Income Tax Appellate Tribunal - Mumbai
Grasin Industries Ltd , vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "J",
MUMBAI
BEFORE SHRI R.S.SYAL (A.M) & SHRI N.V.VASUDEVAN(J.M)
M.A.NO.247/MUM/2010
(Arising out of ITA No.6253/Mum/99)
Jt. Commissioner of Income Tax, Grasim Industries Ltd.
Special Bench 53, Room No.639, 3rd Floor, Century Bhavan,
Aaykar Bhavan, MK Road, Vs. Dr.A.B.Road, Worli,
Mumbai - 20. Mumbai - 400 051
PAN: AAACG 4464B
(Applicant) (Respondent)
Applicant by : Shri Naresh Kumar Balodia
Respondent by : Shri Jehangir D. Mistry
ORDER
PER N.V.VASUDEVAN, J.M,
This is a miscellaneous application filed by the Revenue u/s.254(2) of the Income Tax Act, 1961, (the Act) praying for rectification of certain apparent errors in the order of the Tribunal.
2. The Assessee is a company. It is engaged in manufacturing and trading activities. The Assessee had filed appeal before the Tribunal against the order dated 16-09-1999 of the CIT(A)-XII, Mumbai for A.Y.1995-96 being ITA No.6253/Mum/99. The Assessee sought to raise an additional ground before the Tribunal apart from the grounds urged in the memorandum of grounds of appeal in form No.36. The additional ground was raised claiming that sales tax exemption that the Assessee obtained under various schemes of State Government was capital receipt not chargeable to tax. The Tribunal dealt with the admissibility of the additional ground and the merits of the grievance projected by the Assessee in the additional ground as follows:
2 M.A.NO.247/MUM/2010"35. The assessee has filed an application seeking to raise an additional ground of appeal. The additional ground of appeal sought to be raised by the assessee relates to the claim made by the assessee on account of sales tax exemption, which the assessee received was capital receipt and not chargeable to tax. Admittedly, this issue was neither raised by the assessee before the AO or the CIT(A). This question raised by the assessee for the first time before the Tribunal. In view of the decision of the Hon'ble Supreme Court in the case of NTPC, 229 ITR 383 (SC), the assessee is entitled to urge question of law on the basis of facts already available on record. The scheme under which the sales tax exemption was received by the assessee has to be analysed and to find if the subsidy in question is capital receipt or revenue receipt. It was also submitted that on identical scheme, various decisions of Hon'ble High Courts exist and the issue can be adjudicated on the basis of the ratios laid down in the aforesaid decisions, the case laws of which are as under:-
i) Reliance Industries Ld., 88 ITD 272 (Mum)(SB)
ii) Pony sugar, 308 ITR 392 (SC)
iii) Pony Sugar, 260 ITR 605(Mad)
iv) PJ Chemical, 210 ITR 830
v) Sadichha Chitra, 189 ITR 774(Bom)
vi) CIT V. Ruby Rubber Works, 178 ITR 181 (Kerala)(SB)
vii) CIT Vs. Plastichem, 174 ITR 546 (MP)
viii) CIT Vs. Dusad Inds., 162 ITR 784(MP)
ix) Asbestos Cement, 203 ITR 358 35.1 The learned DR opposed the prayer for admission of the additional ground on the ground that the assessee has not revised its return of income making the aforesaid claim and in view of the decision of the Hon'ble Supreme Court in the case of Goetz India Ltd., Vs. CIT, 284 ITR 323 (SC), such plea cannot be entertained at the instance of the assessee.
35.2 On this objection, the learned counsel for the assessee brought to our notice the decision of the Hon'ble Delhi High court in the case of Jai Parobolic Springs Ltd. Vs. CIT 306 ITR 42(Del.) wherein the Delhi High court has held that the power of the Tribunal to entertain the additional ground is not in any way restricted in view of the decision of the Hon'ble Supreme Court in the case of Goetz India Ltd. In view of the above, we admit additional ground for adjudication. We are, however, of the view that for adjudication of the additional ground, the AO has to examine the scheme under which the subsidy was received and thereafter give conclusion regarding claim made by the assessee. We are, therefore, of the opinion that the matter should be remanded 3 M.A.NO.247/MUM/2010 to the AO with a direction to the AO to examine the claim of the assessee after affording opportunity of being heard to the assessee and decide the issue. We order accordingly. For statistical purpose the additional ground of assessee is allowed."
3. The Revenue originally filed an application u/s.254(2) of the Income Tax Act, 1961, (the Act) on 12-4-2010 which was numbered as MA 247/Mum/10. A letter dated 3.2.2011 was filed by Mr. Alok Singh, Asst. Commisioner of Income-Tax, Circle 6(3), Mumbai along with an application u/s.254(2) of the Act, in which it has been stated that the earlier application which was numbered as MA 247/Mum/10 did not contain full facts and the application enclosed with the letter dated 3.2.2011 is intended in place of the earlier application and that a decision may be rendered on the application enclosed with the letter dated 3.2.2011 in place of the earlier application filed on 12.4.2010. We will therefore consider the application filed along with the letter dated 3.2.2011.
4. The stand taken by the Revenue in the application is as follows:
1. The claim of the Assessee that it received a sum of Rs.10,90,23,209/-
by way of "sales tax exemption" and the fact that the same is shown as revenue receipt forming part of sales credited in the accounts, by the Assessee and offered to tax in the return of income filed for AY 95-96 is not discernible from the assessment records and therefore the quantification of the same needs fresh investigation into facts.
2. The Assessee never raised the issue with regard to non-taxability of "sales tax exemption" before the AO or CIT(A) and no details were submitted by the Assessee about the same. The details of the sales made and sales tax collected are not available on record to determine the amount of sales tax exemption, if any, as claimed by the Assessee.
3. The Hon'ble ITAT has admitted the additional ground of the assesse on the above issue and set aside the issue to the file of AO to examine the issue afresh after affording opportunity of being heard to the Assessee and decide the issue. The ITAT while giving the above direction has not recorded any finding that all the facts and details or sufficient evidence, necessary to decide the claim of the Assessee, raised in the 4 M.A.NO.247/MUM/2010 additional ground, are available on records of the AO or that the facts necessary to decide the question of law have been found by the revenue authorities during the course of assessment or thereafter in appellate proceedings before CIT(A) and are duly recorded. This is a condition precedent before additional ground is admitted. According to the revenue the condition precedent to admit an additional ground of appeal raised for the first time before Tribunal is that all facts and details necessary to decide the claim are found on the records of the revenue authorities.
4. The Assessee had filed additional evidence before the Tribunal in support of the claim made in the additional ground of appeal. According to the Revenue, the Assessee cannot be permitted to file additional evidence or further evidence or fresh details in support of additional ground raised before ITAT. It is further averred that fresh investigation into facts to decide admissibility of an additional claim raised for the first time before ITAT cannot be permitted.
5. The Assessee had filed a paper book at the time of hearing of the original appeal in which the following documents had been filed:
S.No. Parituclars Page Unit.
No.
1. Details of sales Tax Exemption 1 Vikram
claimed as Capital receipt in FY 95 Ispat/PAC/CSA/Membrane
2. Package Scheme of Incentive, 1988 02-16 Vikram Ispat
dated 1/10/1988 by State of
Maharashtra
3. Copy of Certificate of Entitlement 17-29 Vikram Ispat
No.N29M/ 136/LM/660 issued by
Dy. Commissioner of Sales Tax
(Incentive & Enforcement), Sales Tax
Department, Maharashtra.
4. Eligibility Certificate for Sales Tax 30-53 Vikram Ispat
Incentive issued by SICOM
5. Certificate of Registration u/s. 22 54-56 Vikram Ispat
and 22A of the Bombay Sales Tax Act
6. Sales Tax Assessment Order F.Y. 57-63 Vikram Ispat
1995
7. New Industries Notification No.A-3- 64-69 PAC
11-86(74)-ST-V dated 16/10/1986
under Madhya Pradesh General Sales
Tax Act, 1958
8. Sales Tax Assessment order for F.Y 70-74 PAC
1995- State Sales Tax
5 M.A.NO.247/MUM/2010
9. Sales Tax Assessment Order for F.Y. 75-78 PAC
1995- Central Sales Tax
10. Entry Tax Notitiaction No.422-6596 78-82 PAC & CSA
dated 09/02/1977 under Madhya
Pradesh Sthaniya Kshetra Me Mal Ke
Pravesh Par Kar Adhiniyam, 1976
11. Entry Tax Assessment Order for F.Y 83-87 PAC
1995
12. Entry Tax Assessment order for FY 88-92 CSA
1995
13. New Industry Notification No.A-3-24- 93-96 Membrane
94-ST-V(112) dated 6/10/1994
under Madhya Pradesh Sthaniya
Khhetra Me Mal Ke Pravesh Par Kar
Adhiniyam , 1976
14. Entry Tax Assessment Order for FY 97-102 Membrane
1995
The above documents were not submitted before the lower authorities.
It has been clarified by the Assessee that these were not filed before the lower authorities. Out of the above, page-1 contains the following details:
Name of Unit Sales Tax Amount Vikram Ispat - alibaug 107,21,823 Chemical Division - Nagda Poly Aluminium Chloride CST 1,162,868 Poly aluminium Chloride-State 375,026 Poly Aluminim Chloride -Entry 135,604 Chloro Sulphonic Acid Division- 30,023 Entry Tax Caustic Soda Membrance Sale 101,865 Entry Tax Total 109,023,209
This document according to the revenue is not certified. The other documents are incentive schems of the State of Maharastra, M.P., but nevertheless additional evidence.
6. It has further been contended that the Assessee has not filed any application to admit the documents filed in the paper book in support of the additional ground of appeal as additional evidence. Even the Tribunal in its order has not directed that these documents are admitted as additional evidence on its own motion as contemplated 6 M.A.NO.247/MUM/2010 rule 29 of the ITAT nor has it has held that these documents are not to be admitted as additional evidence. Having made the above allegation, the revenue nevertheless, contents in the application, that the tribunal committed a mistake in admitting the additional evidence. To this extent there is a contradiction in the stand taken by the revenue. Be that as it may.
7. The final conclusion of the revenue in the application is that the Hon'ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) held that additional ground raised for the first time before Tribunal can be admitted provided the facts necessary for adjudication of the additional ground are available on record. It is the plea of the revenue that in the present case, the facts necessary for adjudication of the additional ground of appeal are not available on record and therefore the Tribunal ought to have refused to admit the additional ground of appeal. The revenue has prayed that the above mistake in the order of the tribunal should be suitably rectified.
5. We have heard the submissions of the learned D.R. The learned D.R. reiterated the stand of the revenue as reflected in the application u/s.254(2). It was further submitted that admittedly the documents in support of the additional ground of appeal were not available on record. Therefore the facts necessary for adjudication of the additional ground of appeal was not available on record. The tribunal therefore ought to have refused to admit the additional ground of appeal raised for the first time by the Assessee before the tribunal, because as per the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) additional ground raised for the first time before Tribunal can be admitted provided the facts necessary for adjudication of the additional ground are available on record.
6. The further contention of the learned D.R. was that the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. (supra) was rendered in the context of the law as it stood at the relevant point of time. In this regard, he first pointed out that the decision in the case of NTPC(supra) was rendered 7 M.A.NO.247/MUM/2010 by the Hon'ble Supreme Court with reference to a dispute relating to AY 78-
79. According to him the scheme of law with regard to assessment of income, as it prevailed prior to its substitution by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-1989 was that u/s.143(2) of the Act, the Assessing Officer, if he was not satisfied without requiring the presence of the assesse or the production of evidence that the return is correct and complete he could require presence of Assessee and production of evidence in support of claim made in a return of income. According to him w.e.f. 1-4- 89, u/s.143(2) of the Act, the AO can call for the presence of the Assessee or production of evidence in support of the claim made in the return of income only if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner. According to him the powers of the AO prior to 1-4-89 to call upon the Assessee to produce evidence in support of the claim in the return of income was much wider viz., "to ensure that the return is correct and complete" whereas after 1-4-89, such powers are restricted only in cases of "understatement of income, computation of excessive loss or underpayment of tax". Therefore according to the learned D.R. after 1-4-89, the powers of the AO while making an assessment while completing the original assessment being very limited, cannot be enlarged by the tribunal by admitting additional ground, which the AO could not have considered while completing the original assessment. According to the learned D.R. because of the change in the policy of the Government in the matter of making assessments, the decision of the Hon'ble Supreme Court in the case of NTPC(supra) should be applied keeping in view the above change. It was further submitted by him that the Hon'ble Supreme Court in the case of Goetz (India)Ltd. Vs. CIT 284 ITR 323(SC) has held that a claim for deduction cannot be entertained by an Assessing Officer otherwise than by way of filing a revised return of income. This decision according to the learned D.R. was rendered in relation to a tax dispute pertaining to AY 95-96 8 M.A.NO.247/MUM/2010 and is in tune with the change in the policy of the Government in the matter of making assessments referred in the earlier paragraph of this order. According to him the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Jai Parabolic Springs Ltd. 306 ITR 42 (Del) has no doubt, explained the decision of the Hon'ble Supreme Court in the case of Goetz (india) Ltd. (supra) in the light of the decision of the Hon'ble Supreme Court in the case of NTPC (supra) and has held that as laid down by the Hon'ble Supreme Court in the case of NTPC(Supra) the power of the Tribunal in dealing with appeals is expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law and that the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd.(supra) is limited to the power of the assessing authority to entertain claim for deduction otherwise than by a revised return, and did not impinge on the power of the Tribunal. According to him the facts in the case of Goetz (India) Ltd., were that 1/5th of expenditure which was admitted revenue in nature was claimed as deduction in the return of income but in the assessment the entire expenditure was claimed as deduction. Thus according to the learned D.R. facts necessary for adjudication were available on record and therefore the Hon'ble Delhi High Court made the aforesaid observations. According to him, the decision of the Hon'ble Delhi High Court has to be considered as having been rendered on the facts of that case and cannot be applied to the facts of the case decided by the Tribunal which is subject matter of the present application.
7. The learned D.R. relied on the following decisions where the Tribunal has refused to admit an additional ground for adjudication on the ground that facts necessary for adjudication of additional ground were not available on record.
1. Jay Bharat Co-op Hsg.Society Ltd. Vs. ITO 125 TTJ (Mumbai) 552 9 M.A.NO.247/MUM/2010
2. DDIT(international Taxation Vs. Scientific Atlanta Inc. 130 TTJ (Mumbai) 142
3. ACIT Vs. DHL Operations BV 108 TTJ (Mumbai) (SB) 152
8. His next submission was that unlike CIT(A), the Tribunal does not have powers of enhancement. The powers of tribunal are restricted to questions considered in an assessment. He relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Stepwell Industries Ltd. 228 ITR 171 (SC) wherein the Hon'ble Supreme Court held that a claim for Export Market Allowance u/s.35B of the Act could not have been allowed by the Tribunal u/s.35B on weighted basis on assumption of facts when no claim was made before the AO or the first appellant authority and no particulars of expenditure were furnished to them. Reference was also made to the decision of the Hon'ble Supreme Court in the case of ACIT Vs. Gurjargravures Pvt. Ltd. 111 ITR 1 (SC) wherein it was held that claim for relief u/s.84 of the Act which was not made before AO and where there were no material on record supporting such a claim, the CIT(A) could not entertain the claim or direct the AO to allow relief.
9. He next drew our attention to Rule 29 of the ITAT Rules, 1963, which reads as follows:
"29. Production of additional evidence before the Tribunal.--The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced."10 M.A.NO.247/MUM/2010
10. It was submitted by him that production of additional evidence before the ITAT is not a right of the parties before the ITAT. It is only when ITAT requires admission of additional evidence to enable it to pass orders or for substantial cause, additional evidence can be admitted. In this regard the learned D.R. relied on the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Smt.Kamal C.Mahboobbani 214 ITR 15 (Bom) wherein the above proposition of law was laid down in the context of Rule 29 of the ITAT Rules, 1963. Further reference was also made to the decision of the Hon'ble Bombay High Court in the case of Velji Deoraj & Co. Vs. CIT 68 ITR 708 (Bom) and Hon'ble M.P.High Court in the case of CIT Vs. Babulal Nim 47 ITR 864 (M.P.) laying down identical proposition of law. In this regard he submitted that in the present case, the Tribunal did not call for any additional evidence nor did it admit additional evidence or reject additional evidence filed by the Assessee before the Tribunal.
11. The learned counsel for the Assessee submitted that from the fact that the learned D.R. had to make such lengthy submissions by itself would go to show that the issue sought to be canvassed by the learned D.R. is highly debatable issue, involving dealing with long drawn process of reasoning and issues on which possibly there could be two views. In such cases, application u/s.254(2) is not appropriate remedy. This submission was made without prejudice to the submission that even otherwise there is no merit in the application filed by the revenue.
12. On the submission of the learned D.R. that the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. (Supra) would not hold good after the change in the law w.e.f. 1-4-89, the learned counsel for the Assessee submitted that the law always was and has been that tax liability can be imposed only in accordance with law. If according to law a particular receipt is not income and therefore not chargeable to tax, the same cannot be 11 M.A.NO.247/MUM/2010 brought to tax. Technicalities would not and cannot stand in the way of determination of tax liability in accordance with law and this is the ratio of the Hon'ble Supreme Court in the case of NTPC (supra). In this regard he made a reference to Article 265 of the Constitution of India, which lays down that there shall be no tax levied and collected save in accordance with law. The learned counsel for the Assessee further relied on the decision of the Hon'ble Bombay High Court in the case of Nirmala L. Mehta v. A. Balasubramaniam, Commissioner of Income-tax 269 ITR 1 (Bom) wherein it was held as follows:
"There cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. So long as the Income-tax Act, 1961, did not become applicable to the State of Sikkim, the Income-tax Act, 1961, could not be applied to the income earned in Sikkim. The President of India in exercise of his powers conferred by clause (n) of article 371F of the Constitution, extended to the State of Sikkim, the Income-tax Act, 1961, by Notification No. S. O. 1028(E), dated November 7, 1988, with effect from April 1, 1989. However, the commencement of the Income-tax Act, 1961, was deferred for one year making it effective from April 1, 1990, applicable from the assessment year 1990-91 and onwards. The legal position that emerges, thus, is that the Income-tax Act, 1961, was made applicable and came into force in the State of Sikkim from the assessment year 1990-91 (previous year 1989-90) and on the coming into force of the Income-tax Act, 1961, the Sikkim Income-tax Manual, 1948, stood repealed."
13. Further reference was also made to the decision of the Hon'ble Bombay High Court in the case of Balmukund Acharya Vs. DCIT 310 ITR 310 (Bom) wherein in para-31 of its judgment, the Hon'ble Court has held that authorities under the Income Tax Act, 1961 are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If any assesse, under a mistake, misconception or not being properly instructed is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. Further 12 M.A.NO.247/MUM/2010 reference was also made to the decision of the Hon'ble Delhi High Court in the case of DCM Benetton 173 Taxman 283 (Delhi) laying down identical proposition.
14. It was also submitted by him that the Hon'ble Supreme Court in the case of NTPC (supra) has emphasised the need for facts on record being available on record only because of the question that it framed for consideration in that case. In the decision of the Hon'ble Supreme Court in the case of NTPC (Supra), the Tribunal had framed as many as five questions while making a reference to Hon'ble Supreme Court. Since the Tribunal had not examined the additional grounds raised by the assessee on the merits, the Hon'ble Suprme Court did not propose to answer the questions relating to the merits of those contentions. The Hon'ble Supreme Court therefore reframed the question which it had to consider as follows :
"Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same ?"
It was pointed out by him that the operative portion of the judgment of the Hon'ble Supreme Court was as follows:
Under section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/crossobjections before 13 M.A.NO.247/MUM/2010 the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier."
Thereafter the Hon'ble Supreme Court relied on the ruling of Hon'ble Supreme Court in the case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, wherein it was held that in the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. The Hon'ble Court thereafter held that the Tribunal will have the discretion to allow or not allow a new ground to be raised and further observed that where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings then such a question should be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Thereafter the Hon'ble Court observed as follows:
"The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits."
15. According to the learned counsel for the Assessee the observation of the Hon'ble Supreme Court about the need for facts being on record to adjudicate the additional ground, is only because of the reframed question in that case but the principle reason given by the Hon'ble Supreme Court is the need to determine tax liability in accordance with law. According to him it would be proper to interpret the decision of Hon'ble Supreme Court as not restricting the power of tribunal to admit additional ground only where facts necessary for adjudication of the additional ground is already available on record.
14 M.A.NO.247/MUM/201016. It was submitted by him that the additional evidence sought to be filed by the Assessee before the ITAT were the quantum of Sales tax subsidy received which is already recorded in the books of accounts of the Assessee for the relevant previous year. It was submitted by him that the quantum of deduction was irrelevant before the ITAT and the question was whether it is capital receipt not chargeable to tax or a revenue receipt chargeable to tax. The other documents are all Incentive Schemes of the Government and orders passed by the authorities under the relevant sales tax law. All these are public documents. Authenticity, admissibility and relevancy of these documents cannot be disputed by the revenue. In this regard he drew our attention to the decision of the Hon'ble ITAT in the case of Everest Industries Ltd. Vs. ACIT ITA No.1968/Mum/2005 dated 27-10-2008, wherein dealing with a similar argument on the side of the revenue, the Hon'ble ITAT held in para-17 of its order that where additional evidence consist of public documents, it cannot be said that there is need to investigate further facts. The Tribunal admitted additional evidence and remanded the issue to the AO for fresh consideration. In this regard, the learned counsel for the Assessee also made a statement across the bar that the AO in the set aside proceedings has already allowed the deduction thereby allaying all fears expressed by the learned D.R. about facts not being available on record of the AO to decide the additional ground raised by the Assessee.
17. The learned counsel for the Assessee submitted that pending disposal of appeal of the Assessee before the ITAT, the various decisions of the Tribunal holding similar receipt of sales tax subsidy as capital receipt not chargeable to tax, were rendered. The Hon'ble Bombay High Court in the case of CIT Vs. M/S.Reliance Industries Ltd., by its judgment dated 15.4.2009 held that identical sales tax subsidy was capital receipt not chargeable to tax. It was in those circumstances that the Assessee made the claim by way of additional ground before the Tribunal.
15 M.A.NO.247/MUM/201018. The learned counsel for the Assessee submitted that for deciding whether receipt of a subsidy is capital receipt or revenue receipt, one has to look at the scheme and find out the purpose for which the subsidy was given. According to him, therefore, investigation of facts is not involved in deciding the issue as alleged by the learned D.R.
19. In this regard, the learned counsel for the Assessee filed before us a copy of the order of the ITAT Mumbai in the case of M/S.Aditya Birla Nuvo Ltd. Vs. ACIT ITA No.3207/Mum/02 wherein identical argument based on the same case laws were advanced by the Revenue but rejected by the Tribunal.
20. The learned D.R. in his rejoinder submitted that at the stage of admission of additional ground the merits of the claim made by the Assessee should not influence the mind of the Court. He also submitted that in the event of an apparent error in the order of the Tribunal, such orders can be recalled or the order of the tribunal modified and in this regard relied on the decision of the Full Bench of the Delhi High Court in the case of M/S.Lachman Dass Bhatia Hingwala Pvt. Ltd. Vs. ACIT WP ( C) 6460 to 6465 of 2010 judgment dated 24.12.2010. It was also submitted that any apparent error has to be rectified as laid down by the Hon'ble Supreme Court in the case of ACIT Vs. Saurastra Kutch Stock Exchange Ltd. 305 ITR 227 (SC).
21. We have considered the rival submissions. At the outset, we have to record the fact that the learned D.R. who argued the application did not argue the appeal. There is no averment in the application that the issue sought to be raised by the AO in the present application was argued when the appeal was heard and the tribunal has failed to consider such argument.
16 M.A.NO.247/MUM/2010We have already extracted the order of the Tribunal on the admissibility of the additional ground of appeal. A perusal of the same would show that the only argument raised by the learned D.R. when the appeal was heard was that a claim not made by way of a revised return of income cannot be entertained and he placed reliance on the decision of the Hon'ble Supreme Court in the case of Goetz (India) Ltd. (Supra). The learned counsel for the Assessee relied on the decision of the Hon'ble Delhi High Court in the case of Jai Parobolic Springs Ltd. (Supra) wherein the Hon'ble Delhi High Court after considering the decision of the Hon'ble Supreme Court in the case of NTPC (Supra) and Goetz (India) Ltd. (Supra) held that power of the tribunal to entertain additional ground is not in any way restricted by the ruling of the Hon'ble Supreme Court in the case of Goetz (India) Ltd. (Supra). In these circumstances, it is not open to the revenue to raise by way of an application u/s.254(2) of the Act, a new argument which was never advanced when the appeal was heard. It is not open to the revenue to urge an argument by way of application u/s.254(2) of the Act, which was never urged when the appeal was heard. On this short ground the application u/s.254(2) of the Act is liable to be dismissed.
22. Nevertheless, we will also examine the other arguments of the learned D.R. and the learned counsel for the Assessee.
23. The first argument advanced by the learned D.R. was that the facts necessary for adjudication of the additional ground of appeal was not available on record and therefore the tribunal ought to have refused to admit the additional ground of appeal raised for the first time by the Assessee before the tribunal, because as per the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) additional ground raised for the first time before Tribunal can be admitted provided the facts necessary 17 M.A.NO.247/MUM/2010 for adjudication of the additional ground are available on record. The ratio laid down in the decision of the Hon'ble Supreme Court in the case of NTPC (Supra) is that the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law and therefore the Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. The question whether a subsidy received by an Assessee is a capital receipt not chargeable to tax or a revenue receipt chargeable to tax has to be ascertained by looking into the Scheme under which the subsidy is received. The subsidy schemes are all framed by State Governments and one has to take judicial notice of the same. The receipt of subsidy is imbedded in the sales, which is already disclosed by the Assessee in its books of accounts. The orders of assessment and other orders allowing relief to the Assessee under the relevant Sales Tax Laws are all documents, the authenticity of which cannot be doubted. We fail to see what fresh facts need to be examined by the AO. We are surprised at the stand taken by the Revenue that they would refuse to examine the issue because of technicalities. The claim of the Assessee is that the scheme under which subsidy was received by the Assessee has already been considered by the Tribunal/High Courts in other cases and it has been held that the subsidy were capital in nature not chargeable to tax. The Revenue however wants to contend before the Tribunal that the merits of chargeability to tax of the receipt should not weigh in the mind of the tribunal while deciding the application u/s.254(2) of the Act. That apart, all that Hon'ble Supreme Court has observed in NTPC's case is that where all the necessary facts are on assessment records, there is good reason for not exercising the discretion of admitting additional ground of appeal on a question of law, but, in our humble understanding, this observation cannot be construed to mean that just because some additional factual verifications 18 M.A.NO.247/MUM/2010 are needed, Tribunal is denuded of powers to admit the additional ground of appeal on questions of law.
24. We are also of the view that in the present case the first point of time at which the Assessee could have raised this issue is only before the Tribunal. It is only during the pendency of the appeals of the Assessee before the Tribunal that the various decisions of the Tribunal holding similar receipt of sales tax subsidy as capital receipt not chargeable to tax, were rendered. The Hon'ble Bombay High Court in the case of CIT Vs. M/S.Reliance Industries Ltd., by its judgment dated 15.4.2009 held that identical sales tax subsidy was capital receipt not chargeable to tax. It was in those circumstances that the Assessee made the claim by way of additional ground before the Tribunal. The objection raised by the revenue is therefore without any merit.
25. We fail to see any prejudice that would be caused to the revenue, if the issue is examined afresh by the AO. The objection that the additional ground should not be admitted seems to suggest that tax liability can be fastened on a taxpayer even without deciding existence or otherwise of such liability in accordance with law. In this regard we are also of the view that approach in such matters would be different when the revenue seeks to fasten liability on an Assessee at the stage of proceedings before the Tribunal on a basis different from the one that was adopted by the revenue authorities. The reasons are that an assessee has no further avenue to project his grievance except before the Tribunal. If on the facts and in law, ultimately it is found that the assessee is not liable to tax, the Revenue can not have grievance. Art.265 of the Constitution of India provides that no tax shall be levied and collected except by authority of law. If ultimately the assessee is found to be liable to tax, he compensates the Revenue in the form of interest. Therefore the Tribunal can even think of a remand of the 19 M.A.NO.247/MUM/2010 case for a finding on facts or can adjudicate on facts itself. On the other hand the Revenue has other options open to it under the Act. If the order of an Assessing Officer is erroneous and prejudicial to the interests of the Revenue the same can be revised by the CIT u/s 263 of the Act. If income chargeable to tax escapes assessment, proceedings u/s 147 can be initiated to bring to tax such escaped income. In an appeal by an assessee against the order of the Assessing Officer, the CIT(A) has power of enhancement u/s 251(1) of the Act.
26. The next argument put forth by the learned D.R. before us that the powers of the AO prior to 1-4-89 to call upon the Assessee to produce evidence in support of the claim in the return of income was much wider viz., "to ensure that the return is correct and complete" whereas after 1-4- 89, such powers are restricted only in cases of "understatement of income, computation of excessive loss or underpayment of tax". Therefore according to the learned D.R. after 1-4-89, the powers of the AO while making an assessment while completing the original assessment being very limited, cannot be enlarged by the tribunal by admitting additional ground, which the AO could not have considered while completing the original assessment. According to the learned D.R. because of the change in the policy of the Government in the matter of making assessments, the decision of the Hon'ble Supreme Court in the case of NTPC(supra) should be applied keeping in view the above change. We are of the view that the argument put forth by the learned D.R. cannot be accepted because the argument overlooks the principle that tax liability has to be determined in accordance with law. Even otherwise the limitation of the powers should apply only to the AO and the Assessee should not lose his right to demand assessment of correct income to tax in accordance with law. In other words the Revenue should not be permitted to put its own inability as a defence to deny a legitimate claim made by an Assessee. We are of the view that the fundamental principle laid down by the Hon'ble Supreme Court in the case 20 M.A.NO.247/MUM/2010 of NTPC (Supra) is that there can be no tax liability without the authority of law and this principle will hold good at all point of time. We therefore reject this argument of the revenue. The argument that the powers of the tribunal to entertain additional ground of appeal should also be considered to be restricted because of the change in the law referred to above also deserves to be rejected for the reasons given above.
27. The other arguments of the learned D.R. placing reliance of decisions of ITAT wherein additional grounds were not admitted for want of evidence in support of the additional ground being available on record are not relevant in the present case, as we have already held that the grievance projected in the additional ground can be decided on the basis of authentic and reliable evidence and the sales already recorded by the Assessee in its books of accounts. These decisions therefore do not require any consideration. Similarly the decisions based on Rule 29 of the ITAT Rules, 1963 referred to by the learned D.R. in our view also do not require any consideration.
28. As rightly contended by the learned counsel for the Assessee, the power of the Tribunal under s. 254(2) of the Act is confined to rectifying any mistake apparent from the record. The Tribunal does not have inherent power of rectification or review or revision. Unless there is mistake apparent from the record in the sense of patent, obvious, clear error or mistake, the Tribunal cannot recall its previous order. If the error or mistake is one which could be established only by long-drawn arguments or by way of process of investigation and research, it is not a mistake apparent from the record. Unless there is manifest errors which are obvious, clear and self- evident, the Tribunal cannot recall its previous order in an attempt to rewrite the same. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The Tribunal cannot in 21 M.A.NO.247/MUM/2010 exercise of its power of rectification look into some other circumstances which would support or not support its conclusion. The Tribunal cannot redecide the matter and it has no power to review its order. The Tribunal has no power to rectify a decision on debatable point of law. A decision on debatable point of law is not a mistake apparent from the record.
29. Where the Tribunal has overlooked the relevant material on record, there would be an error apparent from record which can be rectified by setting aside the order for fresh consideration. Where a material fact brought to the notice of the Tribunal has been lost sight of, the Tribunal has the power to rectify the mistake so committed; provided the material fact has an important bearing on the ultimate decision. The mistake pointed out in the application u/s.254(2) of the Act by the revenue in the present case cannot be said to fall in either of the above categories.
30. For the reasons stated above, we are of the view that the present application u/s.254(2) of the Act is devoid of merits and deserves to be dismissed and is hereby dismissed.
31. In the result the application is dismissed.
Order pronounced in the open court on the 25th day of Mar.2011
Sd/- Sd/-
(R.S.SYAL) (N.V.VASUDEVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated. 25th March.2011
Copy to: 1. The Applicant 2. The Respondent 3. The CIT City -concerned
4. The CIT(A)- concerned 5. The D.R"E" Bench.
(True copy) By Order
Asst. Registrar, ITAT, Mumbai Benches
MUMBAI.
Vm.
22 M.A.NO.247/MUM/2010
Details Date Initials Designation
1 Draft dictated on 18/3/2011 Sr.PS/PS
2 Draft Placed before author 23/3/2011 Sr.PS/PS
3 Draft proposed & placed JM/AM
before the Second Member
4 Draft discussed/approved by JM/AM
Second Member
5. Approved Draft comes to the Sr.PS/PS
Sr.PS/PS
6. Kept for pronouncement on Sr.PS/PS
7. File sent to the Bench Clerk Sr.PS/PS
8 Date on which the file goes to
the Head clerk
9 Date of Dispatch of order