2014 (10) TMI 362 - HC - Income Tax

High Court Upholds Rectification of Tribunal Order under Income-tax Act, Considers Supreme Court Decisions

The High Court upheld the rectification of the Tribunal's order under Section 254 of the Income-tax Act, allowing consideration of subsequent Supreme ... Rectification of order - Computation of book profit u/s 115J / 115JA- MAT - assessee changed its method of claiming depreciation from Straight Line Method to Written Down Value method. - Held that:- Reliance placed upon Apollo Tyres Ltd. Versus Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court] – Held that:- The question is based on a misconception of fact, as the Tribunal has not only relied upon the decision of the Supreme Court in Apollo Tyres Ltd. case, but also relied on the decision in Surana Steels Pvt. Ltd. and others Versus Deputy Commissioner of Income-Tax And Others [1999 (4) TMI 5 - SUPREME Court] and the Board Circular No.68, dated 17.11.1971, which were very much available before the Tribunal at the time of passing the rectification order - The said fact is also not disputed by the Revenue – Decided against revenue. Issues:1. Rectification of order under Section 254 of the Income-tax Act based on a judgment of the Supreme Court rendered six years after the original order.2. Jurisdiction of the Tribunal to rectify its order beyond the time limit specified under section 254(2).Analysis:Issue 1:The case involved the rectification of an order under Section 254 of the Income-tax Act based on a Supreme Court judgment rendered six years after the original order. The Tribunal rectified its order based on subsequent decisions of the Supreme Court in Surana Steels Pvt. Ltd. and Apollo Tyres Ltd., along with Circular No.68, dated 17.11.1971. The Tribunal justified its rectification by citing relevant legal precedents and circulars available at the time of passing the rectification order. The High Court upheld the Tribunal's decision, emphasizing that the rectification was not barred by the delay in the Supreme Court judgment. The Court found that the Tribunal had valid reasons for considering the subsequent Supreme Court decisions and circulars in rectifying the order, thereby ruling in favor of the assessee.Issue 2:The second issue pertained to the jurisdiction of the Tribunal to rectify its order beyond the specified time limit under section 254(2) of the Income-tax Act. The Supreme Court clarified that the miscellaneous petition filed for rectification was within the prescribed time limit, contrary to the earlier ruling by the High Court. The Supreme Court highlighted that the Tribunal's delay in disposing of the petition should not have been a factor in determining the validity of the rectification. As a result, the second question of law raised before the High Court became irrelevant post the Supreme Court's clarification on the timeliness of the rectification petition. This issue was resolved in favor of the assessee based on the Supreme Court's findings.In conclusion, the High Court's judgment upheld the rectification of the Tribunal's order under Section 254 of the Income-tax Act, emphasizing the validity of considering subsequent Supreme Court decisions and circulars. The Court also clarified the timeliness of the rectification petition, as determined by the Supreme Court, thereby ruling in favor of the assessee and disposing of the appeal without costs.