211 ITR 853 (MA D) SURAT TEXTILES MILLS LTD. VS. CIT (1971) 80 ITR 1 (GUJ) MA NO.744/MUM/2010 MAHAJAN SILK MILLS. 4 SOUTHERN INDUSTRIAL CORPORATION LTD. VS. CIT (2002) 258 ITR 481 (MAD). 7. MOREOVER, WITH THE ADVENT OF THE JUDGMENT B Y THE HONBLE SUMMIT COURT IN SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) LAYING DOWN CLEARLY IN FAVOUR OF RECTIFICATION, THE CONTRARY JUDGMENTS OF THE HONB LE HIGH COURTS HOLDING OTHERWISE ARE IMPLIEDLY OVERRULED. WE, THEREFORE, HAVE NO HE SITATION IN COMING TO THE CONCLUSION THAT THE JUDGMENT RENDERED BY THE HONBL E SUPREME COURT OR THE HONBLE JURISDICTIONAL HIGH COURT RENDERS THE EARLI ER CONTRARY ORDER PASSED BY THE TRIBUNAL ERRONEOUS, WHICH NEEDS TO BE RECTIFIED U/ S.254(2) OF THE ACT. IT IS NOTWITHSTANDING THE FACT THAT SUCH JUDGMENT WAS PRO NOUNCED BEFORE OR AFTER THE PASSING OF THE ORDER BY THE TRIBUNAL. 8. UNDER THESE CIRCUMSTANCES, WE HOLD THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL SUFFERS FROM AN INFIRMITY INASMUCH AS IT IS IN CONTRADICTION TO WHAT HAS BEEN SUBSEQUENTLY LAID DOWN BY THE HONBLE JURISDIC TIONAL HIGH COURT IN KALPATRU CHEMICALS (SUPRA) . THE SAME DESERVES AND IS HEREBY RECTIFIED. WE, TH EREFORE, SET ASIDE THE ORDER OF THE LD. FIRST APPELLATE AUTHORIT Y AND RESTORE THAT OF THE AO ON THIS ISSUE. CONSEQUENTLY, THE APPEAL FILED BY THE REVEN UE WOULD STAND ALLOWED. 9. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E. ON T HE 25TH DAY OF MARCH , 2011. SD/- SD/- (VIJAY PAL RAO) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 25 TH MARCH , 2011. NG: MA NO.744/MUM/2010 MAHAJAN SILK MILLS. 5 COPY TO : 1. THE APPLICANT. 2. THE RESPONDENT. 3. THE CIT-23, MUMBAI. CONCERNED 4. THE CIT(A) XXIII, MUMBAI. 5. THE DR, F BENCH,ITAT, MUMBAI. 6. GUARD FILE. (TRUE COPY). BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. MA NO.744/MUM/2010 MAHAJAN SILK MILLS. 6 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 25-03-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 25-03-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON -03-11 SR.PS/ 7. FILE SENT TO THE BENCH CLERK -03-11 SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER