TMI Blog2006 (9) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... and would have decided the issue in favour of the revenue instead of deciding the issue against the revenue. The Hon ble ITAT is, therefore, requested to recall the order passed on 8-12-2003 and decide the issue in favour of the department as the Hon ble Supreme Court has settled the issue. 3. Under the above circumstances, I hereby make this application with a request to allow the Department s appeal on merits and also due to the fact that there was no representation from the assessee s side." 2. We have heard both the parties. The issue involved in the Department s appeal filed before this Tribunal was whether carried forward losses could be set off for computing profits for the purpose of section 80HHC. The issue was decided by this Tribunal on 8-12-2003 against the Department with the following observations : "5. Aggrieved by the order, revenue is before us with the above ground. Before us, the ld. counsel submitted that the issue involved is squarely covered in favour of assessee by the decision of Jurisdictional High Court in the case of Shirke Construction Equipments Ltd., 246 ITR 429. To this proposition, ld. Departmental Representative also agreed. Respectfully f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law declared by the Hon ble Bombay High Court in Shirke Construction Equipments Ltd. s case ( supra ) stands overruled by the Hon ble Supreme Court in IPCA Laboratories Ltd. s case ( supra ) and is therefore no longer good law. 5. The ld. counsel for the assessee however resists the application of the Department on the ground that subsequent judgment delivered by the Supreme Court in IPCA Laboratories Ltd. s case ( supra ) would not render the earlier order passed by this Tribunal following the decision of Hon ble Jurisdictional High Court in Shirke Construction Equipments Ltd. s case ( supra ), as erroneous and thereby amenable to rectification under section 254 of the Income-tax Act. The ld. counsel for the assessee has placed reliance on the decisions in Surajmul Choteylal v. CIT [1978] 114 ITR 130 (Cal.) and another decision in CED v. Murarilal Sovasaria [1989] 179 ITR 380 (Guwahati) in support of his submission. 6. Sub-section (2) of section 254 of the Income-tax Act empowers the Tribunal to correct any mistake provided it is "apparent from the record". Mistake can be both of law as well as of fact. The plain language of the provision suggests that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronouncements rendered subsequently by the jurisdictional High Court or the Supreme Court, would always disclose a mistake apparent from the record. When the Court decides a matter, it does not make the law in any sense but all it does is that it interprets the law and states what the law has always been and must be understood to have been. Where an order is made by this Tribunal on the basis of a particular decision of the High Court, the reversal of such decision in further proceedings will justify a rectification of the order based on that decision in terms of section 254(2). Thus, the declaration of law by the Supreme Court in a subsequent case overruling the previous decision of the High Court provides a sound legal basis for rectification of the Order passed by this Tribunal following an overruled decision so as to bring the same in conformity with the law declared by the Supreme Court. Any other view, in our humble opinion, will run counter to the mandate of Article 141 of the Constitution. The view that we have taken is fortified by the following observations made by the Hon ble jurisdictional High Court in Bhagwandas Kevaldas v. N.D. Mehrotra [1959] 36 ITR 538 (Bom.) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent to the date of the order passed by this Tribunal. Section 254(2) has been enacted to enable this Tribunal to rectify a mistake. The legislative intent is, therefore, loud and clear that the mistake should not be allowed to continue. This purpose has to be promoted. The legislative will have to be carried out. By placing a narrow construction, the object of the legislation shall be defeated. Such a consequence should not be countenanced as it will be detrimental not only to the judicial discipline but also to the sound administration of justice in consonance with the law declared by the highest Court of the State or the country. 10. It also deserves to be mentioned that section 254(2) prescribes a period of four years for correction of the mistake. The obvious intention of the Legislature is that if a mistake has come to the notice of the Tribunal within the prescribed time, it should not be allowed to continue. It should be rectified regardless of the fact that the limitation for filing an appeal has elapsed. The learned counsel for the assessee however submits that there was no error in the order when it was passed by this Tribunal in that the decision of the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of such decision in further proceedings will justify a rectification of the order based on that decision. The issue before us is thus squarely covered by the decision of the Hon ble jurisdictional High Court with which we are in respectful agreement. Similar view has been taken in Parshuram Pottery Works Co. Ltd. v. D.R. Trivedi, WTO [1975] 100 ITR 651 (Guj.); Bhauram Jawahirmal v. CIT [1980] 121 ITR 487 (All.); Kil Kotagiri Tea Coffee Estates Co. Ltd. s case ( supra ) and CIT v. Smt. Aruna Luthra [2001] 252 ITR 76 (Punj. Har.). 13. The ld. counsel for the assessee has placed reliance on the decision in Surajmal Choteylal s case ( supra ) and another decision in Murarilal Sovasaria s case ( supra ). We have perused the aforesaid decisions. Both the decisions are in the context of Review of an order of the High Court as provided for in Order 47, rule 1 of the Code of Civil Procedure in Reference matters under section 260 of the Income-tax Act and not in the context of the provisions of section 154/254(2) of the Income-tax Act. Scope of Order 47, Rule 1 of the CPC is altogether different from the provisions of section 154/254(2) of the Income-tax Act. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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