2009 (9) TMI 57 - HC - Income Tax

Rectification of mistake - Housing Project claim of deduction u/s 80IB(10)- binding precedence of decision of another bench AO denied the deduction in respect of two projects since all the flats were not of specified size CIT(A) allowed the deduction tribunal denied the deduction held that - in the impugned order the first respondent Tribunal has explicitly taken note of the substance of the issue decided by the Kolkatta Tribunal in Bengal Ambuja Housing Developments Ltd. v. CIT wherein it was decided that the eligibility condition for deduction under section 80I-B(10) of the Act - It would not amount to non-consideration of a material fact which could amount to a mistake apparent on the record which could be rectified under section 254(2) of the Act

Summary

Issues Involved:
1. Deduction under Section 80I-B(10) of the Income-tax Act.
2. Binding nature of decisions from different jurisdictional Tribunals.
3. Rectification of mistakes under Section 254(2) of the Income-tax Act.
4. Maintainability of writ petitions against orders passed under Section 254(2) of the Income-tax Act.

Issue-wise Detailed Analysis:

1. Deduction under Section 80I-B(10) of the Income-tax Act:
The petitioner, engaged in real estate, claimed deductions under Section 80I-B(10) for residential units less than 1500 sq. ft. for the assessment year 2004-05. The assessing officer denied the deduction as not all flats met the specified size. The Commissioner of Income-tax (Appeals) allowed the deduction based on a Division Bench order in Bengal Ambuja Housing Developments Ltd. v. Commissioner of Income-Tax. However, the Income Tax Appellate Tribunal (ITAT) reversed this decision, rejecting the petitioner's claim. The petitioner argued that the ITAT failed to consider the decision of the Kolkatta Bench Tribunal and the Calcutta High Court, which were binding precedents.

2. Binding Nature of Decisions from Different Jurisdictional Tribunals:
The respondent Department contended that decisions from Tribunals in different jurisdictions are not binding on the ITAT at Chennai. They cited judgments from the Bombay High Court in CIT vs. Thana Electricity Supply Ltd. and the Punjab and Haryana High Court in CIT vs. Vardhman Spinning, asserting that rectification cannot be done based on decisions from other jurisdictions. The petitioner, however, relied on judgments from the Supreme Court and various High Courts to argue that non-consideration of binding precedents constitutes a mistake apparent on the record.

3. Rectification of Mistakes under Section 254(2) of the Income-tax Act:
The petitioner filed a miscellaneous petition under Section 254(2) of the Act, claiming a mistake in the ITAT's order for not considering the Kolkatta Tribunal and Calcutta High Court decisions. The ITAT dismissed this petition, stating that the petitioner was seeking a review rather than rectification, and no error apparent on the record existed. The petitioner argued that the ITAT should have rectified its mistake by considering the binding precedents, citing the Supreme Court's judgment in Honda Siel Power Products Ltd. v. CIT.

4. Maintainability of Writ Petitions Against Orders Passed under Section 254(2) of the Income-tax Act:
The respondent argued that the appropriate course of action for the petitioner was to file a tax case appeal under Section 260A of the Act, not a writ petition. The petitioner countered that an appeal under Section 260A is only permissible against orders passed under Section 254(1) on substantial merits, not under Section 254(2). The court examined various judgments, including those from the Bombay High Court in Chem Amit vs. CIT and Calcutta High Court in Shaw Wallace & Co. Ltd. vs. ITAT, concluding that orders under Section 254(2) are not appealable under Section 260A and thus, a writ petition is maintainable.

Conclusion:
The court dismissed the writ petition, holding that the ITAT's order under Section 254(2) was correct and there was no apparent mistake to rectify. The court emphasized that decisions from different jurisdictional Tribunals are not binding on each other and rectification under Section 254(2) cannot be sought based on such decisions. The court also clarified that writ petitions against orders under Section 254(2) are maintainable, but in this case, the petition was misconceived and thus dismissed.