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Vishal Tools & Forgings Pvt. Ltd. Versus Addl. Commissioner of Income Tax, Range-II, Jalandhar

2015 (9) TMI 1179 - ITAT AMRITSAR

Rectification of mistake - whether dividend income can be taxed as income under the head ‘Income from business’? - Held that:- A mistake apparent from record means an ‘obvious or patent mistake’ or a ‘glaring and obvious mistake’. Hotly debatable issues are excluded; hardly debatable issues are included. The issue may be complicated, yet the mistake may be simple. It is a mistake apparent from record. The test is not complexity of the issue but simplicity of the mistake.The question whether divi .....

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therefore, ever ready to learn; great and honest enough to discard all mere pride of opinion and follow the truth wherever it may lead; and courageous enough to acknowledge his errors. See Distributors (Baroda) Private Limited Versus Union of India And Others [1985 (7) TMI 1 - SUPREME Court ]

We are, therefore, unable to accept Revenue’s contention that a considered opinion expressed by the Tribunal, after applying its mind to an issue in appeal, cannot be unsettled even if the mistak .....

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e applicant seeks recall of orders dated 29th April, 2014 on the ground, inter alia, (i) that the core arguments advanced by the assessee have been simply brushed aside, without adjudicating upon the same, and (ii) that the binding judicial precedents, cited by the assessee, have been distinguished, without any specific reasons and on a wholesale basis, by simply observing that the circular of IRDA has clarified the position and the argument made by the learned Counsel that it is prospective in .....

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er we decide in the said rectification petition will follow mutatis mutandis in these cases as well. 3. Learned representatives for the parties are the same as in that case and common arguments have been advanced by them for all these rectification petitions. 4. Vide our order of even date we have upheld the plea of the assessee and accordingly recalled the order in the case of F.C. Sondhi & Company (India) Pvt. Ltd. While doing so, we have, inter, alia observed as under 9. As for the scope .....

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error which is said to have been committed. Once we come to the conclusion that Tribunal did err in coming to a particular conclusion, and the error is such an error on which no two views are possible, it is irrelevant whether the error was an error on a point of law or on a point of fact, or as to what is the degree of complexity of the issue. Elaborating upon the scope of the expression mistake apparent from record and explaining the import of Hon ble Supreme Court s judgment in the case of V .....

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of the issue but simplicity of the mistake." The question whether dividend income can be taxed as income under the head Income from business , in our considered view, is hardly debatable. 9. The next issue raised before us is whether a considered view of the Tribunal can be subjected to rectification of mistake. It is Revenue s contention that the mistake, even if there be any, is a conscious one inasmuch as the Tribunal duly considered all aspects of the matter and then came to a particula .....

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l whether it is a conscious mistake or unconscious mistake. If a judicial body like this Tribunal applies its mind to a situation but reaches a wrong conclusion because of a simple mistake committed in the process on reasoning, on which no two views are possible, it will indeed be unreasonable to suggest that only because this mistake is committed after application of mind on a situation, this is not a mistake apparent from record. It cannot be termed as an error of judgment, but, in our humble .....

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h Hon ble Supreme Court made certain observations and then interpreting those observations as complete exposition of law on that subject. Hon ble Supreme Court itself, in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 (1992) 198 ITR 297 (SC), has observed that, "it is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration, and to treat it to be complete law .....

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rd, there is no reason for not rectifying the same under the provisions of law. To err is human but there cannot be any justification for perpetuating an error. In his inimitable words, Justice Bhagwati, in the case of Distributors (Baroda) (P) Ltd. vs. Union of India (1985) 47 CTR (SC) 349 (1985) 155 ITR 120 (SC), had observed thus "To perpetuate an error is no heroism. To rectify it is the compulsion of judicial conscience. In this, we derive comfort and strength from wise and inspiring w .....

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ke in the process of reasoning is a simple mistake apparent from record on which no two views are possible. (Emphasis, by underlining, supplied by us) 10. Everything, thus, hinges on whether the process of reasoning adopted by the Tribunal, in relying upon the IRDA guidelines which find no mention in the Income Tax Act, and in holding that only pure life insurance policies are covered by Section 10(10D), was a mistake apparent on record or nor. Explanation to Section 10 (10D), as it stood at the .....

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ncept of term policy, pure life policy and IRDA guidelines find no mention in the statutory provisions. Even if these concepts ought to be incorporated in this statutory provision to make it more meaningful and workable, it cannot be open to any judicial forum to supply these omissions. Relying upon Hon ble Supreme Court s judgment in the case of Tarulata Shyam Vs CIT [(1977) 108 ITR 245 (SC)], a coordinate bench of this Tribunal, in the case of Tata Tea Limited Vs JCIT [(2003) 87 ITD 351 (Cal)] .....

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ersuasive arguments..... (which) if accepted, will certainly soften the rigour of this extremely drastic provision and bring it more in conformity with logic and equity. But the language of sections........ is clear and unambiguous. There is no scope for importing into the statute the words which are not there. Such interpretation would be, not to construe, but to amend the statute. Even if there be a casus omissus, the defect can be remedied only by legislation and not by judicial interpretatio .....

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a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." Once it is shown that the case of the assessee comes within the letter of law, he must be taxed, however great the hardship may appear to the judicial mind to be." Even in the case of CIT vs. National Taj Traders (supra), relied upon by the assessee, Their Lordships of Hon ble Supreme Court have referred to, with approval, Maxwell on Interpretation of Statutes observation that &qu .....

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and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute". 13. The very fact that the Tribunal leaned over material outside the statute, without adjudicating upon the core question as to whether it is permissible to lean upon the same- as in this c .....

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is the only relevant factor for deciding as to what is keyman insurance policy , has no mention about this condition. Apparently, this expression has been taken from the IRDA circular but then there is no finding on record to hold that one can refer to these circulars to find out the connotations of expression keyman insurance policy for the purposes of the Income Tax Act. 15. Going by the interpretation that the Tribunal has given, only term insurance policies, which are explained as pure life .....

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of the policy term, or whether it is a saving or investment oriented insurance policy, which involves payments at the end of the policy term, is not relevant even after the curative amendments. 16. We have noted that in the written submissions filed by the assesse during he course of the hearing, the above point was specifically raised by the assesse as follows: Keyman Insurance Policy has been defined in section 10(10D) and reads as under: Keyman Insurance Policy means a life insurance policy .....

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-employee or in connection with business. (Page 1 of written submission) Before proceeding further, it is submitted that the IRDA was established with certain objectives and these have been mentioned by the CIT(A) himself in para 2.9.1. It is very clear that the scope of IRDA is confined to regulate, promote and ensure orderly growth of insurance business . The IRDA has no relevance so far as allowability or premium under Income Tax Act or taxation of policy proceeds is concerned. Where another .....

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rs to Transfer of Property Act, 1882 Since IRDA 1999 has not been referred to in defining Keyman Policy or Life Insurance, its circulars cannot be relied upon for income tax purposes (Page 3 of written submission) 17. These submissions were, however, not dealt with at all while passing the order which is subjected to this rectification petition. 18. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the order passed by the Tribunal .....

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