Commissioner of Income TAx-II, V. M/S Charminar Bottling Co. Lt.d,

ITTA/183/2010

AI Insights

The case involves the Commissioner of Income Tax \\u2013 II, Hyderabad as the appellant and M/s. Charminar Bottling Co. Ltd. as the respondent. The dispute centered on the depreciation rate claimed by the respondent on crates for the assessment year 2001-2002, where the respondent claimed a 50% depreciation rate which was initially disallowed by the assessing officer but later allowed by the Commissioner of Income Tax (Appeals). The Revenue's appeal under Section 254 of the Income Tax Act was dismissed, leading to the filing of a miscellaneous application under Section 254(2) by the Revenue, which was also rejected by the Tribunal. The core legal issue was whether the non-consideration of a binding precedent at the time of the initial appeal constituted a 'mistake apparent on the record' that could be rectified under Section 254(2). The court referenced decisions from the Supreme Court and the High Court of Gujarat to support the view that such non-consideration does amount to a mistake apparent on the record, warranting rectification.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 683068 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 20-09-2010
• Assessment Year: misc
• Other Referred Cases: Honda Siel Power Products Ltd v CIT, CIT v Sourashtra Kuch Stock Exchange Limited, Suhrid Geigy Ltd. v Commr. of Surtax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Appeal; Assessment year 2001-2002; Crates; Depreciation; Rectification Application
• Section: 254(2); 254

Judgement Text

"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN INCOME TAX TTRIBUNAL APPEAL No.183 of 2010 September 20, 2010 Between: The Commissioner of Income Tax – II, Hyderabad. … Appellant And M/s.Charminar Bottling Co. Ltd., Pothireddypally, Sangareddy, Medak District ... Respondent THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN INCOME TAX TRIBUNAL APPEAL No.183 of 2010 JUDGMENT: (Per Hon’ble Sri Justice V.V.S. Rao) For the assessment year 2001-2002, the respondent assessee claimed depreciation at 50% on crates. The same was disallowed by the assessing officer. The Commissioner of Income Tax (Appeals), however, held in favour of the assessee, aggrieved by which the Revenue preferred the appeal under Section 254 of the Income Tax Act, 1961 (the Act). The appeal was dismissed. The Revenue, then, moved an application being M.A.No.95/Hyd/2007 under Section 254(2) of the Act. Inter alia they contended that the issue, as to whether the depreciation is permissible at 25% or 50%, stood concluded by the order of the Tribunal in respect of the assessment year 1998-1999 of the same assessee. Nonetheless, by the impugned order dated 23.11.2007, the learned Tribunal rejected the application under Section 254(2) of the Act observing as follows. If now, the learned Departmental Representative brings to our notice, an order of the Tribunal in the earlier year, it amounts to arguing the appeal again. If this is permitted, then we would be reviewing our own order which is beyond the purview of Section 254(2) of the Income Tax Act, 1961 (the Act). In other words, though the learned Departmental Representative was vehement and insistent that we rectify the order because the earlier order is binding on us, we may only say that we can rectify the order only if there is a mistake apparent on record. Here, there may be a mistake in the present order, but it is not apparent on record because the earlier order of the Tribunal, and that too an unreported decision, was not placed on record when there was an opportunity for the learned Departmental Representative while arguing the appeal. If such a practice is permitted, then the casual approach at the time of arguing the appeal will persist and the parties would always take shelter under miscellaneous applications of which there will be no end. The Senior Counsel for appellant relying on Honda Siel Power Products Ltd v CIT[1] and CIT v Sourashtra Kuch Stock Exchange Limited[2] contends that the binding precedent of a coordinate Bench even it is not brought to the notice at the time of exercise of the appellate jurisdiction, the same can be brought to the notice in an application filed under Section 254(2) of the Act. According to the Senior Counsel, non- consideration of such precedent is certainly an error apparent on the face of the record and, therefore, the jurisdiction under Section 254(2) of the Act is very much attracted. Per contra, the Counsel for the respondent submits that the decision relied on by the Revenue is in an appeal before this Court and that, as observed by the learned Tribunal even if it is considered, the respondent is entitled to claim depreciation at 50% on crates. We have perused the two precedents cited by the Senior Counsel. In Sourashtra Kuch Stock Exchange Limited considering the scope of Section 254(2) of the Act, the Apex Court held as follows. The core issue, therefore, is whether non-consideration 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, 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). … … A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd. v Commr. of Surtax, (1999) 237 ITR 834 (Guj). 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 be “mistake apparent from the record” under Section 254(2) of the Act and could be corrected by the Tribunal. The conspectus of the ratio above is that for non-consideration of a binding precedent, whether prior to or subsequent to the order, rectification application would lie and the non-consideration of such judgment would amount to, “an error apparent on the face of the record”. In that view of the matter, we are inclined to allow the appeal and remand the matter to the learned Tribunal for considering afresh in accordance with law. The Income Tax Tribunal Appeal is accordingly allowed. No costs. _______________ (V.V.S.RAO, J) ______________________________ (RAMESH RANGANATHAN, J) September 20, 2010 YS [1] (2007) 12 SCC 596 : (2007) 295 ITR 466 (SC) [2] (2008) 14 SCC 171 : (2008) 305 ITR 227 (SC) "