Gujarat High Court
Commissioner Of Income Tax Exemptions vs Gujarat Institute Of Housing & Estate ... on 18 July, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
C/SCA/11130/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 11130 of 2017
TO
SPECIAL CIVIL APPLICATION NO. 11135 of 2017
With
TAX APPEAL NO. 327 of 2017
TO
TAX APPEAL NO. 332 of 2017
==========================================================
COMMISSIONER OF INCOME TAX EXEMPTIONS....Petitioner(s)
Versus
GUJARAT INSTITUTE OF HOUSING & ESTATE DEVELOPERS &
1....Respondent(s)
==========================================================
Appearance:
MR MR BHATT, SENIOR ADVOCATE with MRS MAUNA M BHATT,
ADVOCATE for the Petitioner(s) No. 1
MR SN SOPARKAR, SENIOR ADVOCATE WITH MR B S SOPARKAR,
ADVOCATE for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1 - 2
==========================================================
CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 18/07/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The writ petitions are filed by the Income Tax department challenging a common order dated 29.07.2016 passed by the Income Tax Appellate Tribunal in Misc. Applications No. 82 to 87 of 2015 filed by the respondent no.
1. The tax appeals are also filed by the department Page 1 of 5 HC-NIC Page 1 of 5 Created On Fri Aug 18 08:40:44 IST 2017 C/SCA/11130/2017 ORDER challenging common order dated 25.11.2016 passed by the Income Tax Appellate Tribunal allowing the appeals filed by the assessee.
2. Brief facts are as under:
2.1 The respondent is an Institute of Housing and Estate Developers. The question of taxing the income earned by the respondent no. 1 from the contribution of its members reached the Income Tax Appellate Tribunal. Case of the assessee was that on the principle of mutuality, the same was not taxable at the hands of the assessee. For the assessment years 2006-07 to 2011-12, the Tribunal passed a common order on 29.09.2015 confirming the view of the Assessing Officer and CIT(A) holding that such income was taxable. In such an order, the Tribunal referred to a relatively recent decision of the Supreme court in case of Bangalore Club vs. Commissioner of Income Tax reported in [2013] 350 ITR 509 (SC) and noted that as per the decisions of the Supreme Court and other courts, three basic features would have to be tested i.e. complete identity between the class of contributors and the participators, the action of the participators and contributors should be in furtherance of the mandate of the association and lastly that there should not be any scope of profiteering by the contributors from a fund made by them which could only be extended or returned to themselves. The Tribunal thereafter by a detailed reasoned order proceeded to apply each of the tests to facts on hand and ultimately came to the conclusion that none of the tests are satisfied and therefore the principle of mutuality would not apply and accordingly dismissed the appeals of the assessee.Page 2 of 5
HC-NIC Page 2 of 5 Created On Fri Aug 18 08:40:44 IST 2017 C/SCA/11130/2017 ORDER 2.2 Against such order of the Tribunal, the assesee preferred Misc. Applications requesting the Tribunal to recall the order on an apparent error being committed. The Tribunal by impugned order dated 29.07.2016 allowed the Misc. Applications. This order runs into several pages. The reasoning portion of the Tribunal's order also runs into a detailed discussion.
2.3 The Tribunal having allowed such Misc. Applications and recalled its earlier order of rejection of assessee's appeals proceeded to hear the appeals afresh and by further order dated 25.11.2016 allowed the assessee's appeals. The Tribunal held that the principle of mutuality would apply and the income of the assessee would not be taxable. This common order of the Tribunal was challenged by the department in the present Tax Appeals No. 327 of 2017 to 332 of 2017. While these tax appeals were pending, the revenue filed the present writ petitions in which, as noted, the department has challenged the order of the Tribunal dated 29.07.2016 granting of the Misc. Applications for rectifications.
3. Having heard learned advocates for the parties and having perused the documents on record, we cannot countenance the approach of the Tribunal in recalling its earlier detailed order rejecting the assessee's appeals in exercise of rectification powers. The powers of the Tribunal to rectify its orders flow from Section 254(2) of the Act. Under sub-section (1) of Section 254, the Appellate Tribunal would after hearing both sides on appeal pass such orders as Page 3 of 5 HC-NIC Page 3 of 5 Created On Fri Aug 18 08:40:44 IST 2017 C/SCA/11130/2017 ORDER it thinks fit. Sub-section (2) of Section 254 in turn provides that the Appellate Tribunal at any time within six months (previously the period was four years) from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any oder passed by it under sub-section (1). It is well settled that this power of rectification of the Tribunal is for correction of a mistake apparent from the record and is vastly different and far more circumscribed than the review powers. In other words, while exercising powers under rectification, the Tribunal cannot review or reconsider its own decision and render an order entirely different on facts and law already presented. If the error sought to be corrected by the parties is such which would require elaborate consideration, discussion and reasoning, it cannot be stated to be a mistake apparent on the record.
4. In the present case, as noted the Tribunal had given detailed reasons for coming to the conclusion that the principle of mutuality would not apply. While accepting the assessee's rectification applications, the Tribunal undertook equally painstaking and elaborate consideration of the very same issues and very same facts to come to a contrary conclusion. It is not necessary nor possible for us to hold whether the Tribunal's first view was correct or the subsequent one. It is enough to hold that the Tribunal could not have undertaken such incisive and detailed examination of facts and law to come to the conclusion which are completely contrary to its own conclusion arrived at after detailed considerations. Such powers simply do not flow from the power of rectification under sub-section (2) of Section 254 of Page 4 of 5 HC-NIC Page 4 of 5 Created On Fri Aug 18 08:40:44 IST 2017 C/SCA/11130/2017 ORDER the Act.
5. Under the circumstances, in our opinion the Tribunal committed a serious error in allowing the assessee's rectification applications and recalling its earlier order of rejection of appeals. The impugned order dated 29.07.2016 is therefore set aside. Consequently, the order passed by the Tribunal of allowing all the tax appeals of the assessee by order dated 25.11.2016 would therefore automatically be rendered non-est. Resultantly, the Tribunal's original order dated 29.09.2015 would be restored. Needless to state that the assessee feeling aggrieved by the said order, it will always be open for the assessee to file tax appeals. The intervening facts and circumstances would certainly be relevant in the context of technical delay if any that may arise in the process of filing such tax appeals.
6. With these observations and directions, all the writ petitions as well as tax appeals are disposed of.
(AKIL KURESHI, J.) (BIREN VAISHNAV, J.) divya Page 5 of 5 HC-NIC Page 5 of 5 Created On Fri Aug 18 08:40:44 IST 2017