2012 (5) TMI 390 - AT - Income Tax

Tribunal upholds original order, rejects rectification based on subsequent Supreme Court decision

The Tribunal dismissed the application for rectification under section 254(2) of the Act, as it held that the subsequent Supreme Court decision in Liberty ... Application u/s 254(2) - It has been mentioned that the revisionary order was passed to withdraw deduction u/s 80-IB granted by the AO on export incentives received by the assessee - It is true that a subsequent decision of the jurisdictional High Court or the apex Court forms a valid basis for rectification of an order under s. 254(2) - The decision of the Supreme Court in the case of Liberty India (2009 -TMI - 34471 - SUPREME COURT) was rendered on 31st Aug., 2009, i.e., three years and five months after passing the revisionary order - Appeal is dismissed Issues:1. Rectification of order under section 254(2) of the Act based on subsequent decisions of the Supreme Court.2. Interpretation of law for exercising revisionary power under section 263 of the Act.3. Validity of revisionary order in light of contentious legal position at the time of passing the order.Analysis:1. The Tribunal initially set aside the order of the CIT and restored the order of the AO granting deduction under section 80-IB. The Revenue later filed an application under section 254(2) of the Act, citing a mistake apparent from the record due to subsequent Supreme Court decision in the case of Liberty India. The Departmental Representative argued that the Tribunal's order could be rectified based on this new decision. However, the counsel for the assessee referred to the Supreme Court decision in CIT vs. Max India Ltd., emphasizing that the law applicable at the time of passing the revisionary order should be considered. The Tribunal noted the timing of the Supreme Court decision in Liberty India and held that it cannot be the basis for revising the Tribunal's order, citing previous judgments. The application for rectification was dismissed accordingly.2. The Tribunal delved into the interpretation of law for exercising revisionary power under section 263 of the Act. It referenced the case of CIT vs. G.M. Mittal Stainless Steel (P) Ltd., highlighting the importance of considering the legal position at the time of passing the revisionary order. The Tribunal emphasized that if different High Courts had conflicting interpretations on a legal issue, and there was no decision from the jurisdictional High Court, then the revisionary order could not be passed to deny benefits to the assessee. This analysis underscored the significance of legal clarity and the relevance of existing legal interpretations at the time of making revisionary decisions.3. The Tribunal scrutinized the validity of the revisionary order in light of the legal position prevailing at the time of its passing. It noted the contentious nature of the legal landscape, with conflicting decisions from various High Courts. The absence of a decision from the jurisdictional High Court made the legal position uncertain. The Tribunal highlighted that the Supreme Court decision in the case of Liberty India, rendered after the revisionary order, could not be used as a basis for revising the Tribunal's order. Citing precedents, the Tribunal emphasized the importance of considering the legal scenario at the time of passing revisionary orders. Consequently, the Tribunal dismissed the application, affirming the validity of the original order in the context of the legal ambiguity existing at the time.