TMI Blog1981 (7) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the assessee under s. 80J(3) of the I.T. Act, 1961, with regard to the assessee's new Foil Mill Unit at Kalwa, and to carry forward such deficiency for adjustment against future profits. The original assessment had been completed by the ITO under s. 143(3) of the Act on 21st March, 1972. It appears from the order of the Appellate Tribunal, where the matter went up finally, that the assessee had not claimed any relief either under s. 84 or under s. 80J. for the carry forward of deficiency in the applications under s. 154 in respect of the unit. In the returns also the assessee did not make any claim under s. 84 or under s. 80J and even during the assessment proceedings, the Tribunal observed, no such claim was put up by the assessee before the ITO. This is a finding of fact recorded by the Tribunal in the instant case which has not been challenged. Learned advocate for the assessee, however, drew our attention to the grounds of appeal from the order of the ITO to rectify the assessments under s. 154 wherein the assessee had contended, inter alia, as follows : " (iv) The ITO was wrong to observe that no claim with regard to the deficiency of rebate under section 84 concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the other applications being more or less in identical terms, the assessee stated as follows : " While passing the order under section 143(3) dated 21st March, 1972, you appear to have forgotten to ascertain the statutory relief or deficiency allowable to the assessee in accordance with section 84 of the Act with regard to the Foil Unit at Kalwa and to carry the deficiency forward. We, therefore, request you to kindly ascertain the deficiency and let the assessee have the benefit of the carry forward, thereof, by using your jurisdiction under section 154 of the Act. A computation of the relief under section 84 for the relevant year is annexed herewith." Thereafter the assessee referred to the capital employed at the New Foil Mill at Kalwa as on 1st January, 1966, viz., Rs. 3,26,78,847 and 6% of the capital employed, Rs. 19,60,730. Beyond that no further particulars were given. It appears that thereafter on or about 19th April, 1974, the assessee filed a further clarification wherein the assessee stated, inter alia, as follows: " 1. The relief/rebate under section 80J/84 was not shown in the return as there was no provision in the relevant return form to indicate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book and which is dated 6th April, 1967. But there was no mention of any profit as indeed there was no profit from the said Unit which is under dispute here, that is to say, the new foil mill unit at Kalwa. The certificate under s. 197(3) naturally did not refer to any profit of the said new foil mill unit at Kalwa. The certificate was as follows : " Certificate According to the information supplied the directors of Indian Aluminium Company Limited at their 190th meeting held on 12th February, 1968, resolved that a final dividend of Re. 1.00 on each ordinary share of the company (to be proportionately on shares partly paid), over and above the interim dividend of Rs. 0.75 paid earlier in November, 1967, to the holder of the ordinary shares and also of Rs. 6.25 subject to income-tax payable by the company on each preference share of the company as on 28th May, 1968, will be paid in respect of the year ended 31st December, 1967. On a representation made to me and on the basis of figures supplied by the company I hereby certify (provisionally subject to final assessment) that 11.59 per cent. of the said dividend on ordinary including interim dividend and preference shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t application was the first application made by the company after s. 80J(3) was enacted by the Finance (No. 2) Act of 1967 with effect from the April, 1968, which specifically provided for a carry forward of any such unabsorbed relief. The certificate under s. 197(3) was issued on the 10th April, 1970, relating to the assessment year 1970-71 incorporating therein the relief with reference to the new foil mill unit at Kalwa but the assessment orders were passed on the 21st March, 1972, and the ITO, according to the assessee, must have referred to the certificate issued under s. 197(3) which had been issued by him before the completion of the assessment. It was further contended that on the above facts it was quite evident that at the time of the completion of the assessments the ITO was well aware of the statutory relief due under s. 84/80J of the Act with regard to the new foil mill unit at Kalwa. Further, the ITO's specific attention, according to the assessee, was drawn to the specific claim of relief relating to this new industrial undertaking as it had been filed while claiming certificate under s. 197(3) of the Act, through the letter dated 6th April, 1967, through a note subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t mistake from the records. He, accordingly, dismissed the assessee's appeal. The assessee thereafter went up in further appeal before the Tribunal. It was contended that there was no provision in the return form to claim such a relief and it was further urged it was a statutory obligation and duty of the ITO to grant such a relief. In fact, a certificate under s. 197(3) had been issued long before the completion of the assessments and to the proceedings and certificate the ITO's attention was specifically drawn at the time of assessments. The proceedings in respect of the issuance of the certificate under s. 197(3) of the Act formed part of the assessment records and the failure of the ITO to allow relief was only, therefore, a patent error of law. Thus, it was according to the assessee, a mistake which was apparent from the record. It was further urged that s. 80J(3) of the Act was a retrospective one and it was incumbent on the ITO to compute the deficiency in accordance with the law of the I.T. Rules in force and to carry forward the same for adjustment against future profits. Various decisions were cited before the Tribunal. The Tribunal, however, did not agree with the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically is whether in the facts as we have mentioned hereinbefore and as found by the Tribunal there was any mistake apparent from the record. It is true, as was contended on behalf of the assessee, that for the relevant year, there was no special column for claiming the loss, as such. It was done specifically from the assessment year 1972-73 by the Finance (No. 2) Act of 1977. Section 80J applied for deduction in respect of profits and gains from industrial undertakings or ships or hotel business in certain cases. It stipulated that where the gross total income of an assessee included certain types of income including the income of new industrial undertakings, certain relief had to be given to the assessee, upon the fulfilment of certain conditions, on percentage of the profit. It is not necessary to spell out the exact terms of the conditions required to be fulfilled. Section 80J(3) also dealt with certain conditions for the application of such relief but the entire s. 80J was made applicable provided certain conditions, as stipulated under s. 80J(4), were fulfilled. There were other conditions to which it is not necessary for us to refer. In our opinion, in order to determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income computed was Rs. 1,57,570. On 27th February, 1970, the assessee applied to the ITO praying that the assessments for these two years should be rectified so as to grant relief to the assessee under s. 84 of the I.T. Act, 1961. So far as the assessment year 1967-68 was concerned and under s. 80J for the assessment year 1968-69, the provisions of ss. 84 and 80J being identical. The contention of the assessee was that all the contentious which would justify the relief under s. 84/80J were satisfied and the relief calculated at 6 per cent. of the capital employed would come to Rs. 30,543 and Rs. 31,020 for the two years, respectively. The application was, therefore, for the purpose of deduction of Rs. 30,543 and Rs. 31,020, respectively, for the two assessment years under reference, ill, that case, from the total income computed for the two assessment years. The applications were filed by the assessee before the ITO on the ground that the assessee had not claimed the deductions under s. 84/80J in its return of income nor was the claim put forward during the assessment proceedings for the two years. On appeal, the AAC agreed with the ITO. On further appeal, the Appellate Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows (pp. 665-666): " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Kalwa foil mill unit of the assessee-company was entitled to relief under section 80J and in that view directing the Income-tax Officer to determine the quantum of deficiency to be carried forward from earlier years and to set it off against the profit of assessment year 1970-71 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Belgaum smelter unit of the assessee-company was entitled to relief under section 80J and in that view in directing the ITO to determine the quantum of deficiency of the current year to be carried forward for set off against future profit in accordance with law ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that for obtaining the benefit of the carry forward of the deficiency of the earlier previous year and set-off thereof against the profits of the previous year in which the assessee actually earned profits it was not obligatory upon the assessee to make a claim under section 80J(3) in respect of each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inarily these facts should be sufficient to entitle the assessee to the claim of relief under section 80J However, some doubt has been raised at the time of hearing about the correctness of the figures given to us. We would, in the circumstances, restore the matter to the file of the ITO with a view to check up the figures as also the facts as stated before us, and then allow the relief under section 80J including that permissible under sub-section (3) of that section. " When the matter came up before this court in reference in the aforesaid decision, the court observed after discussing several authorities, at p. 672, as follows : " On a consideration of the scheme of Chap. VIA and in particular s. 80J, it appears to us that the contentions on behalf of the assessee are of substance and overrides the contention made on behalf of the Revenue to the contrary. We respectfully agree with the decisions cited on behalf of the assessee on this point. Admittedly, when s. 80J came into force in the assessment year 1969-70, it gave retrospective benefit to assessees whereby they could carry forward their loss and deficiency with effect from the 1st January, 1967. In such a case, there co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been drawn to Pt. II of the I.T. Rules, 1962, for the relevant year which appears at p. 500 of Kanga's Income Tax, 6th Edn., Vol. II, which provided a column for " profits and gains from newly established industrial undertakings or ships or hotel business " (s. 80J) where though deductions as such were not indicated, there was nothing to prevent an indication of the quantum of loss suffered; but in any event that is not a very material or relevant consideration in the facts of the instant case. Our attention was also drawn on behalf of the assessee to certain observations in the case of Bhauram Jawahirmal v. CIT [1980] 121 ITR 487, where the Division Bench of the Allahabad High Court observed that the statement, that if a mistake was revealed in an order of assessment on the basis of a judgment of the High Court rendered subsequently, it would, under no circumstances, constitute a mistake apparent from the record, was too wide. What the court, therefore, meant was that in certain circumstances it might be a mistake apparent from the record and in other circumstances it might not be. What other circumstances in which it would be a mistake apparent from the record could not be spel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits made out of the operation of this unit, arises. Therefore, even if one looked to the records of the certificate under s. 197(3), in our opinion, that record did not indicate that either the conditions of s. 80J or of s. 84 were fulfilled. Therefore, on that plea, the assessee, in our opinion, could not claim that there was a mistake apparent on the record. In that case, the Supreme Court had observed that a mistake apparent from the record must be an obvious and patent mistake and not something which would be established by long drawn process of reasoning between two opinions. A debatable point of law is not a mistake apparent from the record. It is quite clear that the conditions for the applicability of s. 80J are numerous and various and there have been divergent views, even on the applicability of s. 84, which is identical to s. 80J, of the Supreme Court. Now, in a case where there has been no investigation of the fact whether these conditions were fulfilled or not, in our opinion, it cannot be said that there was a mistake apparent from the record which could be rectified. Our attention was drawn to certain observations of the Supreme Court in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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