TMI Blog2016 (8) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of technology and mechanism of production, it left this question open to be judged case specific. This was therefore not a case where by virtue of the judgment of the case of High Court in case of Gujarat Alkalies and Chemicals Ltd. (supra), it can be stated that the Tribunal had committed an error apparent on record which needed rectification. At best, the High Court propounded that mere dependence of a new industry on an existing industry, would not disqualify itself from claiming deduction. Tribunal orders set aisde - Decided in favour of revenue - TAX APPEAL NO. 635 of 2012, TAX APPEAL NO. 740 of 2013 - - - Dated:- 1-8-2016 - Akil Kureshi And A. J. Shastri, JJ. MRS MAUNA M BHATT, ADVOCATE for the Appellant MR. S.N. SOPARKAR, LD. SENIOR ADVOCATE with MR B S SOPARKAR, ADVOCATE for the Opponent JUDGMENT ( Per : Honourable Mr. Justice Akil Kureshi ) 1. Since appeals involve the same assessee and similar issues, we may refer to facts arising in Tax Appeal No.635 of 2012. Revenue is in appeal against the order of the Income Tax Appellate Tribunal dated 11.05.2012. On 04.09.2013, the Court noticing that the issue arises out of the rectification applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into existence within the meaning of the provisions contained in section 80IA of the Act by transferring the boiler or by installing new machinery for the purpose of generation of power. It was only an exercise to claim deduction to reduce taxable profits. The power plant was not capable of running independently and depended on the transfer of steam from the existing plant. He therefore rejected the assessee's appeal. 5. The assessee carried the matter further in appeal before the Tribunal. 6. The Tribunal by a judgment dated 16.05.2008 on this issue rejected the appeal of the assessee making following observations: 9. We have carefully considered the rival submissions and perused the material on record along with the order of the tax authorities below. The deduction u/s 80IA is available to an assessee where the gross total income of the assessee includes any profits and gains derived by an undertaking or enterprise from any eligible business as referred to in subsection (4). The deduction shall be allowed an amount equal to 100% of the profits and gains derived from such business for ten consecutive years. As per section 80IA(4) this section applies to any undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turbine claimed to be eligible undertaking itself cannot generate the power. No material or evidence was brought to our knowledge which may prove that the new turbine installed by the assessee can independently generate the power. The assessee is already having the undertaking engaged in the business of generating the power. The assessee in this case has merely added a new turbine to the existing undertaking by which his capacity to generate the power has increased. This, in our opinion, is merely an expansion of the existing undertaking. The new undertaking as is eligible u/s. 80IA, in our opinion, must be independent and integrated unit which should be able to carry on the activities or to carry on the business as has been stipulated u/s. 80IA independently. It is not the case of the assessee that the new unit established by the assessee has taken the boiler from the existing unit for its exclusive use and generation of power. It is only in the existing unit the assessee has added new turbine which, in our opinion, cannot be regarded to be establishing the new undertaking qualifying for deduction u/s 80IA. We, therefore, do not find any illegality or infirmity in the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Exchange Ltd., reported in [2008] 305 ITR 227 (SC), in which the issue of error apparent on face of the record came up for consideration. 9. On the other hand, learned counsel Shri Soparkar for the assessee opposed the appeal contending that the judgment of the Tribunal dated 16.05.2008 was not in consonance with the view of the case of the decision of the High Court given in case of Gujarat Alkalies and Chemicals Ltd. (supra). Merely because new industry depended on the existing industry, would not be a ground to deny deduction under section 80IA of the Act. Since the Tribunal had proceeded only on this basis, it had recalled its judgment and posted the appeal for further hearing. Counsel relied on the decision of the Supreme Court in case of Honda SIEL Power Products Ltd. v. Commissioner of IncomeTax reported in [2007] 295 ITR 466 (SC) in which, in the context of scope of power of rectification, it was observed as under: 12. As stated above, in this case we are concerned with the application under section 254(2) of the 1961 Act. As stated above, the expression rectification of mistake from the record occurs in section 154. It also finds place in section 254(2). The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Gujarat High Court, the Tribunal's view would be rendered incorrect and in that view of the matter, power of rectification could have been exercised. 11. As noted, the Supreme Court in case of T.S. Balram (supra) held that a mistake apparent on record must be obvious and patent mistake and not something which can be established on a long drawn process of reasoning where two opinions are possible. 12. In case of Honda SIEL Power Products Ltd. (supra), the Supreme Court highlighted that the purpose behind enactment of section 254(2) is based on the fundamental principle and no party appearing before the Tribunal should suffered on account of the mistake committed by the Tribunal and that power of rectification of the Tribunal is granted to see that no prejudice is caused to either of the parties by the decision of the Tribunal based on the mistake apparent from the record. Section 254 (2) itself refers to a mistake apparent on record, which can be rectified. The concept of mistake apparent on record was not diluted by the Supreme Court in case of Honda SIEL Power Products Ltd. (supra) also. 13. In case of Saurashtra Kutch Stock Exchange Ltd. (supra) also, the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of satisfying the test of a separate and distinct identity of the industrial unit set up, the Court was of the opinion that only because to a certain extent, the new undertaking is dependent on the existing unit, will not deprive the new undertaking status of a separate and distinct identity. It all depends on the nature of technicality and the mechanism of production. 15. Thus while discarding the theory of the test of separate and distinct identity failing merely because the new undertaking was dependent on the existing one, the Court opined that it all depends on the nature of technicality and the mechanism of production. In the later portion of the judgment, the Court observed that The true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is a new identifiable endevour where substantial investment of fresh capital is made to enable earning of profit attributable to that new capital. 16. It can thus, be seen that the High Court in case of Gujarat Alkalies and Chemicals Ltd. (supra) while laying down certain broad propositions for ascertaining whether a new industrial undertaking in the gi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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