Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Promain Limited Versus Commissioner of Income Tax

2016 (2) TMI 525 - DELHI HIGH COURT

Rectification of mistake - Interest income earned - income from other sources OR business income - Held that:- In the present case, the Court finds that the order dated 12th October, 2012 merely records that the Assessee did not carry on the business of Vyaj Badla during AY 2006-07. As pointed out by Mr Aggarwal, although in the AY in question the Assessee may not have carried out the business of Vyaj Badla, it was necessary for the ITAT to examine, in light of the stand of the Revenue in the ea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for rectification of the above order in view of the law explained by the Supreme Court in Honda Siel Power Products Ltd. v CIT (2007 (11) TMI 8 - Supreme Court of India ).

In that view of the matter the impugned order dated 19th December, 2014 passed by the ITAT is set aside and the application for rectification filed by the Assessee before the ITAT under Section 254 (2) of the Act is treated as disposed of. However, this would require the restoration of the appeal to the file of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n filed by the Petitioner challenging the order dated 19th December, 2014 passed by the Income Tax Appellate Tribunal (ITAT) in M.A. No. 06/Del/2013 in ITA No. 427/Del/2010 under Section 254(2) of the Income Tax Act, 1961 ( Act ) for the Assessment Year ( AY ) 2006-07. 2. The background facts are that the Petitioner is a public limited company incorporated under the Companies Act, 1956 and is carrying on the business of investment, finance and trading. From the details placed on record, it is se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ated as business income. 3. Aggrieved by the order of the Assessing Officer (AO) treating the interest income earned during the AY 2006-07 as income from other sources and not as business income, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. In the order dated 26th November 2009 dismissing the appeal, the CIT(A) did not specifically deal with the issue of interest income being treated as business income. 4. Against the said order of the CIT(A), the Petiti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tance of business activity of the Assessee . 5. The above order led the Assessee to file an application under Section 254(2) of the Act before the ITAT. It was urged by Mr Salil Aggarwal, learned counsel appearing for the Petitioner, that before the ITAT in the rectification application the Petitioner urged the ground of applicability of the principle of consistency and contended that the Revenue had treated the interest income earned by the Petitioner as business income for the AYs earlier to A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the ITAT observed that admittedly, the rental income, dividend income, income from long terms/short term capital gain cannot be the business income. Now, only other interest was the interest income of ₹ 48,312/- which too was held by the Assessee by investment of own funds." Therefore, the question before the ITAT was "whether the earning of the interest was of ₹ 48,312/- by investing own funds can be said to carrying on the business and consequently, allowance of a busines .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ated 12th October 2012, was to have filed an appeal before this Court under Section 260A of the Act. However, Mr Salil Aggarwal, learned counsel for the Petitioner states that in view of the enunciation of the law by the Supreme Court in Honda Siel Power Products Ltd. v CIT (2007) 295 ITR 466 (SC), the Assessee decided to file a rectification application since there was a fundamental legal error with the ITAT declining to apply the rule of consistency and failing to appreciate that for all earli .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

TAT which clearly was not permissible within the scope of Section 254(2) of the Act. Having failed to avail the remedy of filing an appeal against the original order of the ITAT dated 12th October, 2012 the Petitioner could not be permitted to indirectly seek the same relief. 9. What the scope of powers of the ITAT under Section 254(2) of the Act is, was explained by this Court earlier in four decisions CIT v. K. L. Bhatia (1990) 182 ITR 361 (Del), Ms. Deeksha Suri v. ITAT (1998) 232 ITR 395(Del .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terated 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 the 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o the party, which prejudice is attributable to the Tribunal s mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case. 10. The above decision was followed by a Full Bench of this court in Laxman Das v. ACIT (2011) 330 ITR 243 (Del). While, paraphrasing the decision of the Supreme Court in Honda Siel Power Products Ltd. v CIT (2007) 295 ITR 466 (SC), the Full Bench of this Court in Laxm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iple is not allowable. In Honda Siel Power Products Ltd., (supra), the Division Bench of this court considered the stance of the counsel that the decision in K.L. Bhatia [1990] 182 ITR 361 (Delhi) and the other decisions that have followed it, forbids recall of the Tribunal s entire decision on the basis that in the grab of rectification, the order cannot be recalled. When the matter travelled to the apex court, their Lordships as is evident from the paragraphs quoted hereinbefore, took note of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ourt or the Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. Their Lordships further took note of the fact that the Tribunal committed a mistake in not considering the material which was already on record and the Tribunal acknowledged its mistakes and accordingly rectified its order. It is wrong nothing that their Lordships have clearly stated that they are not going by the doctrine or concept of inherent power but on the basis that if prejud .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Tribunal had no power of recall of its own order in entirety; that the court was not going by the doctrine or concept of inherent power; that the rule of precedent which is an important part of legal certainty in rule of law is not obliterated by section 254(2) of the Act; that if prejudice has resulted to the party due to the mistake, error or omission which is attributable to the Tribunal and it is manifest from the record, the mistake can be rectified. Thus understood, it is clear as crys .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is of review, the limited power of recall as provided under rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963 as regards the exercise of power which cannot be exercised directly or exercised indirectly and that even if there is any irregularity caused, that would not clothe the Tribunal with the power of review as it may ultimately result in rehearing of the appeal. Thus, the entire stream of decisions has gone by the concepts which are fundamentally founded on the power of review, rehe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

254(2) of the Act does not totally prohibit so." 11. Ultimately, the Full Bench of this Court in Laxman Das (supra) overruled the earlier decisions in K. L. Bhatia (supra), J. N. Sahni (supra), Baljeet Jolly (supra) and Deeksha Suri (supra) to be not laying down the correct law. 12. The result of the above discussion of the legal position is that, it will be open for the ITAT in application of Section 254(2) of the Act, to also examine whether the order sought to be rectified has an apparen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version