Income Tax Appellate Tribunal - Delhi
Assistant Commissioner Of Income-Tax vs Somany Pilkington Ltd. on 31 March, 1993
Equivalent citations: [1994]49ITD207(DELHI)
ORDER
A. Kalyanasundharam, Accountant Member
1. This application has been moved by the revenue, stating therein that, certain glaring mistake has crept into the order of the Tribunal passed on 30-12-1988. It has been stated that, the mistake relates to the upholding of the order of CIT (Appeals), who had allowed deduction under Section 80J, on the Glost Kiln No. 4. The Glost Kiln No. 4, had been found by the Assessing Officer (A.O. for short) only in the previous year commencing from 1-7-1979 and ending on 30-6-1980. Section 80J(4) of the Act, prohibits allowing of deduction for any unit, which manufactures articles prescribed in the Eleventh Schedule, if the manufacturing commences after 1-4-1979. Therefore, the assessee, could not have been allowed deduction under Section 80J for this Kiln No. 4, and is clearly a glaring mistake, apparent from the record.
2. Shri C.S. Agarwal, the learned counsel for the respondent-company, raised a preliminary objection. He pleaded that, the petition could not be proceeded with, but, has to be dismissed as barred by limitation. He pleaded that, according to Section 254(2) of the Act, the Tribunal has the power to rectify an order for any mistake contained therein, within a period of four years from the date of its order, which, in the instant case had expired on 30-12-1992. He contended that, the application, that was filed on 16-11-1992, is no doubt within time. But, the department had sought adjournments on previous two occasions, i.e., on 8-1-1993 and 15-2-1993, for obtaining certain clarifications on the application, indicating that, it had yet to make up its mind as to the exact nature of the mistake in the order. Therefore, it has to be held that, the application as moved by the department is incomplete and it has to be treated as if the department has not filed its application at all. He contended that, the action of the department in having sought the adjournment is to be proceeded with, as if it is seeking extension of time for filing of the rectification application, and the Tribunal is powerless to entertain such belated applications. He strongly contended that, the delay in disposing of the application could not be attributed to the Tribunal, but squarely lay upon the department and therefore, the Tribunal, has no alternative, but to dismiss the application in limine, as barred by limitation.
3. Mr. Rai Khan, on the other hand contended that, the Tribunal had fixed the application for hearing for the first time, after the expiry of four years' limits, i.e., on 8-1-1993 and is therefore, bound to dispose of the application on merits. He contended that, the seeking of time by the department for obtaining instructions in the matter, is not the same thing as seeking time for filing of the applications.
4. We have given our very careful considerations to the rival submissions on this preliminary objection. The application for rectification was filed with the Registry on 16-11 -1992, stated to be arising from the order of the Tribunal, dated 30-12-1988. According to Section 254(2) of the Act, the rectification application, should have been disposed of by the Tribunal, by 30-12-1992. The Registry, had fixed it for the first time for hearing the parties, only on 8-1-1993. The revenue had sought adjournment on 8-1-1993 on the ground that, it needs to obtain some clarifications from its Commissioner and the hearing of the application was adjourned to 15-1-1993. The revenue sought adjournment, for the second time, on the same reasoning and the hearing was adjourned to 5-2-1993. When the application came up for hearing again, the assessee had raised the preliminary objection of the application getting bared by time. Mr. Rai Khan objected to the line of argument taken by the counsel for the respondent, that, it having not objected to the grant of the requests for adjournments, it could not raise that objection any longer. But, since in our view, this being a purely legal proposition, it could be raised at any time and hence, we have entertained its preliminary objection. The question that needs to be resolved is, whether, consequent upon the adjournment request having been made and granted by this Tribunal, is it proper for it to hold that, the application is barred by limitation. Since, the Tribunal, had not disposed of the application before 30-12-1992, it is obligatory on the part of the Tribunal, to dispose of the application, according to the provisions of law. This fundamental principle is based on the appreciation of the proposition that, the applicant is only required to move its application for rectification in time, and it is for the Court or the Tribunal to pass its order on such an application. Since, the application had remained to be disposed of at the instance of the Tribunal, it is no longer open to this court, to refuse to entertain the application on the ground of expiry of four year time limit, or to hold that, it can no longer pass any order under Section 254(2) of the Act, because the Act states that, that the order could be rectified within four years from the date of the order. Therefore, we have to hold that, the Tribunal could dispose of the application on 8-1 -1993, when the application had come up for hearing for the first time. Besides, the adjournments having been granted by this court, and allowing the application to remain pending, the duty that is cast upon this Court, of disposing of the application on merits, has to be necessarily performed. Hence, we have to hold that, the application, could still be disposed of by the Tribunal and rather it has no other alternative but, to consider the application, on its merits and dispose it of on that count. We accordingly reject the preliminary objection, as mooted by the respondent.
5. On merits, Mr. Khan had insisted that, the finding of the Assessing Officer, is staring on the face of it, that, Glost Kiln No. 4 was commenced in the year, which accounting year commenced from 1-7-1979, which is after 1 4-1979, and the appellant being a manufacturer of the article specified in Eleventh Schedule, hence is ineligible for deduction according to Section 80J(4) of the Act.
6. Shri Agarwal, on the other hand, pleaded that the revenue had never contested so, in its grounds before the Tribunal and the Tribunal, never had addressed itself on that issue at all and therefore, it could not said to be a mistake apparent from the record. In support of this argument, he referred to the grounds, as had been raised in appeal before the Tribunal. He vehemently pleaded that, the claim as made by the revenue, requires investion into the matter, and therefore, could not be stated as a glaring mistake.
7. We have given our very careful consideration to the rival submissions. The grounds of appeal, as had been raised by the revenue is its objection on allowing of deduction under Section 80J on two Glost Kilns and two Biscuit Kilns. For the sake of facility, we reproduce the ground, as had been raised :
The learned CIT (Appeals) has also erred in law and facts in allowing relief under Section 80J @ 7.5% of the capital employed in each of the two Glost Kilns and two Biscuit Kilns.
The reading of the ground indicate that, it had objected to the grant of deduction under Sections 80JoftheAct, which would cover all the aspects, which govern its allowance. This is apparent on the face of the Assessing Officer's order, and for the sake of facility, the relevant observation, has been reproduced below :
The assessee has made a claim for deduction under Sections 80J in its letter dated 29-10-1983. No such claim was made by the assessee during the course of assessment proceedings on 29-10-1983. The claim of relief of Rs. 1,79,703 was made by the assessee on the ground that three Glost Kilns No. 2 (started during the assessment year 1979-80), No. 3 (started during assessment year 1978-79) and No. 4 (started during this year) are separate industrial undertakings and satisfy all the conditions laid down under Sections 80J of the Income-tax Act.
The Assessing Officer, in his order had refused to allow deduction under Sections 80J on the ground that, the appellant did not have separate books of accounts and had observed that:
the addition of the new Glost Kiln does not constitute a separate industrial undertaking. It is merely an addition to the already existing unit of the assessee.
Apparently, Assessing Officer, had not considered the provisions of Sections 80J(4) of the Act, while refusing the claim advanced by the assessee. The assessee too had not highlighted on this Sections 80J(4) of the Act and did not claim the observation of the Assessing Officer, that Glost Kiln No. 4 having been started in the year 1-7-1979 to 30-6-1980, as incorrect or wrong.
The CIT (Appeals), never ventured into this aspect, while allowing relief to the assessee. Even at the time of hearing of the appeal before this Tribunal, the revenue, had not raised this issue or addressed us on the applicability of Sections 80J(4) of the Act to Glost Kiln No. 4. Since, it was not so raised by the revenue, the same could not be considered by the Tribunal and the consequence was that, there was no finding by the Tribunal, from that angle.
The observation as had been made by the Assessing Officer, is very apt and clear and the principle of stare decisis applies. The accounting year being 1-7-1979 to 30-6-1980, it is patent on the face of it, that, the unit had commenced its operation after 1-4-1979 and hence, Sub-section (4) of Sections 80J was clearly attracted. The omission to apply a particular provision of law, which is mandatory, is clearly an error and is capable of being rectified. It does not require any investigation into the matter, that, the article as is manufactured by the assessee, is one that is covered by the Eleventh Schedule and the units, if established up to 31 -3-1979 alone, are entitled to deduction under Sections 80J of the Act. Furthermore, the order was plainly and obviously inconsistent with the provisions of the law and has thus given raise to a mistake apparent from the record. Such mistakes are capable of being rectified and this has the sanction of the Supreme Court, as has been so held by it, in M.K. Venkatachalam, ITO v. Bombay Dyeing & Mfg. Co. Ltd. [1958] 34 ITR 143. We accordingly rectify our order dated 30-12-1988, by substituting the following as para 4, in place of what has been stated as para 4 in the order dated 30-12-1988 :
On the above issue, the finding of CIT (Appeals) that, the assessee had satisfied the requirements prescribed in Sections 80J of the Act, has no doubt, not been controverted by the revenue, but, it would hold good in respect of the units other than Glost Kiln No. 4, which has been found to have commenced production only from 1-7-1979. Since, the categorical observation of the A.O. that, Glost Kiln No. 4 had commenced production in the accounting year relevant to the assessment year under appeal, which accounting year is from 1-7-1979 to 30-6-1980, has not been challenged by the assessee, as an incorrect observation or as wrong on facts and to this extent, the CIT (Appeals), could not have allowed relief under Sections 80J of the Act, to the assessee-company. Moreover, it is not the case of the assessee that, it is not manufacturing the article specified in the Eleventh Schedule or that, it had commenced production prior to 1 -4-1979. Therefore, we have to reverse the order of CIT (Appeals) on the grant of deduction under Sections 80J of the Act on Glost Kiln No.4. The deduction allowed in respect of the other units, in our view, is proper and in accordance with the law and the same is upheld. The Assessing Officer, is accordingly directed to allow deduction under Sections 80J on the Glost Kiln No. 2 and No. 3 and withdraw the deduction permitted on the Glost Kiln No. 4.
8. In the result, we allow this miscellaneous petition of the revenue.