TMI Blog2014 (6) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - - - Dated:- 16-5-2014 - Shri Mukul Kr. Shrawat And Shri T. R. Meena,JJ. For the Petitioner : Shri O. P. Bhateja, Sr. D. R. For the Respondent : Shri S. N. Soparkar, A.R. ORDER Per : Shri T. R. Meena, Accountant Member These two Misc. Applications are filed by the assessee against the Tribunal s order dated 06.08.2010 in Revenue s appeal in ITA No. 1601/Ahd/07 assessee s appeal in ITA No. 1591/Ahd/07 for A.Y. 2003-04. 2. In these cases, this ITAT in ITA Nos. 1591 1601/Ahd/2007 for A.Y. 2003-04 has decided the appeal on 06.08.2010, wherein assessee s appeal was dismissed and Revenue s appeal was partly allowed. 3. Now assessee filed M.A. on 22.01.2014 which are reproduced as under: M. A. No. 10/Ahd/2014 (Assessee s M.A. against Revenue s appeal) 1. The present Miscellaneous Application arises from the aforesaid order of the Hon'ble Tribunal under which the aforesaid appeal filed by the assessee company was decided along with the Departmental appeal in ITA No. 1601/Ahd/2007 for A.Y. 2003-04. This Miscellaneous Application seeks rectification of certain mistakes apparent from record in the order of the Hon'ble Tribunal on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its and gains of business or profession . The expression included any such profits would mean only such receipts by way of brokerage, commission, interest, rent, charges or any other receipt which are included in the profits of the business as computed under the head Profits and gains of business or profession . Therefore, if any quantum of the receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature is allowed as expenses under sections 30 to 44D of the Act and is not included in the profits of business as computed under the head Profits and gains of business or profession , ninety per cent, of such quantum of receipts cannot be reduced under clause (1) of Explanation (baa) from the profits of the business. In other words, only ninety per cent, of the net amount of any receipt of the nature mentioned in clause (1) which is actually included in the profits of the assessee is to be deducted from the pro-fits of the assessee for determining profits of the business of the assessee under Explanation (baa) to section 80HHC. Explanation (baa) has to be construed on its own language and as per the plain natural meaning of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Hon'ble High Court and the position has been summed up on page 162 of the report in the following manner: (a) The Tribunal has power to rectify a mistake apparent from the record on its own motion or on an application by a party under section 254(2) of the Act; (b) An order on appeal would consist of an order made under section 254(1) of the Act or it could be an order made under sub-section (1) as amended by an order under subsection (2) of section 254 of the Act; (c) The power of rectification is to be exercised to remove an error or correct a mistake and not for disturbing finality, the fundamental principle being, that power of rectification is for justice and fair play ; (d) That power of rectification can be exercised even if a mistake is com- mitted by the Tribunal or even if a mistake has occurred at the instance of party to the appeal; (e) A mistake apparent from record should be self-evident, should not be a debatable issue, but this test might break down, because judicial opinions differ, and what is a mistake apparent from the record cannot be defined precisely and must be left to be determined judicially on the facts of each case ; (f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 1601/Ahd/2007 for A.Y. 2003-04. This Miscellaneous Application seeks rectification of certain mistakes apparent from record in the order of the Hon'ble Tribunal on account of the fact that the legal position on the relevant issues was reversed on account of subsequent Supreme Court decisions on the same issues. 2. These issues pertain to the finding of the Hon'ble Tribunal with regard to Grounds No. 1 and 2 of the assessee's appeal which read as under: 1. The learned CIT(A) has erred in disallowing deduction u/s, 80HHC on DEPB receivables and accruals of Rs.251.43 lacs and treating recognition of DEPB income in the year of realization of sale proceeds and not on accrual basis. s 2. The learned CIT(A) has erred in disallowing deduction u/s. 80HHC on 90% of other income being (i) Interest .income (FOR) Rs.21,88,854/- (ii) Interest income of Rs.1,63,618/- (iii) Rent income Rs.12,70,000/- (iv) other misc. income Rs.14,18,854/-. 3. These Grounds have been dealt with and adjudicated by the Hon'ble Tribunal at paras 1 to 7 of the order. With regard to Ground No. 1, the Hon'ble Tribunal observed that third Proviso to Section 80HHC(3) of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven a fewer section of the assessees. We, accordingly, quash the impugned amendment only to this extent that the operation of the said section could be given effect from the date of the amendment and not in respect of earlier assessment years of the assessees whose export turnover is above Rs. 10 crores. In other words, the retrospective amendment should not be detrimental to any of the assessees. 5. It is respectfully submitted that the foresaid finding recorded by the Hon'ble jurisdictional High Court has resulted into reversal of the legal position and, therefore, now the twin conditions of the third Proviso to Section 80HHC(3) have no applicability to A.Y. 2003-04 which is the subject matter of this Miscellaneous Application. It is humbly submitted that this gives rise to a mistake apparent from record which requires rectification. Further the question of DEPB income vis-a-vis Section 80HHC of the Income-tax Act read with clause (baa) of the Explanation be reconsidered and decided in consonance with the legal position in this regard laid down by the Hon'ble Supreme Court in the case of Top Man Exports v. CIT (342 ITR 49). 6. It is respectfully submitted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in the case of Saurashtra Kutch Stock Exchange Ltd. (supra) has been affirmed by the Hon'ble Supreme Court in 305 ITR 277). 8. It is respectfully submitted that various Benches of the Hon'ble Ahmedabad ITAT have also adopted the same view. A reference may kindly be made to the following orders: (1) Order dated 31st August, 2012 in the case of Jay Chemical Industries Ltd. v. DCIT in MA No. 50/Ahd/2012 arising from ITA No. 4237/Ahd/2007 for A.Y. 2004-05 (2) Order dated 14.12.2012 in the case of Sagar Drugs and Pharmaceutical Ltd. v. ITO in MA No. 149/Ahd/2012 arising from ITA No. 4042/Ahd/2008 for A.Y. 2002-03 (3) Order dated 3.5.2013 in MA Nos. 189, 190, 200/Ahd/2012 respectively arising from ITA Nos. 1819, 1820 and 1818/Ahd/2008 for A.Ys. 2003-04, 2004-05 and 2000-01 9. With regard to Ground No. 2 of the assessee's appeal pertaining to 90% exclusion under clause (baa) of the Explanation in respect of (1) FOR interest income of Rs.21,88,854, (2) other interest income of Rs.1,63,618, (3) Rental income of Rs.12,70,0000 and (4) Other Misc. Income of Rs.14,18,854, the Hon'ble Tribunal has recorded its findings at paras 6.9 and 7 of the order. The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion , ninety per cent, of such quantum of receipts cannot be reduced under clause (1) of Explanation (baa) from the profits of the business. In other words, only ninety per cent, of the net amount of any receipt of the nature mentioned in clause (1) which is actually included in the profits of the assessee is to be deducted from the pro-fits of the assessee for determining profits of the business of the assessee under Explanation (baa) to section 80HHC. Explanation (baa) has to be construed on its own language and as per the plain natural meaning of the words used in it, the words receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits will not only refer to the nature of receipts but also the quantum of receipts included in the profits of the business as computed under the head Profits and gains of business or profession referred to in the first part of Explanation (baa). Accordingly, if any quantum of any receipt of the nature mentioned in clause (1) of Explanation (baa) has not been included in the profits of business of an assessee as computed under the head Profits and gains of business or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have to be excluded under Clause baa of other income referred of explanation is to be considered net not gross as this Bench has relied upon the Bombay High Court decision in case of CIT v. Asian Star Co. Ltd. (326 ITR 56), which has been over ruled by the Hon ble Supreme Court in case of ACG Associated Capsules Pvt. Ltd. (343 ITR 89), held that for the purposes of Section 80HHC, the DEP Credit is not to be included as an entire amount received for calculation of deduction and also 90% on profit alone to be deducted, 90% of net interest or is to be included in the profit. He also argued that when law changed by the reasons that High Court has decided the issue in favour of the assessee, then it is a matter of a rectification as held by the Supreme Court in case of Saurashtra Kutch Stock Exchange Ltd. (305 ITR 277). Thus, he requested either to rectify due to change of the law or recall the order dated 06.08.2010 decided by the ITAT. At the outset, ld. Sr. D.R. fairly accepted the proposal. 5. We have heard the rival contentions and perused the material on record. The legal position on both the issues have been changed as case laws referred by the A.R. of the assessee on duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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