Income Tax Appellate Tribunal - Ahmedabad
Gujarat State Electricity Corp. Ltd.,, ... vs The Commissioner Of Income Tax - 1,, ... on 27 November, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"D" BENCH, AHMEDABAD
BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER And
SHRI WASEEM AHMED, ACCOUNTANT MEMBER
Misc. Application No.05/Ahd/2017
(In ITA No.950/Ahd/2015)
( नधा रण वष / Assessment Year : 2010-11)
Gujarat State Electricity बनाम/ CIT-1
Corporation Ltd., Baroda.
Vs.
Vidyut Bhavan,
Race Course Circle,
Baroda - 390 007.
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACG 6864 F
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से/ Appellant by : Shri J. P. Shah, A.R.
यथ क ओर से/Respondent by: Shri Lalit P. Jain, Sr. D.R.
सन
ु वाई क तार ख/ Date of 05/10/2018
Hearing
घोषणा क तार ख /Date of 27/11/2018
Pronouncement
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
By this Miscellaneous Application, the assessee prays to rectify the mistakes apparent from the record in the order passed by the ITAT in ITA No. 950/Ahd/2015 for Assessment Year 2010-11 vide order dated 13.12.2016.
MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -2-
2. The assessee in its Miscellaneous Application has pointed out two mistakes in the order of Hon'ble ITAT as mentioned below:
i) Disallowance of additional depreciation
ii) Disallowance of loss on the collapse of a cooling tower
3. The assessee regarding the first mistake has submitted as under:
"2. In the above appeal, Ground No.2 was regarding additional depreciation as per section 32(1)(iia) of Rs.2,03,43,49,000/- on the machinery producing electricity. The Tribunal is kind enough to record in Para 6 that for the applicant, reliance was put on various decisions of the Tribunal; two being Assistant Commissioner of Income Tax vs. M. Satishkumar - (2013) 33 taxmann.com 396 (Chennai) and Deputy Commissioner of Income Tax vs. Hutti Gold Mines Co.
Limited - (2013) 39 taxmann.com 18 (Bangalore) and they were not considered to be relevant because the assessment year concerned was 2010-11 in this matter; whereas those decisions were pertaining to the assessment years prior to the amendment.
2.1 Now, in the humble submission of the Applicant herein, an apparent error has been committed by the Tribunal in considering the above decisions not to be relevant when in fact, both the decisions though pertaining to earlier Asst. Year 2008-09 did consider the amendment and held that the addition of the words 'or in the business of generation or generation and distribution of power' w.e.f. 01.04.2013 inserted by the Finance Act, 2012 are clarificatory, and therefore, will apply to Asst. Year 2008-09. Now, if the amendment including generation of electricity applies to Asst. Year 2008-09, by virtue of these decisions, these decisions become totally relevant so far as the Asst. Year 2010-11 of the Applicant is concerned. The copies of above MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -3- two Tribunal decisions are annexed herewith for facility of ready reference.
2.3 In the humble submission of the Applicant, this is an apparent error committed by the Hon'ble Tribunal and may kindly be amended in the interest of justice, for which act of kindness, the Applicant shall for ever pray and remain grateful."
4. The Ld. AR further submitted that nonconsideration of the order of the other Hon'ble Tribunals is a mistake apparent from the record which requires to rectified u/s 254(2) of the Act. The Ld. AR in support of his claim relied on the judgment of Hon'ble Supreme Court of India in the case of Honda Siel Powers Products Ltd. vs. CIT reported in 295 ITR 0466.
5. On the other hand, Ld. DR vehemently supported the order of Hon'ble ITAT.
6. We have heard the rival contentions and perused the materials available on record. At this juncture, we are inclined to reproduce the relevant extract of the ITAT order which reads as under:
6. The first issue relates to the claim of additional depreciation by the assessee on the ground that the assessee company is industrial undertaking engaged in the business of generation of power and activity of power generation and satisfies the condition of manufacture or production of any article or thing as required by the Act. Reliance was placed on the decisions of the Hon'ble Supreme Court in the case of MPEB 1970 SC 732 and State of AP vs. NTPC 127 STC 280W. Reliance was also placed on the decisions of the Co-ordinate Bench in the case of M. Satishkumar MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -4- in ITA No. 718/MDS/ 2012, Hutti Gold Mines Co. Ltd. in ITA No. 832/BANG/2012 and NTPC Ltd. in ITA No. 1438/DEL/2009.
7. A careful perusal of all the decisions relied upon by the ld. Counsel before us pertained to assessment years prior to the amendment brought in the Act in Section 2(29BA) by which the definition of manufacture now reads as under:-
S. 2 [(29BA) "manufacture", with its grammatical variations, means a change in a non-living physical object or article or thing,-
(a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or
(b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;] .
8. This amendment has been inserted by the Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2009. We are in assessment year 2010-11.
9. Since the Assessing Officer has not considered the amendment brought to the definition of manufacture and have allowed the claim of additional depreciation on the basis of earlier decisions mentioned hereinabove, in our considered opinion, there is an error in law in the assessment order and, therefore, we do not find any reason to interfere with the findings of the ld. Principal CIT to this extent."
6.1 On the perusal of the above order, we note that the ITAT while deciding the issue has duly considered the orders of the Tribunal as discussed above and after that, the order was passed by the ITAT.
MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -5- Therefore, the arguments of the Ld. Counsel for the assessee that the Hon'ble ITAT had not considered these orders are not correct.
6.2 There can be an error of judgment in the order of ITAT, but the Tribunal can not rectify the same. Otherwise, it will amount to review its own order. In holding so, we find support & guidance from the judgment of Hon'ble Gujarat High Court in the case of CIT(Exemption) Vs. Gujarat Institute of Housing Estate Developers reported in 84 taxmann.com 148 wherein it was held as under:
"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 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.
MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -6- 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."
6.3. In this regard we also place our reliance on the judgment of Bombay High Court in the case of Ramesh Electric & trading company reported in 77 taxman 43 wherein it was held as under:
"The Appellate Tribunal does not have any power to review its own orders under the provisions of the Income-tax Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. In the instant case, in the first order of the Tribunal dated 9-6-1975, there was no mistake which was apparent from the record at all. The Tribunal was required to decide whether the commission payment of Rs. 54,000 was deductible under section 37 after examining the circumstances, the Tribunal came to the conclusion that it was not so deductible. The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself. No such mistake was apparent from the record. In fact, this was doubtful, if this sort of an exercise could have been done by the Tribunal even if it had the power of review. The Tribunal had, patently, far exceeded its jurisdiction under section 254(2) in redeciding the entire dispute which was before it in this fashion, and the Tribunal had committed a gross and inexplicable error for reasons which could not be understood. The power of rectification under section 254(2) can be exercised only where the mistake is apparent from the record, and not a mistake which is required to be established by arguments and a long-drawn process of reasoning on points on which there might conceivably be two opinions. Failure by the Tribunal to consider MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -7- an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may have been an error of judgment. In the instant case, the alleged failure, at least on one count, was attributed by the assessee to the ITO and not the Tribunal Therefore, the Tribunal had no jurisdiction under section 254(2) to pass the second order."
6.4. The provisions of section 254(2) of the Act can be invoked for the mistakes which are glaring in nature and can be pointed from the face of the order. The mistakes which require the application of mind and long drawn process to conclude cannot amount to apparent mistake. If these types of mistakes are considered as apparent from the record, then it would lead to a review of the order. In this regard, we find support & guidance from the judgment of Hon'ble Delhi High Court in the case Smt. Baljeet Jolly Vs. CIT reported in 113 taxman 38 wherein it was held as under:
"A bare look at section 254(2) makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 254(2), the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. 'Mistake' means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault, a misunderstanding, a misconception. 'Apparent' means visible; capable of being seen; easily seen; obvious; plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in section 254(2) makes it clear that only amendment to the order passed under section 254(1) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record.
MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -8- Amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. What the assessee intended, to do in the instant case was precisely the substitution of the order, which was not permissible under the provisions of section 254(2) and, therefore, the Tribunal was justified in holding that there was no mistake apparent on the face of the record. Where an error is far from self-evident, it ceases to be an apparent error. It is no doubt true that a mistake capable of being rectified under section 254(2) is not confined to clerical or arithmetical mistake. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Apex Court in Master Construction Co. (P.) Ltd. v. State of Orissa [1966] 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law."
6.5 The case law relied by the Ld. Counsel for the assessee, i.e., Honda Siel Power Products Ltd is not applicable to the case on hand. It is because in that case the order quoted by the Counsel of the assessee was not considered by the ITAT while delivering the judgment. The ITAT duly admitted this fact. Therefore, there was a mistake apparent from the record. However, in the case before us the orders cited by the Ld. Counsel for the assessee were duly considered by the ITAT in its order. Therefore there is no mistake in the order of Ld. ITAT on the ground that the orders cited by the Ld. Counsel for the assessee had not been considered. Therefore we do not find any merit in the argument of Ld. Counsel for the assessee. Hence the first ground raised by the assessee in its MA is dismissed.
MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11 -9-
7. The assessee for its second mistake in the order of Hon'ble ITAT has submitted as under:
"3. The another ground in respect of which an apparent error has been committed, in the humble submission of the Applicant is Ground No.5, in upholding the disallowance of loss of Rs.5,25,87,000/- on collapse of a Cooling Tower at Kutch Lignite Power Station made by the Commissioner of Income Tax both under normal provisions as well as under
section 115JB.
The Commissioner of Income Tax held in para 7.1.2: "The words used "Adhoc Provision" clearly indicates that the Provision was unascertained liability. Further, the statement was that the loss determined was exactly 50% of the W.D.V. instead of "Net Realisable Value of the asset"
also goes against the contention ofassessee. "The Tribunal upheld this finding of the Commissioner of Income Tax. In the humble submission of the Applicant herein, the fact is:
the entire tower collapsed and what the reply of the Applicant to notice u/s.263 stated: "For the purpose of finalizing the accounts of the company, the usefulness of the remaining structures were determined and after detailed verifications, it was decided that 50% of the cost of the Cooling Tower can be utilized in the construction of new Cooling Tower. " was not doubted or questioned by the Commissioner of Income tax. He went purely by AS-10. Now, the question in any matter u/s.263 is not whether this is merely an error but also whether there is prejudice. Now, the Commissioner of Income Tax has revised the decision of the Assessing Officer only because according to him, it is not in accordance with AS-10 but he has not come to the conclusion that the Net Realisable Value would be more than 50% of the W.D.V., and therefore, A.O.'s order is also prejudiced. Therefore, in the humble submission of the Applicant, the Tribunal committed an apparent error in MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11
- 10 -
upholding the order of the Commissioner of Income tax on this point also. It is worth noting that till the Commissioner of Income Tax passed the order, the Applicant had not been in a position to use any part of the debris of the cooling tower, and therefore, the Applicant's appeal ought to have been allowed instead of being dismissed.
In the premises aforesaid, the Applicant prays that the above two apparent errors be kindly rectified in the interest of justice, for which act of kindness the applicant shall for ever pray and remain grateful."
8. The Ld. AR before us submitted that the loss claimed on account of the collapse of the tower was actually written off in the books of accounts. Therefore the same cannot be treated as an ad-hoc provision. Accordingly, there cannot be any addition to the total income of the assessee under normal and MAT computation of income.
9 On the other hand, Ld. DR vehemently supported the order of Hon'ble ITAT.
10. We have heard the rival contentions and perused the materials available on record. At this juncture, we are inclined to reproduce the relevant disclosure made by the assessee in its financial statement as detailed under:
SCHEDULE-`16' ADMINISTRATION & OTHER EXPENSES:
Year ended Previous
MA No.05/Ahd/2017 (in
ITA No950/Ahd/2015)
Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11
- 11 -
March 31, 2010 year
Rent, Rates and Taxes 294.36 209.43
Insurance 415.49 328.80
Communication 109.42 146.95
Fees and Legal 946.20 409.93
Auditor's Remuneration 17.65 17.65
Travelling and Conveyance 126.65 161.50
Other Expenses 286.76 2584.00
Misc.Loss write off 925.74 0.00
Discount for prompt payment of bills 0.00 17455.10
Provision for obsolence of Material 1554.26 0.00
Provision for bad advances/loss on 0.00 742.95
dispute
7166.53 22056.31
Less : Allocated to Capital Works 775.66 474.16
Total 6390.87 21582.15
SCHEDULE-`12' CURRENT LIABILITIES & PROVISION As at March As at March 31,2010 31, 2009 Current Liabilities Liabilities for/related to 44 046.00 29 886.46 Fuel MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11
- 12 -
Capital Supplies / Works 6 806.88 440.41
O and M Supplies / Works 5181.06 6030.50
Staff (inclusive of welfare schemes) 3 014.23 2 821.86
Expenses 2 136.82 17 275.85
Deposit and Retention from 23 876.38 36 906.46
Supplier/Contractor
Interest accrued but not due 8 797.60 8 433.44
Inter Company Payable 194466.11 123171.12
Provision for Expenses 23043.83 28247.11
Other Liabilities 512.23 168.62
311881.60 253381.83
Provisions for
Leave Encashment Liability 10 761.05 9 367.59
Obsolence of asset 525.87 0.00
Taxation
Income Tax 4 330.00 2 789.91
Fringe Benefit Tax 134.23 134.23
Wealth Tax 0.00 0.21
Total 327632.75 265673.77
SCHEDULE - "20" NOTES TO THE FINANCIAL
STATEMENTS FORMING PART OF ACCOUNTS
4. Fixed Assets and Depreciation
MA No.05/Ahd/2017 (in
ITA No950/Ahd/2015)
Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11
- 13 -
(a) Adhering to significant accounting policy, the depreciation on assets is provided at rates prescribed by Central Electricity Regulatory Commission (CERC), which are equal to the rates as referred to in Schedule-XIV to the Companies Act, 1956 after its revision with effect from 1-04-2009.
(b) During the year, the cooling tower at Kutchh Lignite Thermal Power Station collapsed for which, an adhoc provision of loss of Rs.525.87 lakhs is made in the books of the company i.e at 50% of Written down Value instead of Net Realisable value of the asset as per accounting policy.
10.1 On perusal of the financial statement of the assessee as discussed above, we note that the assessee in itself has shown the loss on the collapse of the tower as an ad-hoc provision. Thus it is clear that there was a clear violation of the provisions of AS 10 as observed by the ITAT in its order. Once the assessee itself has disclosed in the financial statement as ad-hoc provision as discussed above, there remains no doubt that it was not representing the net realizable value as mandated under AS 10 issued by the ICAI.
10.2. We also note that there was no adjustment in the fixed asset schedule on account writing off the tower as discussed above.
10.3 Similarly we also find that there was a provision disclosed in the current liability on account of writing off the tower which evidences that the same has not been written against the relevant fixed assets.
MA No.05/Ahd/2017 (in ITA No950/Ahd/2015) Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11
- 14 -
10.4 We also note that there is no specific apparent mistake pointed out by the Ld. AR in the order of ITAT. The scope for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. In view of the above, we are inclined to reject the ground raised by the assessee in its Misc. Application.
11. In the result, MA filed by the assessee is dismissed.
This Order pronounced in Open Court on 27/11/2018
Sd/- Sd/-
(MAHAVIR PRASAD) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 27/11/2018
Priti Yadav, Sr.PS
MA No.05/Ahd/2017 (in
ITA No950/Ahd/2015)
Gujarat State Electricity Corp.. Ltd.
A.Y. 2010-11
- 15 -
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं'धत आयकर आयु)त / Concerned CIT
4. आयकर आयु)त(अपील) / The CIT(A).
5. ,वभागीय /त/न'ध, आयकर अपील य अ'धकरण, अहमदाबाद / DR, ITAT, Ahmedabad.
6. गाड4 फाईल / Guard file.
आदे शानुसार/BY ORDER, स या,पत /त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation ...16/10/2018(dictation page 5)
2. Date on which the typed draft is placed before the Dictating Member : .. 12/11/2018 & 26/11/2018
3. Other Member...........
4. Date on which the approved draft comes to the Sr.P.S./P.S.....................
5. Date on which the fair order is placed before the Dictating Member for pronouncement..............
6. Date on which the fair order comes back to the Sr.P.S./P.S......
7. Date on which the file goes to the Bench Clerk.........
8. Date on which the file goes to the Head Clerk...
9. The date on which the file goes to the Assistant Registrar for signature on the order............
10. Date of Despatch of the Order..................