2019 (9) TMI 627 - AT - Income Tax

Tribunal allows appeal, recognizes rectifiable mistake, and directs re-computation of deduction.

Anandkumar Jain Versus ITO, Ward 18 (2) (2), Mumbai

The Tribunal condoned the delay in filing the appeal, recognized the denial of deduction as a mistake apparent from the record rectifiable under Section ... Rectification u/s 154 - deduction u/s 80HHC on sale proceeds of DEPB license in favour of the assessee - HELD THAT:- There is no dispute with respect to the fact that the subsequent decision of the Hon'ble Supreme Court in the case of Topman Exports [2012 (2) TMI 100 - SUPREME COURT] has decided the issue of deduction u/s 80HHC on sale proceeds of DEPB license in favour of the assessee. Once that is so, it can be safely inferred that the legal position on the issue of deduction under Section 80HHC of the Act on sale proceeds of DEPB license has been clarified by the Hon'ble Supreme Court and which decision has a retrospective effect. As such, the legal position clarified by the Hon'ble Supreme Court was existing at the time of passing of the order by the AO and the CIT(A). Order passed by the AO was in contravention of the legal position subsequently clarified by the Hon'ble Supreme Court. Thus, it can be said that the mistake was a patent mistake, and which was apparent from the record. Accordingly, it can be termed as a mistake apparent from record and was very much rectifiable under Section 154 of the Act. We find that the issue of deduction under Section 80HHC of the Act on sale proceeds of DEPB license has been decided by the Hon'ble Supreme Court in the case of Topman Exports (supra). We accordingly direct the Assessing Officer to re-compute the deduction under Section 80HHC of the Act on sale proceeds of DEPB license in light of decision of Hon'ble Supreme Court in the case of Topman Exports (supra). Accordingly, the Ground raised by the assessee in appeal is allowed. Issues Involved:1. Condonation of delay in filing the appeal.2. Rectification of mistake apparent from record under Section 154 of the Income Tax Act.3. Deduction under Section 80HHC of the Income Tax Act on sale proceeds of DEPB license.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing the Appeal:The assessee filed the appeal with a delay of 420 days. The delay was attributed to the advice of the assessee's Tax Consultant, who initially believed that filing an appeal would be futile due to the binding decision of the Jurisdictional High Court in the case of Kalpataru Colours. However, after the Supreme Court reversed this decision in the case of Topman Exports, the assessee was advised to file the appeal. The Tribunal considered precedents where delays were condoned due to subsequent favorable Supreme Court decisions (e.g., Magnum Exports, Pahilajrai Jaikishin). The Tribunal found the delay to be due to a bona fide and genuine belief without any mala fide intentions, thereby condoning the delay and admitting the appeal.2. Rectification of Mistake Apparent from Record under Section 154:The assessee argued that the denial of deduction under Section 80HHC on sale proceeds of DEPB license, which was later allowed by the Supreme Court in Topman Exports, constituted a mistake apparent from the record. The Tribunal referred to the Supreme Court's decision in Saurashtra Kutch Stock Exchange Ltd., which established that judicial decisions act retrospectively, clarifying the legal position that always existed. Thus, the Tribunal held that the incorrect application of law by the Assessing Officer (AO) and CIT(A) was a mistake apparent from the record and rectifiable under Section 154.3. Deduction under Section 80HHC on Sale Proceeds of DEPB License:The Tribunal directed the AO to re-compute the deduction under Section 80HHC in light of the Supreme Court's decision in Topman Exports, which favored the assessee. The Tribunal emphasized that the legal position clarified by the Supreme Court had retrospective effect, thereby making the AO's original order a patent mistake apparent from the record.Conclusion:The Tribunal condoned the delay in filing the appeal, recognized the denial of deduction as a mistake apparent from the record rectifiable under Section 154, and directed the AO to re-compute the deduction under Section 80HHC in accordance with the Supreme Court's decision in Topman Exports. The appeal was allowed in favor of the assessee.