TMI Blog2008 (3) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... aneous Petition No. 92/Bang/2001 reversing its earlier common order dated September 25, 2000, passed in I. T. A. Nos. 390/Bang/1997 and 422/Bang/1997 and thereby directing the Assessing Officer to allow the deduction of about Rs. 3.67 crores treating the same as revenue expenditure which deduction was disallowed by the Assessing Officer and was confirmed by the Commissioner of Income-tax (Appeals) (for short "the CIT(A)") and also the Tribunal itself. 2. Stated in nutshell the facts leading to the present appeal are as under: (a) The assessee, namely, McDowell Co. Ltd. which is the respondent herein, has been manufacturing and selling Indian made foreign liquor. For the assessment year 1993-94, this assessee filed its return of income on December 31, 1993, and thereafter it also filed a revised return on September 18, 1995. In the said return, the assessee claimed several items of deductions. The Assessing Officer passed his assessment order dated March 29, 1996, allowing some of the items of deductions and disallowing some others of them. One of the deductions disallowed by the Assessing Officer was a sum of Rs.3,82,03,140 which was claimed by the assessee as revenue expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal. 3. We have heard the arguments of the learned counsel for both sides and perused the grounds of appeal urged and the substantial questions of law framed by the appellant-Revenue. Though it has framed three substantial questions of law, in our opinion, only one substantial question of law emerges for our consideration and decision which reads as under: "Whether the Tribunal was justified in passing the impugned order dated October 23, 2002, in exercise of its jurisdiction under section 254(2) of the Income-tax Act modifying paragraph No. 14 of its earlier common order dated September 25, 2000, passed in the appeals filed by the assessee and the Revenue and thereby reversing its findings therein and directing the Assessing Officer to allow deduction of Rs. 3,67,34,886 treating the same as 'revenue expenditure' which deduction was disallowed by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) treating the same as capital expenditure." 4. Our findings on this substantial question of law is in the "negative" and in favour of the appellant-Revenue for the following Reasons: 5. The facts constituting the assessee's clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets and claimed depreciation accordingly. The Assessing Officer held the same as not admissible. In appeal by the assessee the Commissioner of Income-tax (Appeals) took the view that the claim of the assessee was admissible. In further appeal by the Department the Tribunal held that the Commissioner of Income-tax (Appeals) had erred in allowing the said depreciation as the assessee was not entitled to claim the said amount as depreciation. Thereafter, the assessee moved an application under section 254(2) of the Income-tax Act before the Tribunal seeking rectification of mistake on the ground that the Tribunal had arrived at the conclusion that the said amount was not allowable as depreciation by not considering the decision of its co-ordinate Bench in the case of Samtel Colour Ltd. The Tribunal had not considered the said decision while disposing of the said appeal though it was cited and relied upon by the learned counsel for the assessee therein, and, therefore, it considered the said judgment and then allowed the rectification application of the assessee by passing a considered order under section 254(2) of the Income-tax Act. Aggrieved by the said order, the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts on record constituting the assessee's claim for deduction. On the other hand, on perusal of paragraph 14 of the earlier order of the Tribunal dated September 25, 2000, wherein it concurred with the findings of the Assessing Officer and the Commissioner of Income-tax (Appeals) as to the disallowance of the said claim of the assessee, it could be seen that only after considering the ratio in the decisions of the hon'ble Supreme Court in (i) Brooke Bond India Ltd. v. CIT reported in [1997] 225 ITR 798; 140 CTR 598, (ii) Punjab State Industrial Development Corporation Ltd. v. CIT reported in [1997] 225 ITR 792 (SC) the Tribunal arrived at the conclusion that the said deduction was not allowable under section 37(1) of the Income-tax Act as revenue expenditure. It is pertinent to note that the Tribunal has recorded its finding in paragraph No. 14 of its order as "applying the ratio in the decisions of Supreme Court reported in Brooke Bond India v. CIT reported in [1997] 225 ITR 798 and Punjab State Industrial Development Corporation Ltd. v. CIT reported in [1997] 225 ITR 792 (SC) it is clear that the entire expenditure relating to share issue expenses has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or otherwise of the said expenditure claimed as deduction by the assessee company on the ground that the same has to be treated as revenue expenditure. 10. We are not concerned in this appeal with the question: "whether the said expenditure has to be treated as revenue in nature as contended by the assessee-company or as capital in nature" as contended by the Revenue. But we are concerned only with the question "whether the Tribunal was justified in reversing its findings recorded in its earlier order dated September 25, 2000, in exercise of its power under section 254(2) of the Income-tax Act?" Therefore, we need not discuss in detail the principles laid down in the said three decisions. 11. In order to find answer to the question "whether the Tribunal was justified in passing the impugned order reversing its findings in its said earlier order in exercise of its power under section 254(2) of the Income-tax Act?" we have to see whether the impugned order dated October 23, 2002, passed by the Tribunal amounts to only a "rectification of mistake apparent from the record" as contended by the learned counsel for the assessee- company or it amounts to reviewing of its earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner of Income-tax and that if the Commissioner of Income-tax (Appeals) so far as they related to disallowance of the said expenditure. Thus, it is clear that the Tribunal in its impugned order dated October 23, 2002, which runs into 25 pages has reviewed its entire earlier order in appeal so far as it related to the upholding of the order of the Commissioner of Income-tax (Appeals) confirming the order of the Assessing Officer as to the disallowance of the said expenditure. This review was not permissible in exercise of its power under section 254(2) of the Income-tax Act. 14. Application of the principles laid down by the superior courts to the facts of the case before the Tribunal on erroneous understanding of such principles, recording of an erroneous finding by it based on the facts on record, arriving at a conclusion on erroneous application of provisions of law to the facts of the case, etc., cannot be held to be "a mistake apparent from the record" warranting any rectification by the Tribunal in exercise of its power under section 254(2) of the Income-tax Act, by reconsidering the application of the principles of superior courts to the facts of the case or by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
