TMI Blog2023 (6) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... urselves to subscribe to the claim of the Ld. AR s that the Hon ble Apex Court in the case of Mepco Industries Ltd. [ 2009 (11) TMI 24 - SUPREME COURT] had held that an order passed by the Tribunal which is not found to be in conformity with the ratio decidendi of a subsequent judgment of the Hon ble Apex Court cannot be rectified under sub section (2) of Section 254 of the Act. The issue leading to filing of the present miscellaneous applications by the department, i.e. as to whether an order passed by the Tribunal while disposing off an appeal can be rectified u/s. 254(2) of the Act for the purpose of bringing the same in conformity with a subsequent judgment of the Hon ble Apex Court or that of the Hon ble Jurisdictional High Court is squarely covered by the judgments in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] and S.A.L Narayana Row, CIT Vs. Model Mills Nagpur Ltd [ 1966 (10) TMI 2 - SUPREME COURT] and thus, is no more res-integra. Article 141 of the Constitution of India provides that the law declared by Supreme Court shall be binding on all courts within the territory of India. The law laid down by Supreme Court ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R/2023 (Arising out of ITA Nos.6 7/RPR/2022), MA No. 22/RPR/2023 23/RPR/2023 ( Arising out of ITA Nos.90 91/RPR/2021), MA No.24/RPR/2023 (Arising out of ITA No.88/RPR/2021), MA No. 25/RPR/2023 26/RPR/2023 (Arising out of ITA Nos.18/RPR/2022 89/RPR/2021), MA No. 27/RPR/2023 28/RPR/2023 (Arising out of ITA Nos.77 78/RPR/2021), MA No. 29/RPR/2023 (Arising out of ITA No.41/RPR/2022), MA No.30/RPR/2023 (Arising out of ITA No.64/RPR/2021), MA No. 31/RPR/2023 (Arising out of ITA No.59/RPR/2022) The DCIT, Circle-1(1), Bhilai (C.G), The ACIT, Circle-1(1), Bhilai, The ACIT, Circle-2(1), Raipur (C.G.), The ITO, Ward-1, Raigarh (C.G.), The DCIT (CPC/ITO Ward, Jagdalpur, The DCIT, Circle-1(1), Bilaspur(C.G.), The ITO, Circle-1(1), Bilaspur, The ADIT, CPC, Bengaluru, The AD. CIT (CPC) Bangalore, The ITO, Ward- 2(1), Bilaspur (C.G.), The DCIT, CPC, Bangalore, The ACIT, Cicle1(1), Bilaspur (C.G.), The ACIT (CPC), Bengaluru, The ADIT (CPC) Bengaluru, The DCIT, Circle-1(1), Raipur (C.G.), The DCIT-2(1), Raipur (C.G.), The ACIT, Circle-4(1), Raipur (C.G.), Versus N.R Wires Private Limited, Mutyala Mohan, Shivnath Tractors Jagdalpur, Gayatri Construction, M/s. Prenita Constructions,Shri A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y mutatis-mutandis for the purpose of disposing off the remaining applications. 3. On a perusal of the miscellaneous application filed by the department in MA No.01/RPR/2023, we find that the revenue applicant under sub-section (2) of Section 254 of the Act has sought for recalling of the order passed by the Tribunal while disposing off the appeal in ITA No.67/RPR/2019, stating as under (relevant extract) : 7. However, recently, the Hon'ble Apex Court has passed an order in the case of Checkmate Services Pvt Ltd Vs. CIT-1 in Appeal No. 2833 of 2016 dated October 12th, 2022 in which they have held that the deduction shall be admissible only if the amount is paid within the due date as prescribed under those Acts and not before filing of ITR. As such, the entire scenario has now undergone a change and the litigation with respect to this issue has achieved a finality. The order of the Apex Court is the law of the land. Therefore, any order passed not in consonance with the Apex Court's order can be said to be erroneous to that extent and therefore, a cause for filing a Miscellaneous Application to correct that error can be said to have arisen. 8. However, in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Employees State Insurance (ESI) is not in conformity with the subsequent judgment of the Hon ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax- I, Civil Appeal No.2833 of 2016 dated 12.10.2022, wherein the Hon ble Apex Court had held that as per the provisions of Section 2(24)(x) r.w.s.36 (1)(va) of the Act such delayed deposits were not to be allowed as deduction in the hands of the assessee, therefore, the same had rendered its order that was passed while disposing off the appeal as suffering from a mistake which being apparent from record is amenable for rectification under sub-section (2) of Section 254 of the Act. 7. Admittedly, the Hon ble Apex Court in its recent judgment in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax- I (supra), had held that the delayed deposit of the amount of employees share of contribution towards labour welfare funds by the assessee employer was not to be allowed as a deduction under section 2(24)(x) r.w.s.36(1)(va) of the Act. It is observed by the Hon ble Apex Court that as the assessee is not absolved from its obligation to deposit the employees share of contributions on or befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997. Subsequent to the aforesaid order, the Hon ble Apex Court in the case of Sahney Steel and Press Works Ltd. (1997) 228 ITR 258 (SC) had held that the incentive subsidy in the case before them was a revenue receipt and hence, was liable to be taxed u/s. 28 of the Act. The decision of the Hon ble Apex Court was based on a detailed examination of the subsidy scheme formulated by the Government of Andhra Pradesh. It was observed by the Hon ble Apex Court that the incentives would not be available until and unless production had commenced. The Hon ble Apex Court had observed that as the incentives which were given as refund of sales tax and subsidy on power consumed for production to which the assessee was entitled only after commencing its production, and was not in the nature of a payment made directly or indirectly for setting up the industries, therefore, the same was a revenue receipt . The CIT after considering the judgment of the Hon ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) dated 19.09.1997, vide his order of rectification u/s.154 dated 30.03.1998, held that as the power tariff subsidy received by the assessee after commencement of its busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub section (2) of Section 254 of the Act. Considering the distinguishable facts that were involved in the case of Mepco Industries Ltd. Vs. CIT (supra), we are of the considered view that as in the case of the present assessee before us the department is only seeking rectification of the order passed by the Tribunal, i.e. for the limited purpose of bringing the same in conformity with the judgment of the Hon ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax-I (supra), therefore, the reliance placed by the Ld. ARs on the aforesaid judgment would by no means assist their case. 14. We shall now deal with the reliance placed by S/Shri Abhishek Mahawar Nikhilesh Begani, the Ld. ARs on the judgment of the Hon ble Apex Court in the case of CIT Vs. Reliance Telecom Limited (2022) 440 ITR 1 (SC). The Ld. ARs by referring to the aforesaid judgment had drawn support from the observation of the Hon ble Apex Court, wherein it was observed that the powers u/s. 254(2) of the Act are akin to those under Order XLVII, Rule 1 of the Code of Civil Procedure, 1908. The Ld. ARs referred to aforesaid observations of the Hon ble Apex Court and took us throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly observed that the Tribunal in exercise of powers u/s. 254(2) cannot review its order, i.e. revisit its earlier order and go into details on merits. Be that as it may, it was clearly observed by the Hon ble Court that the Tribunal in exercise of powers u/s.254(2) can only rectify/correct any mistake apparent from record. Our aforesaid view is supported by the judgment of a three judge bench of the Hon ble Apex Court in the case of Income Tax Officer Vs. Ashok Textiles Ltd. (1961) 41 ITR 732 (SC). The Hon ble Apex Court in its aforesaid order in the case of Ashok Textiles Ltd. (supra) that was rendered in context of Section 35 of 1922 Act (pari materia to Section 154), had observed that the restrictive operation of power of review under Order XLVII, Rule 1 of Code of Civil Procedure, 1908 is not applicable in case of Section 35 of 1922 Act. We, thus, are of the considered view, that as held by the Hon ble Apex Court in the case of Reliance Telecom Limited (supra) though the Tribunal u/s. 254(2) can rectify/correct any mistake apparent from record but cannot review its order, i.e. revisit its earlier order and go into details on merits, therefore, the contention of the Ld. ARs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced by Shri G.S. Agrawal, Ld. AR for respondents at Sr. Nos.6 7, that the Tribunal after lapse of a period of six months from the end of the month in which the order proposed to be rectified was passed was functus officio for rectifying the said order, we are unable to persuade ourselves to subscribe to the same. We, say so, for the reason that the scope of sub-section (2) of Section 254 had been looked into by the Hon ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon ble Apex Court had observed that the power vested with the Tribunal to rectify a mistake in its order passed while disposing off an appeal deals with two situations, viz. (i) rectifying any mistake apparent from record on a suo-motto basis within a time period of four years from the date of the order; and (ii) rectifying the mistake that was brought to the notice of the Tribunal either by the assessee or by the A.O. For the sake of clarity, the relevant observations of the Hon ble Apex Court in the case of Saurashtra Kutch Exchange Ltd. (supra) are culled out as under: .orders passed by the Appellate Tribunal on appeal shall be final . Sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n time to dispose of the application. Therefore, in the circumstances, the High Court had erred in holding that the application could not have been entertained by the Tribunal beyond four years. 19. On a perusal of the aforesaid observations of the Hon ble Apex Court, it is established beyond doubt that in case a mistake in the order passed by the Tribunal while disposing off the appeal is brought to its notice either by the assessee or by the department, then the Tribunal is obligated to exercise the powers vested with it under subsection (2) of Section 254 of the Act without being subjected to the restriction of the time limit of six months (earlier four years), which is applicable only in a case where it seeks to rectify any mistake apparent from record on a suo-motto basis. We, thus, finding no substance in the aforesaid contention of Shri G.S. Agrawal, reject the same. We shall now deal with the claim of Mr. Agrawal that as the legislature in all its wisdom in order to avoid any undue hardships to the assessee s had vide the Finance Act, 2021 made available on the statute Explanation 2 to Section 36(1)(va) and Explanation 5 to Section 43B of the Act only with prospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 had, inter alia, stated that in case the department was aggrieved with the order of the Tribunal, then, the remedy available with it was to file an appeal before the Hon ble High Court and not to seek rectification of the order u/s. 254(2) of the Act. We are unable to persuade ourselves to subscribe to the contention of the Ld. AR. As the remedy available with the department to file an appeal before the Hon ble High Court u/s. 260A of the Act operates in an independent field, which in no manner jeopardizes its right for seeking rectification of a mistake in the order passed by the Tribunal under sub-section (2) of Section 254 of the Act, therefore, the said contention being devoid and bereft of any merit cannot be accepted. 22. Ms. Puja Bajaj, Ld. AR for the respondent at Sr. No.27 33 had stated that as the issue, i.e as to whether or not the delayed deposit of the employee s share of contribution towards labour welfare funds, i.e. PF ESI by the assessee-employer was to be held as the latters income, was a debatable issue at the time of processing of the return of income, therefore, the same was beyond the purview of Section 143(1) of the Act. The Ld. AR in order to buttre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Apex Court, therefore, the aforesaid contention of the Ld. AR, wherein he had tried to distinguish the facts involved in case of the assessee as against those before the Hon ble Apex Court being devoid and bereft of any merit is liable to be rejected. 24. Shri Sunil Kumar Agrawal, the Ld. AR for respondents at Sr. No. 3, 35, 37 38 had endorsed the submissions advanced by S/Shri Nikhilesh Begani and Abhishek Mahawar (supra). Additionally, the Ld. AR in order to buttress his claim that the department could not have on the basis of a subsequent judgment of the Hon ble Apex Court in the case of Checkmate Services (P) Ltd. (supra) rectified its order under section 254(2) of the Act had pressed into service the judgment of Hon ble Apex Court in the case of DCIT Vs. Simplex Concrete Piles (India) Ltd. (2013) 358 ITR 129 (SC). Apart from that, the Ld. AR submitted that the DCIT, CPC, Bengaluru could not have made an addition of the delayed deposit of the employees share of contribution towards ESI/EPF by taking recourse to a prima facie adjustment u/s.143(1) of the Act. The Ld. AR in support of his contention had relied on the order of the ITAT, Mumbai in the case of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated in sub-section (2) of Section 254 of the Act filed any application pointing out any mistake in the order passed by the Tribunal while disposing off the appeal, then, the said claim will be considered while disposing off the said applications. 26. Shri Nilesh Jain, the Ld. AR for the assessee respondent at Sr. No.2 had relied on the contentions placed by S/sshri Abhishek Mahawar, Nikhilesh Begani and G.S. Agrawal. Alternatively, it was submitted by the Ld. AR that the present application was filed by the department to circumvent its failure to carry the matter in appeal before the Hon ble High Court. 27. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the aforesaid contention of Mr. Jain. As the filing of an appeal before the Hon ble High Court on the one hand, and seeking rectification of a mistake u/s. 254(2) of the Act, both operate in their respective independent fields and are in no way overlapping, therefore, we are unable to concur with the Ld. AR that as the department has not assailed the order of the Tribunal by filing an appeal u/s. 260A of the Act before the Hon ble High Court, therefore, the application fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the department on the ground that, viz. (i) that as the entitlement of the assessee for deduction of the delayed deposit of employees share of contribution towards ESI EPF was a debatable issue, hence, the same could not have been disallowed u/s.143(1) of the Act; (ii) that as the Tribunal while disposing off the appeal of the assessee had relied upon its earlier order in the case of Ind Synergy Ltd., ITA No.312/RPR/2016 dated 10.03.2022, wherein it was held that the amendment to Section 43B and Section 36(1)(va) that was made available on the statute vide the Finance Act, 2021 was applicable with prospective effect from 01.04.2021, therefore, the rectification proceedings could not have been resorted on the basis of a subsequent change of opinion ; (iii) that though the non-consideration of a judgment of a superior court as was available at the time of passing of the order would render the order of the Tribunal as suffering from a mistake apparent from record but the same would not apply in case of a judgment rendered subsequently; and (iv) that as held by the Hon ble Supreme Court in the case of Reliance Telecom Ltd. (supra) even in a case where the Tribunal had decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs. Commissioner of Income Tax-I (supra). The genesis of the present controversy is as to whether or not the aforesaid subsequent judgment of the Hon ble Apex Court would render our orders passed while disposing off the present appeals, wherein a view to the contrary had been taken, as suffering from a mistake which being apparent, patent, obvious and glaring from record would render the same amenable for rectification u/s. 254(2) of the Act? 33. In our considered view, the aforesaid issue can safely be resolved by referring to the judgment of the Hon ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon ble Apex Court by referring to the order of the Hon ble High Court of Gujarat in the case of Suhrid Geigy Ltd. Vs. CIT (1999) 237 ITR 834 (Guj), had observed, that if a point is covered by the decision of the Hon ble Jurisdictional High Court rendered prior to or even subsequent to the order proposed to be rectified, then it could be said to be a mistake apparent from record u/s. 254(2) of the Act and could be corrected by the Tribunal. The Hon ble Apex Court drawing support from Blackstonian theory, had observed that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well-known work states; The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime . (emphasis supplied) 44. It is no doubt true that after a historic decision in Golak Nath v. Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling'. It is based on the philosophy: The past cannot always be erased by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borate arguments or detailed investigation/enquiry. The Hon ble High Court of Andhra Pradesh in the case of B.V.K. Seshavataram Vs. CIT [1994] 210 ITR 633 (AP) followed the ratio of the decision of the Supreme Court in the case of S.A.L. Narayana Row [1967] 64 ITR 67(SC), and came to the conclusion that a subsequent decision can form a valid basis for rectifying an order of assessment under section 154 of the Income-tax Act, 1961. The Hon ble High Court of Madras in the case of M. K. Kuppuraj Vs. ITO [1995] 211 ITR 853 (Mad.), was of the view that an assessment made contrary to a judgment subsequently rendered by jurisdictional High Court constitutes an error on the face of the record amenable to rectification proceedings under section 154 of the Income tax Act, 1961. The Hon ble High Court of Delhi in the case of Lakshmi Sugar Mills Co Ltd. Vs. CIT (2012) 22 taxmann.com 300 (Delhi) referring to the judgment of the Hon ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd. (supra), had observed that as judges do not make law and only discover or find the law, therefore, a judicial decision acts retrospectively. It was observed by the High Court that where a decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statute. Thus, there is a mistake. Should it still be perpetuated? If the contention raised on behalf of the assessee were accepted, the result would be that even though the order of the authority is contrary to the law declared by the highest court in the State or the country, still the mistake couldn't be rectified for the reason that the decision is subsequent to the date of the order. 15. Only the dead make no mistake. Exemption from error is not the privilege of mortals. It would be a folly not to correct it. Section 154 appears to have been enacted to enable the Authority to rectify the mistake. The legislative intent is not to allow it to continue. This purpose has to be promoted. The legislature's will has to be carried out. By placing a narrow construction, the object of the legislation shall be defeated. Such a consequence should not be countenanced. 16. Still further, it deserves mention that the Parliament has prescribed a period of four years for correction of the mistake. While assessment under Section 143 or 144 has to be normally made within a period of one or two years, the mistake can be rectified at any time during the period of four years. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be regarded as simply not law . (Emphasis supplied.) 21. The above observations clearly support the principle that the court merely declares law. An earlier decision as declared by the court is simply no law . 22. Notwithstanding the above observations, the issue of judge-made law being prospective or retroactive is not free from difficulty. However, the system as followed in Indian courts ensures a suitable legal order . It promotes dignity and good repute of judicial institutions . It is only equitable and fair that similar cases lead to identical results. 23. Mr. Sanjay Bansal contended that the judicial principle of retroactive operative of judge-made law has now been negated by the Parliament by introducing the Explanation in Order 47 Rule 1. A subsequent decision is no longer a good ground for review. Thus, the counsel contended that the same principle should be followed while construing the provisions of the Income Tax Act. 24. This contention cannot be accepted. Firstly, because a similar provision has not been made in S. 154. The plain language is materially different. Still further, we have the authoritative pronouncement of their Lordships of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for the Department to carry out rectification on the solitary ground that in a later decision, the Supreme Court has impliedly overruled the decision . In Hero Cycles Ltd. v. The State of Punjab, () (1995) 99 STC 611 and Ram Dass Rice and General Mills v. The State of Punjab, () (1996) 100 STC 211 the opinion was in favour of the Revenue. 28. On an examination of the judgments cited by the counsel for the Assessee, it appears that the rectification was not sought on the basis of a binding decision of the jurisdictional High Court or the Supreme Court. There was no such judgment when the application under S. 154 had been filed. The pronouncement had come at a later stage when the prescribed period of four years had already expired. Thus, the decisions have been given in a different context. Thus, these are distinguishable from the facts of the case in hand. 29. The basic principle is the certainty of law. Even though considerations of justice, equity and fair-play sometimes compel courts to deviate from a view expressed in an earlier case, yet the common law principle of stare decisis has been followed with the avowed object of ensuring that the litigant must be able to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, there is no vested right which can be said to have been taken away. 34. On the basis of our aforesaid deliberations read along with the settled position of law as had been laid down by the Hon ble Courts, we are of the considered view that as a subsequent decision of the Hon ble Supreme Court do not enact the law but declare the law as it always was, therefore, an order can be rectified on the basis of a subsequent judgment of the Hon ble Supreme Court or that of the Hon ble Jurisdictional High Court. Our aforesaid view is further fortified by Article 141 of the Constitution of India, which reads as under: A law declared by the Hon ble Supreme Court is binding on the Courts within the territory of India . 35. Apart from that, we find that a Third Member of the ITAT, Mumbai, Bench E in the case of Kailashnath Malhotra Vs. JCIT, Special Range 56, Mumbai (2010) 129 TTJ 393 (Mum.), had after drawing support from the judgment of the Hon ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC), observed that if the order passed by the Tribunal is not found to be in conformity with the judgment of the Hon ble Supreme Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the assessees appeals fail. It is however clarified that their claim for approval or registration would have to be considered in the light of subsequent events, if any, disclosed in fresh applications made in that regard. This court is further of the opinion that since the present judgment has departed from the previous rulings regarding the meaning of the term solely , in order to avoid disruption, and to give time to institutions likely to be affected to make appropriate changes and adjustments, it would be in the larger interests of society that the present judgment operates hereafter. As a result, it is hereby directed that the law declared in the present judgment shall operate prospectively. The appeals are hereby dismissed, without order on costs. On the basis of our aforesaid deliberations, it can safely be concluded that as and where the Hon ble Apex Court had intended that its judgment be given a prospective applicability, a specific rider to the said effect as in the case of M/s New Noble Educational Society Vs. The Chief Commissioner of Income Tax (supra) had been provided. However, we are afraid that no such rider is found in the judgment of the Hon ble Apex C ..... 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