ACIT 4(2), V. RAMESH S. DAMANI FIANANCE P. LTD,

MA 794/MUM/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4536 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-02-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2004-2005
• Appeal Filed On: 26-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Depreciation; Rectification of order; Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K, MUMBAI BEFORE SHRI D.MANMOHAN, VP AND SHRI R.S.SYAL, AM M.A.NO.794/MUM/2009 (ARISING OUT OF ITA NO.628/MUM/2008 : ASST.YEAR 200 4-2005) THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 4(2) MUMBAI. VS. M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 619, P.J.TOWER, DALAL STREET MUMBAI 400 001. PA NO.AABCR2756E. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI S.K.SINGH RESPONDENT BY : SHRI PANKAJ R.TOPRANI 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 28.07.2009 IN ITA NO.628/MUM/2008 AN D DISALLOWING THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE BOMBAY STOCK EXCHANGE (BSE) MEMBERSHIP CARD, ON THE BASIS OF THE JUDGMENT OF TH E HONBLE BOMBAY HIGH COURT IN CIT VS. TECHNO SHARES & STOCKS LIMITED. DATED 11.9.2009. 2. IT IS SEEN THAT THE TRIBUNAL ORDER GRANTING DEPRECIATION ON BSE MEMBERSHIP CARD WAS PASSED PRIOR TO THE JUDGMENT RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT HOLDING THAT NO DEPRECIATION CAN BE GRA NTED. THERE IS NO CONFLICT ON THE POINT THAT AS PER THIS JUDGMENT, THE BENEFIT OF DE PRECIATION ON BSE MEMBERSHIP CARD CAN NO MORE BE EXTENDED TO THE ASSESSEE. HOW EVER THE ONLY POINT ARGUED BY BOTH THE SIDES IS WHETHER SUBSEQUENT JUDGMENT RENDE RED BY THE HONBLE JURISDICTIONAL HIGH COURT RENDERS THE EARLIER CONTR ARY TRIBUNAL ORDER ERRONEOUS AMENABLE TO RECTIFICATION OF MISTAKE U/S 254(2) OF THE ACT. WE FIND THAT THE MA NO.794/MUM/2009 M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 2 TRIBUNAL, WHILE DECIDING THE ISSUE AGAINST THE REV ENUE, FOLLOWED ITS EARLIER ORDER IN M/S.TECHNO SHARES & STOCK LTD. LATER ON THE VE RY SAME ORDER, ALONG WITH OTHER ORDERS ON THIS ISSUE, CAME UP FOR ADJUDICATI ON BEFORE THE HONBLE JURISDICTIONAL HIGH COURT, IN WHICH THE ISSUE IN Q UESTION WAS DECIDED IN FAVOUR OF THE REVENUE. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON THE TRIBUNAL AND HENCE THE IMPUGNED ORDER SUFFERED FROM APPARENT LEGAL MISTAKE WHICH WAS LIABLE TO BE RECTIFIED. IN THE OPPOSITION THE LEARNED A.R. RELI ED ON THE JUDGEMENT OF THE HONBLE RAJASTHAN HIGH COURT IN CIT VS. SUNIL KUMAR [212 ITR 238 (RAJ.)] AND THAT OF THE ANDHRA PRADESH HIGH COURT IN CIT VS. K.VENKATESWAR RAO [(1998) 169 ITR 330 (AP)] FOR BOLSTERING HIS SUBMISSION THAT THE SUBSEQUENT JUDGEMENT OF THE HONBLE HIGH COURT WOULD NOT RENDER THE EARLIER CONTRARY OR DER AS ERRONEOUS. HE ALSO RELIED ON CIRCULAR NO.68 DATED 17.11.1971 FOR CANVASSING T HE VIEW THAT RECTIFICATION IS IMPERMISSIBLE UNDER PRESENT CIRCUMSTANCES. 4. THERE IS NO DISPUTE ON THE FACT THA T THE TRIBUNAL ALLOWED DEPRECIATION ON THE BSE MEMBERSHIP CARD ON THE BASIS OF CERTAIN TRI BUNAL ORDERS AND SUBSEQUENTLY THE HONBLE JURISDICTIONAL HIGH COURT REVERSED SUCH VIEW BY HOLDING THAT NO DEPRECIATION CAN BE ALLOWED. NOW THE QUESTION ARISE S AS TO WHETHER A SUBSEQUENT JUDGEMENT RENDERED BY THE HONBLE JURISDICTIONAL HI GH COURT CAN BE CONSIDERED FOR TREATING THE EARLIER CONTRARY ORDER OF THE TRIBUNAL , AS ERRONEOUS LIABLE FOR RECTIFICATION U/S.254(2) OF THE ACT. 5. IN THIS CONTEXT, IT MAY BE RELEVANT TO NOTICE TH E FOLLOWING OBSERVATION OF THE HONBLE APEX COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. [(2008) 305 ITR 227 (SC)] :- MA NO.794/MUM/2009 M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 3 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 T HE 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 CO ULD BE RECTIFIED UNDER S.254(2). A SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFOR E THE HIGH COURT OF GUJARAT IN SUHRID GEIGY LTD. VS. COMMR. OF SURTAX ( 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 R ENDERED PRIOR OR EVEN SUBSEQUENT TO THE ORDER OF RECTIFICATION, IT COULD BE SAID TO BE MISTAKE APPARENT FROM THE RECORD UNDER S.254(2) O F THE ACT AND COULD BE CORRECTED BY THE TRIBUNAL. IN OUR JUDGEMENT, 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 NO T MAKE LAW, THEY ONLY DISCOVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN THE 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 RETROSPECT IVELY. TO PUT IT DIFFERENTLY, EVEN WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOME TIME, THE DECISION RENDERED LATER ON WOU LD HAVE RETROSPECTIVE EFFECT CLARIFYING THE LEGAL POSITION WHICH WAS EARLIER NOT CORRECTLY UNDERSTOOD. 6. FROM THE ABOVE ENUNCIATION OF LAW BY T HE HIGHEST COURT OF THE LAND, IT BECOMES DISCERNIBLE THAT THE JUDICIAL DECISIONS ACT RETROSPECTIVELY AND IF A POINT IS COVERED BY THE DECISION OF THE JURISDICTIONAL 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 ORDER. IF TH E VIEW POINT 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, MA NO.794/MUM/2009 M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 4 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. 7. THE JUDGMENT RELIED BY THE LEARNED A.R. IN K.VENKATESWAR RAO (SUPRA) IS NOT APPLICABLE. IN THAT CASE THE INCOME TAX OFFICER PROCEEDED TO RECTIFY THE MISTAKE U/S.154 ON AUGUST 30, 1977. IT WAS ONLY THEREAFTER THAT THE JUDGEMENT OF THE HONBLE HIGH COURT WAS RENDERED ON 6.3.1979, WHICH SUPPORTED THE VIEW OF THE ITO. IT WAS IN THE LIGHT OF THESE FACTS THAT THE H ONBLE HIGH COURT HELD THAT ON THE DATE WHEN THE INCOME TAX OFFICER EXERCISED HIS JURI SDICTION U/S.154, THE MATTER WAS NOT FREE FROM ARGUMENT OR DEBATE. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE MISCELLANEOUS APPLICATION HAS BEE N FILED BY THE ASSESSEE PURSUANT TO THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN TECHNO SHARES & STOCKS LIMITED (SUPRA) . IT IS NOT AS IF THE MISCELLANEOUS APPLICATION WAS FILED EARLIER AND THEREAFTER THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT CAME INTO EXISTENCE, WHICH COULD BRING THE CASE WITHIN T HE RATIO OF THE JUDGMENT IN K.VENKATESWAR RAO (SUPRA). CIRCULAR NO.68 ALSO NOWHERE PROVIDES THAT A SUBSEQUENT JUDGMENT OF THE HONBLE JURISDICTIONAL H IGH COURT SHOULD NOT BE CONSIDERED FOR THE PURPOSE OF RECTIFICATION OF AN E ARLIER CONTRARY ORDER. 8. WE ARE NOT OBLIVIOUS OF THE FACT TH AT IN CERTAIN OTHER 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 RELEVANT TO MENTION THAT IT IS NOT THE ONLY VIEW ON THE POINT. THE FULL BENCH OF THE PUNJAB & HARYANA HIGH COURT IN CIT VS. SMT.ARUNA LUTHRA[(2001) 252 ITR 76 (P&H) (F B)] HAS HELD THAT THE RECTIFICATION OF AN ORDER CAN BE INITIATED ON THE BASIS 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. I NCOME TAX MA NO.794/MUM/2009 M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 5 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 MISTAKES 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) SOUTHERN INDUSTRIAL CORPORATION LTD. VS. CIT (2002) 258 ITR 481 (MAD) 9. MOREOVER WITH THE ADVENT OF THE JUDGMENT BY THE HONBLE SUMMIT COURT IN SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) LAYING DOWN CLEARLY IN FAVOUR OF RECTIFICATION, WE HAVE NO HESITATION IN COMING TO THE CONCLUSION THAT THE JUDGMENT RENDERED BY THE HONBLE SUPREME COURT OR T HE HONBLE JURISDICTIONAL HIGH COURT RENDERS THE EARLIER CONTRARY ORDER PASSE D 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 PRONOUNCED BEFORE OR AFTER THE PA SSING OF THE ORDER BY THE TRIBUNAL. 10. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL SUFFERS FROM INFIRMITY INASMUCH AS IT IS IN CONTRADICTION TO WHAT HAS BEEN SUBSEQUENTLY LAID DO WN BY THE HONBLE JURISDICTIONAL HIGH COURT IN TECHNO SHARES & STOCKS LIMITED (SUPRA) . THE SAME DESERVES AND IS HEREBY RECTIFIED. WE ORDER FOR THE SUSTENANCE OF THE DISALLOWANCE OF DEPRECIATION OF RS.9,68,994 MADE BY THE ASSESSIN G OFFICER AS CONFIRMED BY THE LEARNED CIT(A). CONSEQUENTLY THE APPEAL FILED BY TH E ASSESSEE WOULD STAND DISMISSED. MA NO.794/MUM/2009 M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 6 11. IN THE RESULT, THE MISCELLANEOUS APPLICATION I S ALLOWED. ORDER PRONOUNCED ON THIS 9 TH DAY OF FEBRUARY, 2010. SD/- SD/- ( D.MANMOHAN ) ( R.S.SYAL ) VICE PRESIDENT ACCOUNTANT ME MBER MUMBAI : 9 TH FEBRUARY, 2010. DEVDAS* COPY TO : 1. THE APPLICANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - IV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. MA NO.794/MUM/2009 M/S.RAMESH S.DAMANI FINANCE PVT. LTD. 7 DATE INITIAL 1. DRAFT DICTATED ON 05.02.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05.02.2010 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/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. *