TMI Blog2011 (4) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 - MA NOS. 62 & 63 (VIZAG.) OF 2010 - - - Dated:- 27-4-2011 - SUNIL KUMAR YADAV, B.R. BASKARAN, JJ. K.C. Devdas for the Appellant. TH.L. Pater for the Respondent. ORDER S.K. Yadav, Judicial Member. This miscellaneous application is preferred by the assessee against the order of the Tribunal dated 5-2-2010 with the submission that the Tribunal has not considered the judgments referred to before it and has laid down a wrong proposition of law thereby an error is committed in the order of the Tribunal which calls for a rectification. 2. The Ld. Counsel for the assessee has submitted that one of the ground raised before the Tribunal relate to computation of profit under section 115JB of the Income-tax Act vis-a-vis profit eligible for deduction under section 80HHC of the I.T. Act. During the course of hearing, it was contended that deduction under section 80HHC should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pparent in the order is crept. 4. We have given thoughtful consideration to the rival submissions and have carefully perused the order of the Tribunal vis-a-vis the miscellaneous application and the judgments referred to by the parties. The issue in dispute raised before the Tribunal during the course of hearing of the appeal was with regard to the computation of profits under section 115JB of the Income-tax Act vis-a-vis the profits eligible for deduction under section 80HHC of the I.T. Act. The contentions raised on behalf of the assessee was that the deduction under section 80HHC should be computed in accordance with the book profit determined under section 115JB of the Income-tax Act placing a heavy reliance upon the order of the special bench of the Tribunal in the case of Syncome Formulations (I) Ltd. (supra). The Ld. Counsel for the assessee has contended that the profit eligible for deduction under section 80HHC should be computed on the basis of the book profit worked out under section 115JB of the I.T. Act. The Ld. Counsel for the assessee has however argued that in the case of Ajanta Pharma Ltd. (supra) though the order of the Tribunal in the case of Syncome Formulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in the manner specified in sub-section (3) or sub-section (3A) of section 80HHC." 7. While dealing with the issue the Tribunal has considered the clause III of explanation below section 115J(1A) of the Act and the provisions of clause VIII of explanation below section 2 of section 115JA of the Act. Though the legislature has used the different language in clause VIII of section 115JA and clause III of explanation of 115J but the Tribunal has applied the analogy of clause III of explanation 115J to clause VIII of explanation 115JA of the Act and held that the adjusted book profit of a company itself is a gross total income of that assessee company and the deduction under section 80HHC is in that way given out of that gross total income in a case falling under MAT. This in turn means that section 80HHC should be computed on the adjusted book profit. The Tribunal finally concluded that deduction under section 80HHC in case of MAT assessment is to be worked out on the basis of adjusted book profit and not on the basis of profit computed under the regular provisions of law applicable to the computation of profit and gains of business or profession. 8. This proposition of law laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a). It is not possible to agree with the view taken by the benches. Those decisions in view of this judgment stands overruled." 8.1 Once the order of the special bench of the Tribunal in the case of Syncome Formulations (I) Ltd. (supra) has been overruled by the jurisdictional High Court of Bombay, it lost its binding force on the subordinate benches. Therefore, the Tribunal has given its specific finding in its order that the issue impugned is to be adjudicated independently without being influenced by the order of the special bench. There after the Tribunal examined the issue independently and has given its finding in its para Nos. 12 to 19 of its order. 9. Though the judgment of Bombay High Court in the case of Ajanta Pharma Ltd. (supra) has been reversed by the Supreme Court but in those cases, the question referred before the High Court and Supreme Court was entirely different than the issue involved in the instant case. The question referred before the Supreme Court was "whether for determining the book profit" in terms of section 115JB, the net profit as shown in the P L account have to be reduced by the amount of profits eligible for deduction under section 80HHC or by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the conditions specified in sub-clauses (4) and (4A) of that section] to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department". 10. Having carefully examined the judgment of the Bombay High Court and the Apex Court of Ajanta Pharma Ltd., (supra) we find that the question referred before them was entirely different than that of the issue involved in the instant case. But Bombay High Court has categorically overruled the order of the special bench in the case of Syncome Formulations (I) Ltd. (supra) which has been rendered on the issue in dispute. Therefore, we find no mistake in the findings of the Tribunal in the instant case in its para No.11 of its order that "once the judgment of the special bench has been overruled by its jurisdictional High Court it looses its binding force over other bench of the Tribunal and we therefore of the view that the question posed before us should be examined independently without being influenced with the proposition laid down by the special bench in the case of Syncome Formulations (I) Ltd." (supra) After recording these observations the Tribunal has adjudicated the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115J should be computed according to the following steps:- (i) It should be first decided whether the assessee carries on a business, the profits from which are eligible for deduction under section 80HHC or 80HHD; (ii) If so, the net profit shown in the profit and loss account of the relevant previous year should be adjusted as per clauses (a) to (f) and (i) and (ii) of the said Explanation. (iii) If the business exclusively consists of the types of business which are eligible for deduction under section 80HHC/80HHD the whole of such amount arrived at as per (ii) above should be allowed as deduction; and (iv) If not, the proportion of the export turnover to the total turnover of the business carried on by the assessee as required under section 80HHC(3)(b) or the proportion of the turnover in respect of the sales made to export house or trading house to the total turnover of the business carried on by the assessee as required under section 80HHC(3A)(b) or, as the case may be, the proportion of the receipts specified in section 80HHD(2) to the total receipts of the business carried on by the assessee should be determined and the said proportion should be applied to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant observations of the Hon'ble Kerala High Court are extracted hereunder: "After hearing both sides and after going through the decisions above referred, particularly that of the Supreme Court, we feel that the assessees are entitled to deduction under section 80HHC computed in accordance with sub-sections(3) and (3A) of section 80HHC of the Act because it is expressly so provided under clause (iv) of section 115JB(2) of the Act. All that the Supreme Court has held is that the ceiling contained in section 80HHC(1B) is not applicable for the purpose of granting deduction under clause (iv) above in the computation of book profit. However, there is nothing to indicate in the Supreme Court decision that the eligible deduction of export profit under clause (iv) above in the computation of book profit can be computed in any other manner other than what is provided in sub-sections (3) and (3A) of section 80HHC of the Act. What is clearly stated in clause (iv) is that deduction of export profit in the computation of book profit is the same "amount of profit eligible for deduction under section 80HHC" computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal while disposing of the appeal. Therefore, we find no infirmity in the order of the Tribunal. 16. Moreover, the scope of section 254(2) is very limited and only those errors can be rectified which are apparent from the record. The scope of provisions of section 254(2) has been defined repeatedly by the apex court and the various High Courts at a different point of time. 17. It has also been held by the apex court and various High Courts that under section 254(2) of the I.T. Act the Tribunal can rectify only those mistakes which are arithmetical or clerical or apparent in its order. The Tribunal has no jurisdiction to review its own order under the garb of rectification. The scope of section 254(2) of the Act has been repeatedly examined by the Apex court and various High Courts and it was held that if the Tribunal commits an error of judgment, that error cannot be rectified under the provisions of section 254(2) of the Act as the Tribunal is not empowered by the statute to review its own order. In the case of CIT v. Vardhman Spg. [1997] 226 ITR 296/93 Taxman 453 their Lordships of the Punjab and Haryana High Court have held in specific terms that "the Appellate Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact cannot constitute an apparent mistake rectifiable under section 254(2). This might, at the worst, lead to perversity of the order for which the remedy available to the assessee is not under section 254(2) but a reference proceedings under section 256. The normal rule is that the remedy by way of review is a creature of the statute and unless clothed with such power by the statute, no authority can exercise the power. Review proceedings imply proceedings where a party, as of right, can apply for reconsideration of the matter, already decided upon, after a fresh hearing on the merits or the controversy between the parties. Such remedy is certainly not provided by the Income-tax Act, 1961, in respect of proceedings before the Tribunal. 19. The Hon'ble High Court of Allahabad in the case of CIT v. ITAT [1997] 143 CTR 446 has held that "sub-section (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-sec. (1) of section 254 with a view to rectifying any mistake apparent from the record. The power of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not examined on facts or in law cannot be dealt with as mistake apparent from record. In the case of ITO v. ITAT [1998] 229 ITR 651 their Lordships of Patna High Court have also expressed a similar observation after holding that section 254(2) of the Act empowers the Tribunal to amend any order passed by it under sub-section (1) with a view to rectifying a mistake from record. However, section 254(2) does not authorize the Tribunal to review its order or to sit in appeal over its earlier order. If it is done, it would amount to an amendment of an earlier order with a view to rectify a mistake apparent from record, but it would be an order passed on reappraisal of the material facts and circumstances and on a fresh application of the legal position which is not permissible within the scope of section 254(2) of the Act. 21. In the case of Ms. Deeksha Suri v. ITAT [1998] 232 ITR 395/100 Taxman 573 their Lordships of Delhi High Court have held in specific terms that "the Income-tax Appellate Tribunal is a creature of the statute. It has not been vested with the review jurisdiction by the statute creating it. The Tribunal does not have any power to review its own judgments or orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
