TMI Blog2007 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... (I. Ahmad, K.K. Tyagi, P. Narasimhan and Ms. Neera Gupta, Advocates, with him) for the respondent. Ms. Kavita Jha and Sandeep S. Karnail, Advocates, for the appellant. JUDGMENT: KAPADIA, J. Leave granted in this special leave petition. 2. A short question which arises for determination in this civil appeal filed by the assessee concerns application of Section 154 of the Income Tax Act, 1961 ("1961 Act") which provides for rectification of any mistake apparent from the record by any income tax authority. It may be mentioned at this stage that the words "rectification of any mistake apparent from the record" find place in section 254(2) of the said 1961 Act. Facts 3. Assessee company is engaged in the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 43A actual payment was a condition precedent for availing the benefit under that section. According to the Tribunal, if actual payment was not made after fluctuation then the value of the asset cannot be increased by adding the increase on account of fluctuation. On facts, the Tribunal found that, in the present case, there was no actual payment after the fluctuation and, therefore, the assessee was not entitled to claim the benefit under section 43A. 6. On 9.12.2002, the assessee moved the Tribunal for rectification of mistake apparent from Order dated 2.4.2002. That application was made under section 254(2) which reads as under: "BEFORE THE INCOME TAX APPELLATE TRIBUNAL: DELHI BENCHES HON'BLE "A" BENCH (HON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book. 2.1 That, in deciding the aforesaid ground against the assessee, the Hon'ble Bench inadvertently has not referred to the decision of Samtel Color Ltd. Since, the order of coordinate bench of Tribunal which was relied upon was not considered, and that in forming another view. The view taken by different benches of the Tribunal was not distinguished, therefore, a mistake apparent from record has crept in. The issue could not be decided without being referred to a Special Bench to reconcile the difference, if at all, between two views. Reference in this regard is invited to the decisions of Hon'ble Supreme Court in the case of Sundarjas Kanyalal Bhatija Others vs. Collector Thane, Maharashtra Others 183 ITR 130 (SC) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of the coordinate bench of the Tribunal dated 10.12.2001 in the case of DCIT, Spl. Range 5, New Delhi v. Samtel Color Limited in which it was held that enhanced depreciation was allowable even on notional increase in the cost of the asset on account of exchange rate fluctuation and despite the fact that the additional liability resulting from the said fluctuation had not been paid by the assessee. It was held that the word "paid" in section 43(2) meant amount actually paid or incurred according to the method of accounting. In this connection, reliance was also placed by the Tribunal on circular no. 5-P of CBDT dated 9.10.1967. 8. Vide order dated 10.9.2003 the Tribunal, in the present case, allowed the rectification applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtered Accountants of India ("ICAI"). It was further held that, under the accounting standards, the liability stood revised in the year in which the fluctuation of foreign exchange took place in order to reflect the true state of affairs regarding the business of the assessee and accordingly, the word "paid" in section 43(2) should be read in the light of the accounting standards. It was further held that under section 209(3) of the Companies Act, it was mandatory for companies to keep accounts on accrual basis only. 11. Suffice it to state that, in view of the said judgment of Delhi High Court in the case of Woodward Governer India (P) Ltd. (supra), the view of the co-ordinate Bench of the Tribunal on section 43A in Samtel Color Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it by its decision based on a mistake apparent from the record. 13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
