2011 (4) TMI 867 - AT - Income Tax

Minimum Alternation Tax(MAT) - Profits eligible for deduction under section 80HHC - computation of profits under section 115JB - Held that - The relevant clauses which deals with the impugned issue are clause (iii) of sub-section (1A) of section 115J and clause (iv) of Explanation 1 below sub-section (ii) of 115JB of the Act - as decided in Ajanta Pharma Ltd. (2010 (9) TMI 8 - SUPREME COURT ) that MAT assessment is only an alternative scheme of assessment and what is clear from clause (iv) above is that even in the alternative scheme of assessment under section 115JB the assessee is entitled to deduction of export profit under section 80HHC Rectification u/s 254 - Similar views have also been expressed by the Guwahati High Court in the case of CIT v. Prahlad Rai Todi 2001 -TMI - 14081 - GAUHATI High Court by holding that A bare look at section 254(2) will show that this section gives the power to rectify any mistake apparent from the record and not to amend any order passed by it and to make such amendment if the mistake is brought to its notice by the Assessing Officer or the assessee - thus examining the order of the Tribunal it is found that the Tribunal has given a specific finding on the impugned issue which cannot be rectified or amended under the garb of rectification - Miscellaneous application of the assessee is dismissed

Summary

Issues Involved:
1. Computation of profit under section 115JB of the Income-tax Act vis-a-vis profit eligible for deduction under section 80HHC.
2. Non-consideration of judgments referred to by the assessee during the course of hearing.
3. Scope and limitations of section 254(2) for rectification of Tribunal's orders.

Issue-Wise Detailed Analysis:

1. Computation of profit under section 115JB vis-a-vis profit eligible for deduction under section 80HHC:
The core issue raised was the method of computing profits eligible for deduction under section 80HHC when calculating book profits under section 115JB of the Income-tax Act. The assessee argued that the deduction under section 80HHC should be based on book profits determined under section 115JB, relying on the special bench decision in Syncome Formulations (I) Ltd. The Tribunal, however, had initially ruled based on the Bombay High Court's decision in Ajanta Pharma Ltd., which overruled Syncome Formulations (I) Ltd., determining that the deduction should be computed after applying the restrictions of section 80HHC(1B). The Supreme Court later reversed the Bombay High Court's decision in Ajanta Pharma Ltd., stating that the full export profit of 100% is eligible and not reduced to 80%. Despite this, the Tribunal found that the Supreme Court's decision did not directly affect the issue in the current case, as the question involved was different.

2. Non-consideration of judgments referred to by the assessee during the course of hearing:
The assessee claimed that the Tribunal failed to consider relevant judgments, including those from the Madras High Court in Ambika Cotton Mills Ltd. and K.G. Denim Ltd., which were submitted during the hearing. The Tribunal acknowledged the oversight but concluded that even if these judgments were considered, the outcome would remain unchanged. The Tribunal emphasized that once the jurisdictional High Court (Bombay High Court) overruled the special bench decision, it lost its binding force, necessitating an independent examination of the issue.

3. Scope and limitations of section 254(2) for rectification of Tribunal's orders:
The Tribunal highlighted the limited scope of section 254(2), which only allows rectification of apparent mistakes on the record, not a review or reappraisal of the merits of the case. The Tribunal cited multiple precedents, including the Supreme Court's ruling in T.S. Balaram v. Volkart Brothers, which clarified that a mistake apparent on the record must be obvious and not require elaborate reasoning. The Tribunal concluded that the assessee's request for rectification was essentially an attempt to review the decision, which is beyond the scope of section 254(2).

Conclusion:
The Tribunal dismissed the miscellaneous application, affirming that there was no apparent error in its original order that warranted rectification under section 254(2). The Tribunal's decision was based on a thorough examination of relevant legal provisions, judicial precedents, and the specific facts of the case, maintaining that the original findings were in accordance with the law.