The Commissioner of Income TaxChennai v. T.M.Abdul Rahaman & Sons49, Wuthu Cotton St.Chennai-3

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 17.07.2012CORAM:THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMANandTHE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABUTax Case (Appeal) No.245 of 2006The Commissioner of Income TaxChennai...Appellant/AppellantversusT.M.Abdul Rahaman & Sons49, Wuthu Cotton St.Chennai-3...Respondent/Respondent-----PRAYER: Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal,Madras 'B' Bench, dated 11.07.2005 in MP.45/Mds/04 inITA.No.1797/Mds/96 (Assessment Year 1992-93). against the orderpassed by the Commissioner of Income Tax (Appeals) VI, Madras 34,and made in ITA.No.376/94-95/V11(1) date of order 17.6.1996 for theassessment year 1992-93 as against the order passed by theAssistant Commissioner of Income Tax, City Circle VII (1), Madrasin PAN/GIR.No.1314-A, dated 29.12.1994 for the assessment year1992-93.-----For appellant:Mr.T.R.Senthil KumarStanding Counsel for Income TaxFor respondent:Mr.R.Venkatarangan-----JUDGMENT(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.)The following is the substantial question of law raised by theRevenue in this Tax Case Appeal, relating to the assessment year1992-93: https://hcservices.ecourts.gov.in/hcservices/ "When on the admitted position, namely, theamended provision of law (amendment was on1.4.1992); and when the assessment is of theyear 1992-93, the amendment brought about inunder Section (baa) 80HHC(4A), should alone beapplied to the case on hand, when there is anomission in referring to that amended provisionof law in passing the assessment order, cansuch an omission treating it as anerror/mistake, be brought before the Tribunalfor correction under Section 254(2) of theIncome Tax Act? "2. The question relates to the includability of the FixedDeposit Receipts in the business profit for granting deductionunder Section 80HHC of the Income Tax Act. The assessment yearunder consideration herein is 1992-93. Based on the decisionreported in [2001] 258 ITR 749 (C.I.T. Vs. N.S.C. Shoes (Mad.),which related to the assessment year 1986-87, the Tribunaloriginally granted the relief to the assessee that there was nexusbetween carrying on of export business and earning of interest fromthe bank deposits. Thus the Tribunal originally allowed theassessee's claim, thereby dismissed the Revenue's appeal. TheRevenue filed a Miscellaneous Petition before the Tribunal that theTribunal did not consider the applicability of Explanation (baa) toSection 80HHC(4A). While deciding the appeal, the provision wasbrought in as effective from 1.4.1992, applicable to the assessmentyear under consideration. The Tribunal, however, rejected the saidMiscellaneous Petition, taking the view that since the decision inthe appeal is made based on the decision of this Court, the filingof a miscellaneous petition would amount to review of the order andthe question raised was not raised before the Tribunal. Thus theMiscellaneous Petition was rejected by the Tribunal. Aggrieved bythis, the present Tax Case Appeal has been filed by the Revenue.3. It is seen from the papers placed before this Court thatthe Assessing Officer originally applied Explanation (baa) ofSection 80HHC(4A) and 90% of the interest received included in theprofits and gains of the business, had to be included forcalculating deduction under Section 80HHC. 4. On appeal before the Commissioner of Income Tax (Appeals),the Commissioner of Income Tax (Appeals) held that the interestreceived formed part of the business income; hence, the assesseewould be entitled to treat it as deductible and includable in thebusiness income for the purpose of Explanation (baa) to Section80HHC(4A). The Commissioner held that the nexus between thebusiness activity of the assessee and the receipt of interest was https://hcservices.ecourts.gov.in/hcservices/ established and that they formed part of the profits of thebusiness. 5. As far as the Tribunal's order is concerned, it merelyapplied the decision reported in [2001] 258 ITR 749 (C.I.T. Vs.N.S.C. Shoes (Mad.) and when an issue was raised before theTribunal at the instance of the Revenue that the interest income tothe extent of Rs.11,61,171/- could not be treated as profitsderived from export business for the purpose of computing thededuction, we feel, that the Tribunal should have considered therelevancy of the provisions contained under Explanation (baa) toSection 80HHC(4A), that the said mistake was pointed out. Thus,when it was with reference to the period prior to the amendment,the Tribunal should have adverted to this aspect, considering themerits of the Miscellaneous Petition. Thus we allow the Tax Case.6. The Tribunal's view that allowing the MiscellaneousPetition would amount to a review, cannot be sustained, consideringthe fact that the claim of the assessee for deduction could onlyrest on the provision of law relevant to the assessment year underconsideration. In this connection, the decision reported in [2008]305 ITR 227 (Assistant Commissioner of Income Tax Vs. SaurashtraKutch Stock Exchange Ltd.), relied on by the Revenue, merits to benoted herein. The Apex Court pointed out that the assessee filed aMiscellaneous Petition before the Tribunal under Section 254(2) forcorrecting the errors committed by the Tribunal in the decisionrendered, in the name of exemption made by the assessee, acharitable institution. The Tribunal allowed the application,holding that there was a mistake apparent from the records. Thus,the High Court recalled its earlier order. On a challenge made tothe order, by the Revenue, which was dismissed on further appeal,the Apex Court considered the scope of rectification under Section254(2) and pointed out that "a patent, manifest and self-evidenterror which does not require elaborate discussion of evidence orarguments to establish it, can be said to be an error apparent onthe face of the record and can be corrected while exercisingcertiorari jurisdiction." Pointing out as to what could be anerror apparent on the face of the record, the Apex Court pointedout:" An error cannot be said to be apparent on theface of the record if one has to travel beyondthe record to see whether the judgment iscorrect or not. An error apparent on the faceof the record means an error which strikes onmere looking and does not need a long drawn outprocess of reasoning on points where there mayconceivably be two opinions. Such error shouldnot require any extraneous matter to show itsincorrectness. To put it differently, it https://hcservices.ecourts.gov.in/hcservices/ should be so manifest and clear that no courtwould permit it to remain on record. If theview accepted by the court in the originaljudgment is one of possible views, the casecannot be said to be covered by an errorapparent on the face of the record. "7. Thus on the facts therein, considering the issue as towhether, in considering the decision of the jurisdictional Court,there could be said to be mistake apparent from the record,answering in the affirmative, the Apex Court held that the Tribunalwas justified in correcting its mistake in exercise of itsjurisdiction under Section 254(2). Applying the said decision tothe case on hand, we hold that the failure to follow the correctprovision of law, which is apparent, warrant an exercise ofjurisdiction under Section 254(2). Thus, setting aside the orderof the Tribunal in the Miscellaneous Petition in M.P.No.45(Mds)/2004 vide order dated 11.07.2005, we remit the matter to theTribunal to pass orders in accordance with law, taking intoconsideration the correct provision of law relevant to theassessment year under consideration. 8. With the above observation, the Tax Case Appeal standsallowed and the Tribunal's order is set aside. The appeal isrestored to the files of the Tribunal for considering the issue denovo, in the light of the provision contained in Explanation (baa)to Section 80HHC(4A). No costs.ksvSd/-Deputy Registrar(J)//True Copy//Sub Asst. RegistrarTo1. The Assistant Registrar, Income Tax Appellate Tribunal, Chennai Bench 'B'. Chennai.2. The Commissioner of Income Tax (Appeals) VI, Madras.3. The Assistant Commissioner of Income Tax, City Circle VII(1) Madras. https://hcservices.ecourts.gov.in/hcservices/

4. The Commissioner of Income Tax, Chennai.+ 1 cc to Mr. R. Venkatanarayanan, Advocate SR No.41579+ 1 cc to Mr. T. Ravikumar, Advocate SR No.41454PUR(CO)SR/7.8.2012.Tax Case (Appeal) No.245 of 2006