M/S.dinosaur Steels Limited v. The Joint Commissioner Of Income Tax, Special Range Ii, Coimbatore

IN THE HIGH COURT OF JUDICATURE AT MADRAS Coram : THE HONOURABLE MR.JUSTICE P.D.DINAKARAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA M/s.Dinosaur Steels Limited,1/110, Mariamman Koil Street,Chinnampalayam Post,Coimbatore...AppellantVsThe Joint Commissioner of Income Tax,Special Range II,Coimbatore. ..Respondent Appeal under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Chennai, 'D' Benchin I.T.A. No.96/Mds/2000 for the assessment year 1997-98. againstthe order of the Commissioner of Income Tax (Appeals) Coimbatoredated 12.11.99 in IT Appeal No. 362-C/99-2000 agianst the order ofthe Joint Commissioner of Income Tax Special Range I, Coimbatoredated 31.8.1999 and made in PA.No.D-3/SR-II/97-98 CBE. The present appeal is filed under Section 260A of the IncomeTax Act, 1961 by the assessee, in I.T.A. No. 96/Mds/2000, passed bythe Income Tax Appellate Tribunal, Chennai, 'D' Bench raising thefollowing substantial questions of law. https://hcservices.ecourts.gov.in/hcservices/ "1. Whether the Tribunal is correct in concludingthat the order of rectification passed by theRespondent in restricting the quantum ofdeduction under section 80 IA of the Act upontaking into consideration the unabsorbed lossesis sustainable on facts and in law? 2. Whether the Tribunal is correct in concludingthat there was no debate in understanding andinterpreting the provisions of section 80 IA ofthe Act, especially with reference to thecomputation part of the said section?" 2.The brief facts leading to the above questions of law areas under: The relevant assessment year is 1997-98 and the correspondingaccounting year ended on 31.03.1997. The assessee filed return ofincome on 28.11.1997 disclosing an income of Rs.3,31,188/-. Thegross income declared was Rs.34,92,096.87 and on this, deductionunder Section 80IA of the Income Tax Act (hereinafter referred to asthe "Act"), at 30% amounting to Rs.10,47,629/- was claimed. On thebalance Rs.24,44,467.87, a sum of Rs.21,13,280/- was adjusted beingcarry forward loss of earlier assessment years. The said return wasprocessed under Section 143(1)(a) of the Act and an intimation wasalso sent to the assessee on 28.12.1998, determining the income atRs.3,31,190/-. Subsequently, the Assessing Officer issued a noticeunder Section 154 of the Act, on 28.06.1999 calling for objections,if any, on the ground that the following mistakes had been crept in. 1.Bonus unpaid of Rs.20,000/- had been omitted to be disallowed. 2.The assessee's claim of deduction under Section 80IA had been allowed before setting of the earlier years losses from theprofits and gains of the Industrial Undertaking. The assessee, by letter dated 12.06.1999, while accepting thedisallowance under Section 43B of the Act, had objected to theproposal of restricting its claim under Section 80IA of the Act.Rejecting the contention, the Assessing Officer completed theassessment under Section 154 of the Act and held that the deductionunder Section 80IA should be given only after setting off theunabsorbed loss of the earlier years. Aggrieved by the order, theassessee filed an appeal to the Commissioner of Income Tax(Appeals). The C.I.T. (A) dismissed the appeal by following theSupreme Court Judgment reported in 224 ITR 604 in the case ofCommissioner of Income Tax Vs. Kotagiri Industrial Co-Operative TeaFactory Ltd. and confirmed the order of the Assessing Officer.Aggrieved by the order of the first appellate authority, theassessee filed an appeal to the Income Tax Appellate Tribunal (hereinafter referred to as the "Tribunal"). The Tribunal dismissedthe appeal filed by the assessee by following the Supreme Courtjudgments reported in 155 ITR 120 and 224 ITR 604, thus confirmingthe order of the lower authority. (hereinafter referred to as the "Tribunal"). The Tribunal dismissedthe appeal filed by the assessee by following the Supreme Courtjudgments reported in 155 ITR 120 and 224 ITR 604, thus confirmingthe order of the lower authority. 3.The learned counsel appearing for the assessee submittedthat the issue involved is not a mistake apparent on the face of therecord and it is only a debatable one and hence, the rectificationorder passed under Section 154 of the Act is without jurisdiction.The learned counsel further stated that any debatable issue shouldnot be subjected to rectification under Section 154 of the Act andrelied on the Supreme Court judgment reported in 82 ITR 50 in thecase of T.S. Balaram, Income Tax Officer, Company Circle IV, BombayVs. Volkart Brothers and Others, and the Delhi High Court judgmentreported in 266 ITR 208 in the case of C.I.T. Vs. Krishak Bharti Co-operative Ltd., to support his contention. The learned counsel forthe assessee also relied on the judgment of the Madhya Pradesh HighCourt reported in 226 ITR 547 in the case of Commissioner of IncomeTax Vs. K.N. Oil Industries, wherein it was held as follows: "The benefit under Section 80HH and 80-I of theIncome Tax Act, 1961 are in the nature ofincentives for these industries in the backwardareas. Therefore, a positive approach should betaken in the matter. The assessee is entitled tothe full amount of deduction under both thesections without deducting earlier years' lossesfrom the current income." 4.Heard the counsel. The issue is well settled now bySupreme Court judgment in the case of C.I.T. Vs. Kotagiri IndustrialCo-operative Tea Factory Ltd. reported in 224 ITR 604, wherein itwas held as follows: "Having regard to the law as laid down by thisCourt in Distributors (Baroda) Pvt. Ltd.'s case[1985] 155 ITR 120 and H.H. Sir Rama Varma'scase [1994] 205 ITR 433, it must be held thatbefore considering the matter of deduction undersection 80P(2), the Income-tax Officer hadrightly set off the carried forward losses ofthe earlier years in accordance with section 72of the Act and on finding that the said lossesexceeded the income, he rightly did not allowany deduction under section 80P(2) and theAppellate Assistant Commissioner as well as theTribunal and the High Court were in error intaking a contrary view. The principle of statutory constructioninvoked by Mrs.Ramachandran has no applicationin construing the expression "gross totalincome" in sub-section(1) of section 80P. Inview of the express provision defining the saidexpression in section 80B(5) for the purpose ofChapter VI-A, there is no scope for construingthe said expression differently in section 80P." 5.The Madhya Pradesh High Court judgment reported in 226 ITR547, relied on by the learned counsel for the assessee, is no longergood law in view of the Supreme Court judgment reported in 224 ITR604, in the case of C.I.T. Vs. Kotagiri Industrial Co-operative TeaFactory Ltd. and the later judgment 266 ITR 521 in the case of IPCALaboratory Ltd. Vs. Deputy Commissioner of Income Tax. The DelhiHigh Court judgment reported in 266 ITR 208 in the case of C.I.T.Vs. Krishak Bharti Co-operative Ltd., relied on by the counsel forthe assessee is also not relevant to the present case, as in thatcase, the finding was that the issue involved was a debatable oneand hence it was not a subject matter for rectification underSection 154 of the Act. In the present case, the issue involved isnot a debatable one and is settled by the Supreme Court judgmentscited supra. While interpreting the scope of rectification underSection 154 of the Act, the Supreme Court, in the case of T.S.Balaram, Income Tax Officer, Company Circle IV, Bombay Vs. VolkartBrothers and Others, reported in 82 ITR 50, held as follows: "A mistake apparent on the record must be anobvious and patent mistake and not somethingwhich can be established by a long drawn processof reasoning on points on which there may beconceivably two opinions. A decision on adebatable point of law is not a mistake apparentfrom the record." From a reading of the above Supreme Court observation, it is clearthat only apparent mistake and non-debatable issue, would be thesubject matter of rectification under Section 154 of the Act. As inthis case, the order sought to be rectified is not in confirmitywith the law declared by the Supreme Court cited supra, whichamounts to mistake apparent on the face of the record. Hence, theaction of Assessing Officer in rectifying the order under Section154 of the Act, is perfectly justified. 6.In view of the foregoing reasons, we are of the view thatthe order of the Tribunal is in confirmity with law and there is noerror or infirmity in the order of the Tribunal and the samerequires no interference. Hence, no substantial questions of lawarise for consideration of this Court and the tax case is dismissed.No costs. km Sd/Asst.Registrar /true copy/ To Sub Asst.Registrar 1. THE ASST REGISTRARINCOME TAX APPELLATE TRIBUNAL III FLOOR RAJAJI BHAVAN BESANT NAGAR, CHENNAI 600 090. 2. THE JT. COMMR. OF INCOME TAX,SPECIAL RANGE II, COIMBATORE. 3. THE INCOME TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI 4. THE COMMISSIONER OF INCOME TAX (APPEALS) COIMBTORE + 1 cc to Mr. J. Balachandar, Advocate SR No. 31338 PV(CO)SR/6.9.2006 Tax Case (Appeal) No.1927 of 2006 https://hcservices.ecourts.gov.in/hcservices/