ITO WD 4(2)(2), V. SYCASE & RACE INQUIRIES INDIA LTD,

MA 799/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3795 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 30-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH ARVIND
• Assessee Lawyers: GOPAL BOHRA
• Keywords: Depreciation; Retrospective amendment; Difference of opinion; Capital receipt; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI. BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER M.A. NO. 799/MUM/2009. (IN ITA NO. 2437/MUM/2008) ASSESSMENT YEAR : 2003-04. THE INCOME TAX OFFICER, M/S SY KES & RAYS EQUITIES 4(2)(2), MUMBAI. VS. IND IA LTD., 24/26, CAMA BUILDING, DALAL STREET, FORT, MUMBAI 400023. PAN AAECS5168A APPLICANT RESPONDENT APPLICANT BY : SHRI RAJESH ARVIND. RESPONDENT BY : SHRI GOPAL BOHRA. O R D E R PER J. SUDHAKAR REDDY, A.M. BY THIS MISCELLANEOUS APPLICATION, THE REVENUE REQUESTS FOR RECTIFICATION OF THE ORDER OF THE TRIBUNAL IN I TA NO.2437/MUM/2008 DATED 3 RD JUNE, 2009 WHEREIN THIS BENCH HAS FOLLOWED THE DEC ISION OF THE C-BENCH OF THE TRIBUNAL IN ASSESSEE OWN CASE FOR AN EARLIER ASSESSMENT YEAR AND DIRECTED THE AO TO ALLOW DEPRECIATION ON M EMBERSHIP CARD OF BSE AS WELL AS OTCEI. 2. THE REVENUE SUBMITS THAT THE DECISION OF THE TR IBUNAL ON THE ISSUE OF DEPRECIATION ON BSE CARD AND ON ACCOUNT OF OTCEI MEMBERSHIP CARD HAS BEEN REVERSED BY THE HONBLE BO MBAY HIGH COURT IN THE CASE OF M/S TECHNO SHARES AND STOCKS LTD. RE PORTED IN 305 ITR 2 227. THE SUBMISSION IS THAT THE CASE SUFFERS FROM AN APPARENT LEGAL MISTAKE REQUIRING RECTIFICATION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI GOPA L BOHRA, ON THE OTHER HAND, OPPOSES THE CONTENTION AND SUBMITS THAT THE RECTIFICATION CANNOT BE PASSED IN VIEW OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF MEPCO INDUTRIES LTD. VS. CIT 319 ITR 20 8 (SC). 4. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT T HE ISSUE IS COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE AS SESSEE BY THE DECISION OF MUMBAI K-BENCH OF THE TRIBUNAL IN M.A. NO. 772/M UM/2009 IN ITA NO.1261/MUM/2008, IN THE CASE OF ITO-4(2)(1) VS. M /S PAS SECURITIES PVT. LTD., ORDER DATED 11 TH FEB., 2010 WHEREIN IT IS HELD AS FOLLOWS : 6. WITH REGARD TO THE FIRST OBJECTION OF LEARNED C OUNSEL FOR THE 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 THE CASE OF SAURASH TRA KUTCH STOCK EXCHANGE LTD. (SUPRA), HON'BLE SUPREME COURT HELD T HAT NON- CONSIDERATION OF DECISION OF JURISDICTIONAL HIGH CO URT OR OF THE SUPREME COURT CAN BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD. THE CONTENTION OF LEARNED COUNSEL FOR THE A SSESSEE WAS THAT IN THE AFORESAID CASE, THE TRIBUNAL DECIDED THE MAT TER ON 27 TH OCTOBER, 2000 AND THE HON'BLE GUJARAT HIGH COURT DE CIDED AN IDENTICAL CASE OF HIRALAL BHAGWATI A FEW MONTHS PRI OR TO THAT DECISION; BUT IT WAS NOT BROUGHT TO THE ATTENTION O F THE TRIBUNAL. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE DECISION IN THE PRESENT CASE WAS RENDERED PRIOR TO THE DECISION OF HON'BLE BOMBAY HIGH COURT AND THEREFORE NO RECTIFICATION WA S POSSIBLE ON THE BASIS OF A SUBSEQUENT DECISION OF JURISDICTIONA L HIGH COURT. WE ARE OF THE VIEW THAT IT MAKES NO DIFFERENCE WHETHER THE DECISION OF JURISDICTIONAL HIGH COURT IS RENDERED PRIOR OR SUBS EQUENT TO THE ORDER OF THE TRIBUNAL. IN FACT, THIS ASPECT HAS BEE N DEALT WITH BY HON'BLE SUPREME COURT IN THE CASE OF SAURASHTRA KUT CH STOCK EXCHANGE LTD. (SUPRA) IN THE FOLLOWING WORDS :- 3 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 SAID TO BE A 'MISTAKE APPARENT FROM THE RECORD' ? IN OUR OPINION, BOTHTHE TRIBUNAL AND THE HIGH COURT WERE RIGHT IN HOLDING THAT SUCH A MISTAKE CAN BE SAID TO BE A 'MI STAKE 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. COMM R. OF SURTAX (SUPRA). IT WAS HELD BY THE DIVISION BENCH O F THE HIGH COURT THAT IF THE POINT IS COVERED BY A DECISI ON OF THE JURISDICTIONAL COURT RENDERED PRIOR OR EVEN SUBSEQU ENT TO THE ORDER OF RECTIFICATION, IT COULD BE SAID TO BE 'MIS TAKE APPARENT FROM THE RECORD' UNDER S. 254(2) OF THE AC T AND COULD BE CORRECTED BY THE TRIBUNAL. IN OUR JUDGMENT, IT IS ALSO WELL-SETTLED THAT A JUD ICIAL DECISION ACTS RETROSPECTIVELY. ACCORDING TO BLACKSTONIAN THE ORY, 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 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 OPERATED FOR QUITE SOME TIME, 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 THEOR Y OF CASE LAW IS THAT A JUDGE DOES NOT MAKE LAW; HE MERE LY DECLARES IT; AND THE OVERRULING OF A PREVIOUS DECIS ION IS A DECLARATION THAT THE SUPPOSED RULE NEVER WAS LAW. H ENCE ANY INTERMEDIATE TRANSACTIONS MADE ON THE STRENGTH OF T HE SUPPOSED RULE ARE GOVERNED BY THE LAW ESTABLISHED I N THE OVERRULING DECISION. THE OVERRULING IS RETROSPECTIV E, EXCEPT AS REGARDS MATTERS THAT ARE RES JUDICATAE OR ACCOUN TS THAT HAVE BEEN SETTLED IN THE MEANTIME'. 4 IT IS NO DOUBT TRUE THAT AFTER A HISTORIC DECISION IN GOLAK NATH VS. UNION OF INDIA, (1967) 2 SCR 762, THIS COURT HA S ACCEPTED THE DOCTRINE OF PROSPECTIVE OVERRULING . IT IS BASED ON THE PHILOSOPHY : 'THE PAST CANNOT ALWAYS B E ERASED BY A NEW JUDICIAL DECLARATION'. IT MAY, HOWEVER, BE STATED THAT THIS IS AN EXCEPTION TO THE GENERAL RULE OF TH E 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 & ORS. VS. STATE OF KARNATAKA, 1993 S UPP (4) SCC SAHAI J. STATED : 'JUSTICE IS A VIRTUE WHICH TR ANSCENDS ALL BARRIERS. NEITHER THE RULES OF PROCEDURE NOR TECHNI CALITIES OF LAW CAN STAND IN ITS WAY. THE ORDER OF THE COURT SH OULD NOT BE PREJUDICIAL TO ANYONE. RULE OF STARE DECISIS IS ADHERED FOR CONSISTENCY BUT IT IS NOT AS INFLEXIBLE IN ADMINIST RATIVE LAW AS IN PUBLIC LAW. EVEN THE LAW BENDS BEFORE JUSTICE . ENTIRE CONCEPT OF WRIT JURISDICTION EXERCISED BY THE HIGHE R COURTS IS FOUNDED ON EQUITY AND FAIRNESS. IF THE COURT FINDS THAT THE ORDER WAS PASSED UNDER A MISTAKE AND IT WOULD NOT H AVE EXERCISED THE JURISDICTION BUT FOR THE ERRONEOUS AS SUMPTION WHICH IN FACT DID NOT EXIST AND ITS PERPETRATION SH ALL RESULT IN MISCARRIAGE OF JUSTICE THEN IT CANNOT ON ANY PRINCI PLE BE PRECLUDED FROM RECTIFYING THE ERROR. MISTAKE IS ACC EPTED AS VALID REASON TO RECALL AN ORDER. DIFFERENCE 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 FLOW S IS THE ANXIETY TO AVOID INJUSTICE. IT IS EITHER STATUTORY OR INHERENT. THE LATTER IS AVAILABLE WHERE THE MISTAKE IS OF THE COURT. IN ADMINISTRATIVE LAW, THE SCOPE IS STILL WIDER. TECHN ICALITIES APART IF THE COURT IS SATISFIED OF THE INJUSTICE TH EN IT IS ITS CONSTITUTIONAL AND LEGAL OBLIGATION TO SET IT RIGHT BY RECALLING ITS ORDER'. IN THE PRESENT CASE, ACCORDING TO THE ASSESSEE, THE TRIBUNAL DECIDED THE MATTER ON 27TH OCT., 2000. HIRALAL BHAG WATI WAS DECIDED FEW MONTHS PRIOR TO THAT DECISION, BUT IT W AS NOT BROUGHT TO THE ATTENTION OF THE TRIBUNAL. IN OUR OP INION, IN THE CIRCUMSTANCES, THE TRIBUNAL HAS NOT COMMITTED A NY ERROR OF LAW OR OF JURISDICTION IN EXERCISING POWER UNDER SUB-S. (2) OF S. 254 OF THE ACT AND IN RECTIFYING 'MISTAKE APP ARENT FROM 5 THE RECORD'. SINCE NO ERROR WAS COMMITTED BY THE TR IBUNAL IN RECTIFYING THE MISTAKE, THE HIGH COURT WAS NOT WRON G IN CONFIRMING THE SAID ORDER. BOTH THE ORDERS, THEREFO RE, IN OUR OPINION, ARE STRICTLY IN CONSONANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. THUS, IT IS CLEAR FROM THE AFORESAID OBSERVATIONS T HAT IT MAKES ON DIFFERENCE WHETHER THE DECISION OF JURISDICTIONAL H IGH COURT WAS RENDERED PRIOR TO AFTER THE ORDER OF THE TRIBUNAL A ND THAT SUCH DECISIONS ALWAYS ACT RETROSPECTIVELY. 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. THE ISSUE IN THE CASE OF MEPCO INDUSTRIES (SUPRA) WAS WITH REGARD TO A CASE WHERE THE ISSUE BEFORE THE AUTHORITY EXERCISING POWER OF RECTIFICAT ION WAS A DEBATABLE ISSUE. IN THE PRESENT CASE, THE ASSESSEE DOES NOT DISPUTE THAT THE DECISION OF HON'BLE BOMBAY HIGH COURT IN T HE CASE OF TECHNO SHARES & STOCKS LTD. (SUPRA), ASSESSEE CANNO T CLAIM DEPRECIATION ON BSC CARD. THUS, AS FAR AS THE CASE OF THE ASSESSEE IS CONCERNED, THERE CAN BE NO DEBATE REGARDING ALLOWAB ILITY OF CLAIM FOR DEPRECIATION FOR BSC CARD. IN THE CASE OF MEPCO INDUSTRIES (SUPRA), THE ASSESSEE RECEIVED POWER SUBSIDY FOR TW O YEARS. INITIALLY, IT WAS OFFERED AS A REVENUE RECEIPT. THE ASSESSEE LATER ON FILED AN APPLICATION U/S. 264 PLEADING THAT THE SUB SIDY WAS CAPITAL RECEIPT AND RELIED ON THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF P.J. CHEMICALS LTD., 210 ITR 830. THE ASSES SEES APPLICATION FOR REVISION WAS ALLOWED BY THE COMMISS IONER. THEREAFTER, HON'BLE SUPREME COURT LAID DOWN CERTAIN PRINCIPLES WITH REGARD TO TAXABILITY OF 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 REC TIFIED HIS ORDER HOLDING THAT THE POWER SUBSIDY WAS TAXABLE AS REVENUE RECEIPT. HON'BLE SUPREME COURT HELD THAT EXERCISING POWER OF RECTIFICATION WAS IMPROPER FOR TWO REASONS. FIRSTLY , HON'BLE COURT HELD THAT POWER OF RECTIFICATION WAS INVOKED ON MER E CHANGE OF OPINION. SECONDLY, COURT HELD THAT MISTAKE SOUGHT T O BE RECTIFIED WAS NOT A MISTAKE APPARENT FROM THE FACE OF THE REC ORD IN THE SENSE THAT IT WAS NOT OBVIOUS AND THAT IT REQUIRED A LONG DRAWN PROCESS REASONING OR WHERE TWO OPINIONS WERE POSSIBLE. AS A LREADY STATED, IN THE PRESENT CASE AFTER DECISION OF HON'BLE BOMBA Y HIGH COURT, 6 THERE IS NO DISPUTE OR DEBATE WITH REGARD TO ALLOWA BILITY OF DEPRECIATION ON BSE CARD. WE ARE THEREFORE OF THE V IEW THAT DECISION IN THE CASE MEPCO INDUSTRIES LTD. (SUPRA) WILL NOT BE OF ANY ASSISTANCE TO THE PLEA OF THE ASSESSEE BEFORE U S. WE ARE THEREFORE OF THE VIEW THAT MISCELLANEOUS APPLICATIO N OF THE REVENUE SHOULD BE ALLOWED AND ACCORDINGLY, THE SAME IS ALL OWED. 8. THE RESULT WILL THAT THE APPEAL FILED BY THE REV ENUE BEFORE THE TRIBUNAL WILL STAND ALLOWED AND THE DISALLOWANCE OF DEPRECIATION ON BSE MEMBERSHIP CARD MADE BY THE ASSESSING OFFICE R WILL STAND RESTORED. 5. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS MISCELLANEOUS APPLICATION OF THE REVENUE. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF JUNE, 2010. SD/- SD/- (N.V. VASUDEVAN) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 18 TH JUNE, 2010. WAKODE COPY FORWARDED TO : 1. APPLICANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, E-BENCH (TRUE COPY) BY ORDER AS STT.REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI.