TMI Blog2011 (9) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ble - Decided in favour of assessee. - ITA No. 3 of 2005 - - - Dated:- 7-9-2011 - R. B. Misra and Surinder Singh, JJ. For the Appellant: K. D. Sood, Advocate with SanjeevSood Sandeep Pandey, Advocates. For the Respondent: Vinay Kuthiala, Advocate with Gaurav Sharma, Advocate. JUDGMENT R. B. Misra, J. The present appeal has been preferred under Section 260A of the Income Tax Act, 1961 (in short IT Act ) against the judgment and order dated 6.4.2004 of the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh ( in short ITAT ) passed in Miscellaneous Application 91/Chandi/03 preferred in ITA No.219/CHD/2002 pertaining to the assessment year 1997-98 thereby reviewing its earlier order. 1 Whether the reporters of the local papers may be allowed to see the Judgment? 2. The present appeal, in question, has been admitted for consideration on the following substantial questions of law:- (A) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in modifying its earlier order. (B) Whether on the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs had paid full amount of the time share amounting to ₹ 54,68,088/-. During the course of assessment proceedings the Assessing Officer (in short AO ), after referring to the assessment of another assessee, namely, M/s.Sterling Resorts, carrying the same business like the appellant, came to the conclusion that 45% of the total receipts were attributable to appellant s liability to provide stay to the members and, therefore, was attributable to the fixed assets such as building and other infrastructure which the appellant had permanently acquired and consequently considered that 45% part of the receipts as capital receipts liable to be adjusted against the cost of such permanent assets. The appellant agreed to this conclusion of the AO and consequently 45% of the receipts were considered as capital receipts and were adjusted against the building cost. The balance 55% was considered as revenue receipt, attributable to the appellant s liability for whole of the period of lease i.e. for 99 years; and, therefore, only 1/99th part of 55% of the receipts was considered as revenue receipt for the assessment year under appeal. 4. The order for the assessment year 1997-98 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt as taxable in the year of receipt and directed the AO accordingly. As such, CIT has not only travelled against his own notice rather contradicted his opinion as indicated in his notice regarding rest of 55% receipt which he in his notice agreed to be fastened with a recurring liability and pertaining to whole period of membership. 8. ITAT in its order dated 11.3.2003 / (Annexure A-6) dealt with all the issues. The relevant extract is given as below:- (A) Regarding 45% share: ( AO treated such share as capital receipt and reduced the same from Block of Assets but CIT treated it as revenue taxable wholly in the year of receipt). (i) ITAT has analyzed the issue in Paragraph-10 of its order and observed in Paragraph-11 as below: - 11. After having considered the rival submission and the facts and circumstances of the case and various decisions, we are of the opinion that so far as AO s reliance on the assessment order of M/s.Sterling Resorts for attributing 45% of the receipts towards fixed assets and considering the sum as of capital nature is concerned, the assessment order of M/s.Sterling Resorts is really silent on this point. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions to the effect that the 45% of the receipts are relatable to the whole of the period of lease which may be 33 years or 49 years or 99 years as the case may be and therefore the 45% part of the whole receipts may also be dealt with in the same manner (taxed) by the AO as the balance 55% of the receipts has been dealt with (taxed). (B) Regarding 55% share: To appreciate the tax treatment given to balance 55% of the receipts, following aspects need attention:- (a) A.O. in his order has accepted the treatment of spreading the receipts over the years of membership tenure. (b) CIT sought to tax it fully in the year of receipt. (c) ITAT , in Para-13 of its order set aside the order of CIT and has observed in Paragraph-13.2 as under:- Following the decision of the Hon ble High Court, we are of the opinion that Commissioner s decision to consider the 55% portion of the receipts as income of the current year, instead of considering the same as for 99 years is contrary to his intention with which he initiated the proceedings u/s 263 of the Act and therefore, the same is bad in law and liable to be struck down. Respectfully following the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard : Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees. (2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub- section (1) of section 253. Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of Section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order: Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (4) The appeal shall be heard only on the question so formulated, and the respondents shall at the hearing of the appeal, be allowed to argue that the case does not involve such question : Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which (a) Has not been determined by the Appellate Tribunal : or (b) Has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1) (7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. Section 263 of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, the High Court or the Supreme Court. Explanation : In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso of section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 11. The following submissions have been made on behalf of the appellant:- (i) ITAT has erred in reviewing / rectifying in its order in the garb of error apparent on the record, moreso, when earlier order was passed by ITAT after due deliberation and elaboration over the subject matter; (ii) ITAT has erred in carrying out rectification in its order on the misconception regarding its power to comment upon future tax implications of the receipts of year under appeal , confusing it with the power to comment upon tax implications of the receipts of future years , meaning thereby the revenue receipt of 55% was to be spread over as income as per the scheme/agreement with each customer i.e. 33, 49 or 99 years as the case may be, so much so, it was imperative to mention that the remaining part of 55% pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ored the position as per the return filed by the appellant and in so deciding the ITAT has in its earlier order taken into consideration the following aspects:- (a) The department has followed/accepted proportionate Tax Treatment for the A.Y 1996- 97 in scrutiny assessment (as held in para 15 of the original order / (Annexure A-6) of ITAT ; (b) The appellant since beginning has been pleading that the taxability should be over the years of agreement. (c) There is no reason to segregate the gross receipts as it belongs to one composite agreement. (d) Even in case of stay part of agreement the appellant has a recurring liability for repair maintenance of the premises, and (e) The appellant is bound under the agreement to fulfill the terms and conditions of the agreement over all the years to which the agreement runs so the receipt relating to the same should be proportionately taxed in those years. (C) It has also been submitted on behalf of the appellant that ITAT can grant any relief. In support of such proposition, following submissions have also been made:- (i) In National Thermal Power Co.Ltd. Versus Commissioner of Income Tax, (1998) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any of the respondents although such a respondent may not have filed appeal or objection. (iii) Gujarat High Court has also observed in CIT versus Maneklal Harilal SPG Mfg. Co.Ltd., 106 ITR 24 and in 106 ITR 159 that even if the particular point regarding which the reassessment proceedings were initiated has to be decided in favour of the assessee, reassessment proceedings once initiated will not come to an end automatically. (iv) In Kella Appalaswamy Sons versus Commissioner of Income Tax, Orissa 106 ITR 487 (ORI), it was observed that procedure is the hand maid and not a mistress of law, intended to sub-serve and facilitate the course of justice and not to govern or obstruct it. (D) In Commissioner of Income Tax Gujarat -1 versus Ahmedabad Keiser-E-Hind Mills Co. Ltd., 128 ITR 486 (Guj), it has been observed that Officers of the department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officer should take the initiative in guiding a tax payer where proceedings or other particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 SC 554; Bank of Bihar versus Mahabir Lal Ors., AIR 1964 SC 377; Union of India Anr. Versus K.S.Subramaninan, AIR 1989 SC 662; Dr.Ashok Kumar Maheshwari versus State of U.P. Anr., (1998) 2 SCC 502; Uptron India Ltd. versus Shammi Bhan Anr., AIR 1998 SC 1681 (Para 23); B.S.Bajwa Anr. Versus State of Punjab Ors., (1998) 2 SCC 523; M.I.Builders Pvt. Ltd. versus Radhey Shyam Sahu Ors., (1999) 6 SCC 464; Jagdish Lal versus Parmanand, (2000) 5 SCC 44; Laxmibai (Smt.) versus Karnataka State Road Transport Corpn. Bangalore, (2001) 5 SCC 59; Union of India Ors. Versus Mohanlal Likumal Punjabi Ors., AIR 2004 SC 1704; and Union of India Anr. Versus S.C.Parashar, (2006) SCC 167). 14. Even otherwise a wrong concession by an advocate regarding law or facts are not binding either on appellant or on any Court and thus can be challenged / rebutted in higher forums. Central Council for Research in Ayurveda Siddha Another versus Dr.K.Santhakumari, (2001) 5 SCC 60 (Paragraph-12). In view of the foregoing submissions, learned counsel for the appellant has also vehemently submitted as below:- (a) The order dated 11.3.2003 of ITAT is not self contradictory, if Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayer for rectification of the order and allowed the assessee s claim in respect of matters like coloured albums, export staff travelling expenses, export sales commission, E. C. G. C., foreign dealers visiting expenses. Rectification under section 154 can only be made when a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point which was not examined on fact or in law cannot be dealt with as a mistake apparent on the record. In Commissioner of Income Tax versus Income Tax Appellate Tribunal Another, (1997) 227 ITR 443, High Court of Allahabad (DB) observed as below:- A bare perusal of section 254 of the Act reveals that subsection (1) of section 254 confers ample powers on the Tribunal to pass such orders in any appeal filed before it as it thinks fit. Sub-section (2) of section 254 postulates that the Tribunal may amend any order passed by it under sub-section (1) of section 254 with a view to rectify any mistake apparent from the record. Thus, the power exercisable under sub-section (2) of section 254 is subject to two limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainly be prejudicial to the interests of the Revenue. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. 18. In respect of review it is relevant to mention that in M/s.Northern India Caterers (India) Ltd. versus Lt. Governor of Delhi, AIR 1980 Supreme Court 674, it was held by the Supreme Court that the review is not for the purpose of a re-hearing or for making a fresh decision. The normal principle is that the judgment pronounced by the Court is final. The Supreme Court has observed in Para-8 which reads as below:- 8. It is well settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ambit of Order 47, Rule 1, C.P.C. In connection with the limitation of the powers of the Court under Order 47, Rule 1, while dealing with similar jurisdiction available to the High Court while seeking to review the orders under Article 226 of the Constitution of India, this Court, in the case of Aribam Tuleshwar Sharma v. Aribam Pishak Sharma,(1979) 4 SCC 389. AIR 1979 SC 1047, speaking through Chinnappa Reddy, J., has made the following pertinent observations (SCC p.390, para-3). It is true as observed by this Court in Shivdeo Singh Vs. State of Punjab 2 AIR 1963 SC 1909, there is nothing in Article 226 of the Constitution to preclude the High Court from exercising the power of review which inheres in every Court of Plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it. But, there are definitive limits to the exercise of the power of review. The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and scope of Order 47 Rule 1 Civil Procedure Code. In Thungabhadra Industries Ltd. v. Govt. of Andhra Pradesh AIR 1964 SC 1372: (1964) 5 SCR 174 (SCR at page 186) the Supreme Court opined: What, however, we are now concerned with is whether the statement in the order of September 1959 that the case did not involve any substantial question of law is an 'error apparent on the face of the record). The fact that on the earlier occasion the court held on an identical state of facts that a substantial question of law arose would not perse be conclusive, for the earlier order itself might be erroneous. Similarly, even if the statement was wrong, it would not follow that it was an 'error apparent on the face of the record', for there is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterized as vitiated by 'error apparent'. A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error . In Lily Thomas, Etc. versus Union of India Others, AIR 2000 SC 1650, the Supreme Court has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple laid down by the Privy Council in Rajunder Narain Rae Vs. Bijai Govind Singh (1836) 1 Moo PC 117 that an order made by the Court has final and could not be altered. . . . . . . . .nevertheless, if by misprision in embodying the judgments, by errors have been introduced, these Courts possess, by Common Law, the same power which the Courts of record and statute have of rectifying the mistakes which have crept in. . . . . The House of Lords exercises a similar power of rectifying mistakes made in drawing up its own judgments, and this Court must possess the same authority. The Lords have however gone a step further, and have corrected mistakes introduced through inadvertence in the details of judgments; or have supplied manifest defects in order to enable the decrees to be enforced, or have added explanatory matter, or have reconciled inconsistencies.' Basis for exercise of the power was stated in the same decision as under : 'It is impossible to doubt that the indulgence extended in such cases is mainly owing to the natural desire prevailing to prevent irremediable injustice being done by a Court of last resort, where by some accident, without any blame, the party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its powers under Art. 136 or Art. 32 of the Constitution and upon satisfaction that the earlier judgments have resulted in deprivation of fundamental rights of a citizen or rights created under any other statute, can take a different view notwithstanding the earlier judgment. 57. Otherwise also no ground as envisaged under O. 40 of the Supreme Court Rules read with O. 47 of the Code of Civil Procedure has been pleaded in the review petition or canvassed before us during the arguments for the purposes of reviewing the judgment in Sarla Mudgal's case (1995 AIR SCW 2326 : AIR 1995 SC 1531 : 1995 Cri LJ 2926). It is not the case of the petitioners that they have discovered any new and important matter which after the exercise of due diligence was not within their knowledge or could not be brought to the notice of the Court at the time of passing of the judgment. All pleas raised before us were in fact addressed for and on behalf of the petitioners before the Bench which, after considering those pleas, passed the judgment in Sarla Mudgal's case. We have also not found any mistake or error apparent on the face of the record requiring a review. Error contemplated under the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror apparent on the face of the record cannot be defined precisely or exhaustively, there being an element of indefiniteness inherent in its very nature, and it must be left to be determined judicially on the facts of each case. In view of the decision of Hon ble Supreme Court of India in Dharam Deo Narayan Singh versus The State of Jharkhand Another, 15 2009 (6) SCALE-718, the rejection of review petition on the ground that there was no error apparent on the face of record, was held justified. In K.A. Ansari Anr. versus Indian Airlines Limited, (2009) 2 SCC 164, Hon ble Supreme Court has observed that in exercise of inherent power under section 151 of CPC, it is not open to court to reopen the proceedings in any miscellaneous application by way of clarification/ implementation, which provides fresh cause of action, however, there is no bar against seeking clarification if the order is not clear and the other party is trying to take undue advantage of the ambiguity. Hon ble Supreme Court in Dinkar Sridhar Tamhankar versus Bhalchandra Sadashiv Kavadi, (2009) 7 SCC 514, has held rejection of review application justifiable when there was no error apparent on the face o ..... 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