ACIT CEN CIR 43, V. WELWORTH SHARE & STOCK BROKING LTD,

MA 860/MUM/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4519 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-02-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 18-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Retrospective amendment; Difference of opinion; Capital receipt; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JM & SHRI R.K. PANDA, AM M.A. NO. 860/MUM/2009 ARISING OUT OF I.T.A. NO. 4050/MUM/2008 (ASSESSMENT YEAR 2004-05) ASST. CIT-CENTRAL CIRCLE 43 6 TH FLOOR, R. NO.659, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20 VS. M/S. WELWORTH SHARE & STOCK BROKING LTD. SARVODAYA MILLS COMPOUND, TARDEO, MUMBAI-400 034 PAN: AAACW2850M APPELLANT RESPONDENT APPELLANT BY: MR. S.M. KESHKAMAT RESPONDENT BY: MS. SNEHAL SHAH O R D E R DATE OF HEARING: 05.02.2010 DATE OF ORDER: 15.02.2010 PER R.K. PANDA, AM: THE REVENUE THROUGH THIS MISCELLANEOUS APPLICATION (MA) REQUESTS THE TRIBUNAL TO RECTIFY THE ORDER PASSED B Y IT WHEREIN IT HAS ALLOWED DEPRECIATION ON BSE MEMBERSHIP CARD AS CLAIMED BY THE ASSESSEE. 2. THE LEARNED DR SUBMITTED THAT THE TRIBUNAL FOLLOWIN G ITS EARLIER ORDER IN ASSESSEES OWN CASE FOR A.Y. 2001- 02 ALLOWED THE ASSESSEES CLAIM OF DEPRECIATION ON THE BSE MEMBERS HIP CARD. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS. M/S. TECHNO SHARES & STOCK LTD., VI DE INCOME TAX APPEAL NO. 971 OF 2006 DECIDED ON 11 TH SEPTEMBER, 2009, HE SUBMITTED THAT THE HONBLE HIGH COURT HAS DECIDED T HE ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY H OLDING THAT THE BSE MEMBERSHIP CARD IS NOT ANY ONE OF THE ITEMS OF INTANGIBLE ITEMS LISTED IN SECTION 32(1)(II) OF THE INCOME-TAX ACT, 1961 (THE ACT) AND THEREFORE, DEPRECIATION CANNOT BE ALLOWED ON THE VALUE OF M.A. NO. 860/MUM/2009 M/S. WELLWORTH SHARE & STOCK BROKING LTD. ============================= 2 THE BSE MEMBERSHIP CARD. IN VIEW OF THIS DECISION BY HONBLE BOMBAY HIGH COURT, THE LEARNED DR SUBMITTED THAT TH E TRIBUNAL SHOULD RECTIFY ITS ORDER AND HOLD THAT THE DISALLOW ANCE OF DEPRECIATION ON BSE MEMBERSHIP CARD CLAIMED BY THE ASSESSEE SHOULD BE UPHELD. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. SAURASHTRA KU TCH STOCK EXCHANGE REPORTED IN 305 ITR 227, HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID ORDER HAS HELD THAT WHERE THE DECISION OF THE TRIBUNAL IS CONTRARY TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT THEN THE SAME HAS TO BE R ECTIFIED BY THE TRIBUNAL U/S. 254(2) OF THE ACT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SAURASHTRA KUTCHH STOCK EXCHANGE (SUPRA) WA S RENDERED IN A SITUATION WHERE THE DECISION OF HONBLE JURISDICT IONAL HIGH COURT WAS EXISTING ON THE DATE WHEN THE TRIBUNAL PASSED I TS ORDER. HOWEVER, IN THE INSTANT CASE THERE WAS NO SUCH DECI SION BY THE HIGH COURT WHEN THE TRIBUNAL PASSED ITS ORDER. THE REFORE, THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. HE SUBMITTED THAT THE DECISION OF HONBLE JURISDICTION AL HIGH COURT RENDERED SUBSEQUENT TO THE ORDER OF THE TRIBUNAL WI LL NOT GIVE RISE TO A MISTAKE APPARENT FROM RECORD AND THEREFORE, RE CTIFICATION APPLICATION FILED BY THE REVENUE SHOULD BE DISMISSE D. 4. HE FURTHER SUBMITTED THAT THE HONBLE SUPREME COURT IN A LATER DECISION IN THE CASE OF MEPCO INDUSTRIES LTD. VS. CIT REPORTED IN 319 ITR 208 HAS TAKEN THE VIEW THAT POWER OF REC TIFICATION CANNOT BE EXERCISED ON THE BASIS OF SUBSEQUENT DECI SION OF HONBLE SUPREME COURT. HE SUBMITTED THAT THE DECISION REND ERED IN THE CASE OF SAURASHTRA & KUTCH STOCK EXCHANGE (SUPRA) W AS A JUDGEMENT CONSISTING OF 2 MEMBER BENCH WHEREAS THE DECISION RENDERED IN THE CASE OF MEPCO INDUSTRIES LTD. (SUPR A) WAS A DECISION RENDERED BY A BENCH COMPRISING OF 3 JUDGES . HE M.A. NO. 860/MUM/2009 M/S. WELLWORTH SHARE & STOCK BROKING LTD. ============================= 3 ACCORDINGLY ARGUED THAT THE LATER DECISION SHOULD B E FOLLOWED. RELYING ON A NUMBER OF OTHER JUDICIAL DECISIONS, HE SUBMITTED THAT THE SUBSEQUENT DECISION RENDERED BY A HIGHER FORUM WILL NOT CONSTITUTE A MISTAKE APPARENT FROM RECORD ON AN ISS UE WHICH WAS DEBATABLE AS ON THE DATE WHEN THE DECISION WAS REND ERED BY THE TRIBUNAL. HE ACCORDINGLY SUBMITTED THAT THE MA FIL ED BY THE REVENUE SHOULD BE DISMISSED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES AND THE VARIOUS DECISIONS CITED BEFORE US. W ITH REGARD TO THE FIRST OBJECTION OF LEARNED COUNSEL FOR THE ASSESSEE THAT DECISION OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED SUBSEQUE NT TO THE DECISION OF THE TRIBUNAL WILL NOT GIVE RISE TO A MI STAKE APPARENT FROM THE RECORD, WE ARE OF THE VIEW THAT THE SAME C ANNOT BE ACCEPTED. IN THE CASE OF SAURASHTRA KUTCH STOCK EXC HANGE LTD. (SUPRA), HON'BLE SUPREME COURT HELD THAT NON-CONSID ERATION OF DECISION OF JURISDICTIONAL HIGH COURT OR OF THE SUP REME COURT CAN BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD. THE CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE WAS THAT IN THE AFORESAID CASE, THE TRIBUNAL DECIDED THE MATTER ON 27 TH OCTOBER, 2000 AND THE HON'BLE GUJARAT HIGH COURT DECIDED AN IDENTICAL CAS E OF HIRALAL BHAGWATI A FEW MONTHS PRIOR TO THAT DECISION; BUT I T WAS NOT BROUGHT TO THE ATTENTION OF THE TRIBUNAL. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE DECISION IN THE PRESE NT CASE WAS RENDERED PRIOR TO THE DECISION OF HON'BLE BOMBAY HI GH COURT AND THEREFORE NO RECTIFICATION WAS POSSIBLE ON THE BASI S OF A SUBSEQUENT DECISION OF JURISDICTIONAL HIGH COURT. WE ARE OF TH E VIEW THAT IT MAKES NO DIFFERENCE WHETHER THE DECISION OF JURISDI CTIONAL HIGH COURT IS RENDERED PRIOR OR SUBSEQUENT TO THE ORDER OF THE TRIBUNAL. IN FACT, THIS ASPECT HAS BEEN DEALT WITH BY HON'BLE SUPREME COURT IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) IN THE FOLLOWING WORDS :- 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 M.A. NO. 860/MUM/2009 M/S. WELLWORTH SHARE & STOCK BROKING LTD. ============================= 4 SAID TO BE A 'MISTAKE APPARENT FROM THE RECORD' ? I N OUR OPINION, BOTHTHE 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. 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 'MISTAKE 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 BLACKST ONIAN THEORY, IT IS NOT THE FUNCTION OF THE COURT TO PRON OUNCE A `NEW RULE BUT TO MAINTAIN AND EXPOUND THE OLD ON E . IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY ONLY DISC OVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN THE S AME. 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 THE 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 JUDICATAA OR ACCOUN TS THAT HAVE BEEN SETTLED IN THE MEANTIME'. IT IS NO DOUBT TRUE THAT AFTER A HISTORIC DECISION IN GOLAK NATH VS. UNION OF INDIA, (1967) 2 SCR 762, THIS COU RT HAS 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, HOWE VER, BE STATED THAT THIS IS AN EXCEPTION TO THE GENERAL RUL E OF THE DOCTRINE OF PRECEDENT. M.A. NO. 860/MUM/2009 M/S. WELLWORTH SHARE & STOCK BROKING LTD. ============================= 5 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 FIN DS 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 PRI NCIPLE 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 APPARENT FROM THE RECORD'. SINCE NO ERROR WAS COMMI TTED BY THE TRIBUNAL IN RECTIFYING THE MISTAKE, THE HIGH COURT WAS NOT WRONG IN CONFIRMING THE SAID ORDER. BOTH TH E ORDERS, THEREFORE, 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 NO DIFFERENCE WHETHER THE DECISION OF JURISDICTIONAL H IGH COURT WAS RENDERED PRIOR TO OR AFTER THE ORDER OF THE TRIBUNA L AND THAT SUCH DECISIONS ALWAYS ACT RETROSPECTIVELY. 6. WITH REGARD TO THE NEXT CONTENTION THAT THE DECISIO N OF HON'BLE SUPREME COURT IN THE CASE OF MEPCO INDUSTRI ES LTD. M.A. NO. 860/MUM/2009 M/S. WELLWORTH SHARE & STOCK BROKING LTD. ============================= 6 (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 RECT IFICATION WAS A DEBATABLE ISSUE. IN THE PRESENT CASE, THE ASSESSEE DOES NOT DISPUTE THAT IN VIEW OF THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES & STOCKS LTD. (SUPRA), ASSESS EE CANNOT 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 COMMISSIONER. THER EAFTER, HON'BLE SUPREME COURT LAID DOWN CERTAIN PRINCIPLES WITH REGARD TO TAXABILITY OF SUBSIDY IN THE CASE OF SAHNEY STEEL A ND PRESS WORKS LTD. ETC, 228 ITR 253. IN THE LIGHT OF THE LATER DE CISION OF HON'BLE SUPREME COURT, COMMISSIONER RECTIFIED HIS ORDER HOL DING THAT THE POWER SUBSIDY WAS TAXABLE AS REVENUE RECEIPT. HON'B LE SUPREME COURT HELD THAT EXERCISING POWER OF RECTIFICATION W AS IMPROPER FOR TWO REASONS. FIRSTLY, HON'BLE COURT HELD THAT POWER OF RECTIFICATION WAS INVOKED ON MERE CHANGE OF OPINION. SECONDLY, CO URT HELD THAT MISTAKE SOUGHT TO BE RECTIFIED WAS NOT A MISTAKE AP PARENT FROM THE FACE OF THE RECORD IN THE SENSE THAT IT WAS NOT OBV IOUS AND THAT IT REQUIRED A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS WERE POSSIBLE. AS ALREADY STATED, IN THE PRESENT CA SE AFTER DECISION OF HON'BLE BOMBAY HIGH COURT, THERE IS NO DISPUTE O R DEBATE WITH REGARD TO ALLOWABILITY OF DEPRECIATION ON BSE CARD. WE ARE THEREFORE OF THE VIEW THAT THE DECISION IN THE CASE MEPCO INDUSTRIES LTD. (SUPRA) WILL NOT BE OF ANY ASSISTANCE TO THE P LEA OF THE ASSESSEE BEFORE US. WE ARE THEREFORE OF THE VIEW THAT MISCEL LANEOUS M.A. NO. 860/MUM/2009 M/S. WELLWORTH SHARE & STOCK BROKING LTD. ============================= 7 APPLICATION OF THE REVENUE SHOULD BE ALLOWED AND A CCORDINGLY, THE SAME IS ALLOWED. 7. THE RESULT WILL BE THAT THE APPEAL FILED BY THE REV ENUE BEFORE THE TRIBUNAL WILL STAND ALLOWED AND THE DISA LLOWANCE OF DEPRECIATION ON BSE MEMBERSHIP CARD MADE BY THE ASS ESSING OFFICER WILL STAND RESTORED. 8. IN THE RESULT, MISCELLANEOUS APPLICATION IS ALLOWED . ORDER PRONOUNCED ON 15 TH FEBRUARY, 2010. SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 15 TH FEBRUARY, 2010 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-IV, MUMBAI, (4) THE CIT-4, MUMBAI, (5) THE DR, G BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO