Madras High Court
Commissioner Of Income Tax vs M/S.Sea Rose Marines Pvt. Ltd on 8 June, 2015
Bench: R.Sudhakar, K.B.K.Vasuki
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 08.06.2015 CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKAR AND THE HONOURABLE MS. JUSTICE K.B.K.VASUKI T.C.A. NOS. 172 & 173 OF 2008 Commissioner of Income Tax Chennai. .. Appellant - Vs - M/s.Sea Rose Marines Pvt. Ltd. 68, First Avenue Indira Nagar, Adyar Chennai 600 020. .. Respondent Appeals filed against the order dated 4.4.07 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, made in ITA No.25/Mds/2005. For Appellant : Mr. J.Narayanaswamy For Respondents : No Appearance JUDGMENT
(DELIVERED BY R.SUDHAKAR, J.) Aggrieved by the order of the Tribunal in partly allowing the appeals filed by the assessee/respondent, the appellant/Revenue is before this Court by filing the present appeals. This Court, vide order dated 24.3.08, while admitting the appeals, framed the following substantial questions of law for consideration :-
"1) Whether in the facts and in the circumstances of the case, the Tribunal was right in reviewing its own order on merits?
2) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the losses of the carton division do not have to be set off to arrive at business profits for the calculation of benefit u/s 80 HHC on the ground that the assessee maintained separate accounts?"
2. The facts, in a nutshell, are as hereunder :-
The assessee is engaged in the export of marine products and manufacture of cartons. For the assessment year 2000-2001 and 2001-2002, the assessee claimed exemption u/s 80HHC of the Income Tax Act. However, the assessing officer reworked the same and levied tax appropriately. Aggrieved over the said assessment, the assessee preferred appeals before the CIT (Appeals). However, the CIT (Appeals) on the basis of the decision of the Supreme Court in DCIT - Vs - IPCA Laboratories (266 ITR 521), reworked the amount of tax and since a negative figure was arrived at, issued a show cause notice to the assessee and after granting sufficient opportunity of hearing, passed an order of enhancement of the assessment holding that the assessee was not entitled to any benefit u/s 80HHC of the Income Tax for the relevant years.
3. Aggrieved over the order passed by the CIT (Appeals), the assessee pursued the matter before the Tribunal. Initially the Tribunal also, following the decision in IPCA Laboratories case (supra) dismissed the appeals. However, miscellaneous petitions were filed by the assessee stating that the hearing notice was not properly served and as such the order ought to be recalled. The Tribunal, accordingly, recalled the order and after hearing passed a fresh order without referring to its earlier and decided the issue in favour of the assessee following the judgment of this Court in CIT - Vs - Rathore Brothers (2002 (254) ITR 656 (Mad.)). Aggrieved by the abovesaid order, the appellant/Revenue is before this Court by filing the present appeals.
4. Mr.Narayanasamy, learned standing counsel appearing for the appellant/Department submitted that the Tribunal erred in reviewing its own order, without adverting to the fact that it had taken a different view on the previous occasion, though the power of the Tribunal is only for rectification and not to review its order. It is further submitted that the Tribunal failed to advert to the well settled law in the case of IPCA Laboratories (supra) while reviewing the order and, therefore, the order passed by the Tribunal deserves to be set aside. It is further submitted that the computation of income has to be in accordance with the Act and not only the profits, but also the losses have to be taken into consideration as could be seen from Section 80AB of the Act, which has been given an overriding effect over all other sections in Chapter VIA. It is the further submission of the learned standing counsel that the decision of this Court in Rathore Brothers (supra) relied on by the Tribunal is on a different set of facts and is not applicable to the present case. The learned standing counsel for the Revenue, on the aforesaid plea, prayed for setting aside the order of the Tribunal.
5. Heard the learned standing counsel appearing for the appellant and perused the materials available on record. Though the appeal has been admitted and notice has been served on the respondent, there is no representation on behalf of the respondent and, therefore, this Court is proceeding to hear the appeals on merit.
6. As could be seen from the order of the Tribunal, the Tribunal, on the first occasion, passed an order on 16.11.05, and that order came to be passed in the absence of the respondent/assessee. Thereafter, the assessee/respondent filed two applications, viz., A. Nos.45 and 46/2006 and the Tribunal, in exercise of powers conferred on it by the Appellate Tribunal Rules, 1963, more particularly the proviso to Rule 24 therein, recalled the order on the plea of failure to issue proper notice to the appellant. Thereafter, final order was passed on 4.4.07 considering the issue on merits. For better clarity, the relevant portion of the order of the Tribunal is extracted hereinbelow :-
"11. In this regard, it is seen that neither the Assessing Officer nor the CIT (A) has discussed about the nature of export incentives. Hence, no finding can be given on this aspect and even the learned AR of the assessee as well as the learned DR could not adduce anything before us. As the relevant facts are not available, we feel that this issue be set aside to the file of the Assessing Officer to find out the nature of export incentives and accordingly consider the claim of the assessee in view of the amended provisions as amended by the Taxation (Amendment) Act, 2005 and the provisos have been added to Section 80HHC (3) (a) (ii) with retrospective effect from 1st April, 1998. In view of this, this issue is remitted back to the file of the Assessing Officer as mentioned above."
7. From a reading of the order, it is clear that on the two issues raised, with regard to one of the issue, the issue was answered in favour of the assessee and with regard to the other issue, the issue was remanded back to the Tribunal for fresh consideration, which has been extracted above. The grievance of the appellant/Revenue that the Tribunal has no right to review its own order, cannot be sustained in view of proviso to Rule 24 of the Appellate Tribunal Rules, which gives power to the Tribunal to recall its order. It is evident from the records that the reason for the Tribunal in recalling its own order was due to the fact that the assessee was not noticed, which was brought to the notice of the Tribunal by way of miscellaneous applications and, thereafter, the Tribunal considered the matter on merits and held in favour of the assessee.
8. In the above backdrop, if the order has been passed in exercise of powers conferred under proviso to Rule 24 of the Appellate Tribunal Rules, we find no justification to find fault with the order of the Tribunal, that too on the above stated facts. Accordingly, on the first question of law, this Court is of the considered opinion that in view of the power vested with the Tribunal under proviso to Rule 24 of the Appellate Tribunal Rules, there is no embargo on the Tribunal in reviewing its own order for the reasons supra. Therefore, this Court finds no reason to interfere with the finding of the Tribunal. Accordingly, the first substantial question of law is answered in favour of the assessee/respondent and against the Revenue/appellant.
9. On the 2nd substantial question of law raised, the Tribunal has considered the same on merits in the light of the decision of this Court in Rathore Brothers case (supra) and remanded the issue to the Assessing Officer for fresh consideration. In such view of the matter, this Court is of the considered view that the issue raised in the 2nd question can very well be gone into by the appropriate authority in the remand proceedings and it is not necessary for this Court to deal with the said issue for the present. The 2nd substantial question of law is answered accordingly.
10. In the result, this appeals filed by the Revenue/appellant are dismissed confirming the order passed by the Tribunal. However, in the circumstances of the case, there shall be no order as to costs.
(R.S.J.) (K.B.K.V.J.)
08.06.2015
Index : Yes/No
Internet : Yes/No
GLN
To
1. Commissioner of Income Tax
Chennai.
2. Income Tax Appellate Tribunal
'C' Bench, Chennai.
R.SUDHAKAR, J.
AND
K.B.K.VASUKI, J.
GLN
T.C.A. NO. 172 & 173 OF 2008
10.06.2015