Ita/45/2002 Of The Commissioner Of Incometax v. The Mathrubhumi Printing & Publishing

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 11TH FEBRUARY 2008 / 22ND MAGHA 1929 ITA.No. 45 of 2002() -------------------- ITA.797/COCH/1992 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT -------------------------- THE COMMISSIONER OF INCOME TAX, CALICUT. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: ------------- THE MATHRUBHUMI PRINTING & PUBLISHING CO LTD., CALICUT. BY ADV. SRI.C.KOCHUNNY NAIR SRI.DALE P.KURIEN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -------------------------------------------- I.T.A. No. 45 OF 2002 -------------------------------------------- Dated this the 11th day of February, 2008 JUDGMENT C.R. C.N. Ramachandran Nair,J. The question raised in the departmental appeal filed underSection 260A of the Income Tax Act is whether the Tribunal isjustified in cancelling the rectification order issued by the assessingofficer under Section 154 of the Act withdrawing relief granted in theoriginal assessment under Section 32A of the Act. We have heardsenior counsel appearing for the appellant and counsel appearing forthe respondent-assessee. 2. The assessee made a claim of investment allowance oninvestment in plant and machinery under Section 32A of the Act,besides claiming relief under Section 32AB on investment depositaccount for the same assessment year. In the original assessmentcompleted the assessing officer allowed deduction of both the claims.However, later the assessing officer found that Section 32A(8B)prohibits granting of investment allowance to assessees who haveclaimed deduction allowable under Section 32AB. Since respondent-assessee had claimed deduction under Section 32AB and in fact claim was allowed, the assessing officer found that granting of deduction ofinvestment allowance is impermissible under Section 32A(8B) of theAct. Consequently, he rectified the assessment withdrawing reliefgranted under Section 32A of the Act. On appeal by the assessee, thefirst appellate authority held that only one claim is allowable, that isunder Section 32A. He allowed the claim under Section 32A and heldthat assessee is not entitled simultaneously to claim deduction underSection 32AB of the Act. The first appellate authority relied onSection 32A(8C) of the Act for granting the relief moulded by him.While the department filed appeal against the order of the firstappellate authority, the assessee filed cross-objections on the groundthat proceedings under Section 154 was not maintainable. TheTribunal dismissed the departmental appeal and allowed the assessee'scross-objections by holding that Section 154 of the Act was notapplicable in this case, as there was no mistake apparent that could becorrected under Section 154 of the Act. It is against this order of theTribunal that the Department has filed appeal before this Court. 3. Standing counsel contended that there was patent mistake inthe original assessment in as much as the assessing officer allowed theclaim of deduction under Section 32A as well as under Section 32AB 3. Standing counsel contended that there was patent mistake inthe original assessment in as much as the assessing officer allowed theclaim of deduction under Section 32A as well as under Section 32AB which is not permissible by virtue of the provisions contained inSection 32A(8B) of the Act. He also referred to the finding of the firstappellate authority which also upheld the proceedings under Section154 of the Act, even though the first appellate authority wronglymoulded the relief to the assessee. We are inclined to uphold thecontention of the revenue because the first appellate authority allowedthe claim by relying on sub-section (8C) of Section32A which cameinto effect only on 1.4.1989 whereas the assessment involved in thiscase is 1988-89. In fact the very same provisions contained in sub-section (8C) of Section 32A are simultaneously incorporated witheffect from 1.4.1989 in clause (10) of Section 32AB. There is no needfor us to consider the scope of these provisions introduced with effectfrom 1.4.1989 because those provisions of the Act are not applicablefor the assessment in question. The scope of sub-section (8B) ofSection 32A is that if in the course of assessment, the assessing officernotices that the assessee has claimed deduction under Section 32AB forthe same year, there is no need to process the claim under Section 32Abut to reject the claim of deduction of investment allowance. If relief isgranted contrary to the statutory provision then such order is amistaken order and assessing officer is entitled to rectify such order in proceedings under Section 154 of the Act. The Tribunal interferedwith the order under Section 154 by assuming that the view taken bythe first appellate authority is also possible. Since we have alreadyheld that the first appellate authority's order based on the provisionnot applicable for assessment year is not tenable, the view adopted bythe first appellate authority is not a possible view. Therefore theTribunal's assumption that two views are possible on the entitlement ofdeduction is wrong. In this view of the matter, we allow the appealfiled by the revenue by cancelling the order of the Tribunal and that ofthe first appellate authority and by restoring the order issued by theassessing officer under Section 154 of the Act. (C.N.RAMACHANDRAN NAIR)Judge.Judge. (T.R.RAMACHANDRAN NAIR) Judge.