The Commissioner Of Income Tax, Rohtak v. M/S The Atlas Cycle Industries Limited, Sonepat

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITA No.208 of 2004 Date of decision: 20.7.2010 The Commissioner of Income Tax, Rohtak -----Appellant Vs. M/s The Atlas Cycle Industries Limited, Sonepat ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Krishan Kumar Mehta, Advocate for the revenue.Mr. Akshay Bhan, Advocate for the assessee. Adarsh Kumar Goel,J. 1.This appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (for short, ‘the Act’) against order dated17.12.2003 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘A’,New Delhi in ITA No.2836/Del/99 for the assessment year 1994-95,proposing to raise following substantial question of law:- “Whether on the facts and in the circumstances of the case,the Hon’ble ITAT has erred in law in holding that there wasno mistake apparent from record in the given case whichcould be rectified under section 154 of the Income Tax Acteven when it is a settled law that loss on export of tradinggoods and self manufactured goods has to be set off againstprofit on export of self manufactured goods and tradinggoods for the purpose of quantifying deduction under section80HHC of the Act?” 2.The assessee is deriving income from manufacture and sale ofcycles including export. The Assessing Officer allowed deduction in respectof business expenses for calculating benefit of section 80HHC of the Act.Subsequently, the Assessing Officer made rectification under section 154 ofthe Act on the ground that the loss on account of trading goods was liable tobe set off against profit on account of export of manufactured goods. Onappeal, the CIT(A) deleted the addition and, inter-alia, held that there wasno justification to invoke power of rectification as the error in questioncould not be held to be mistake apparent from the record as required, inview of judgment of the Hon’ble Supreme Court in T.S.Balram ITO v.Volkarat Brothers, (1971) 82 ITR 50. The Tribunal upheld the said view.In appeal filed by the revenue, reliance has been placed on judgment of theHon’ble Supreme Court in M/s IPCA Laboratory Limited v. DCIT, (2004)266 ITR 521 holding that the assessee was not entitled to deduction undersection 80HHC unless after adjusting loss, there was a positive profit. 3.We have heard learned counsel for the parties and perused the record. 4.It is now well settled that where order of an authority ifpatently against judgment of the Hon’ble Supreme Court, it can be held thatsuch order suffers from error on the face of record which could be rectifiedby the Court. Reference may be made to Full Bench judgment of this Courtin CIT v. Aruna Luthra, (2001) 252 ITR 76. This being the position, inview of judgment of the Hon’ble Supreme Court in M/s IPCA, no faultcould be found with the order of rectification passed by the AssessingOfficer. The Tribunal erred in holding that such a mistake was not a mistakeapparent from the record. 5.Accordingly, we answer the question in favour of the revenue and allow the appeal. (Adarsh Kumar Goel) Judge July 20, 2010‘gs’ (Ajay Kumar Mittal) Judge