ITAT allows rectification application filed within 4-year limit from assessment order date, clarifies subsidy treatment

The ITAT Jodhpur ruled in favor of the assessee regarding rectification application timing. The revenue authorities incorrectly argued the application was filed after 5 years, but the tribunal held that the 4-year limitation period runs from the date of the order sought to be rectified, not the original order. Since the assessee filed the rectification application on 23.05.2017 for an assessment order dated 02.06.2014, it was within the statutory time limit. The appeal was allowed, clarifying that Interest Subsidy under TUFS and Electricity duty subsidy under RIPS were properly treated as revenue receipts.

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Issues Involved:
1. Non-quantification of MAT Credit.
2. Treatment of Interest Subsidy under Technology Upgradation Fund Scheme (TUFS) and Electricity Duty Subsidy under Rajasthan Investment Promotion Scheme (RIPS) as capital receipts.

Non-quantification of MAT Credit:
The assessee contended that their rectification application under section 154 of the Income Tax Act was disposed of without considering their submission. The Tribunal directed the Assessing Officer (AO) to modify the order accordingly.

Interest Subsidy - (TUFS):
The AO and CIT(A) treated the interest subsidy received under TUFS and the electricity duty subsidy under RIPS as revenue receipts. The assessee argued that these subsidies should be treated as capital receipts, citing various judicial pronouncements and a CBDT Circular No. 68 dated 17.11.1971, which states that a mistake apparent from the record includes subsequent interpretations of law by the Supreme Court.

Rectification under Section 154:
The AO rejected the rectification application stating that the issues raised were debatable and not mistakes apparent from the record. The CIT(A) upheld this view, noting that rectification under section 154 is only for obvious mistakes, not those requiring long reasoning or where two opinions are possible.

Tribunal's Analysis:
The Tribunal reviewed the statutory time limit for rectification under section 154, noting that it allows for a period of four years from the date of the order sought to be rectified. The Tribunal found that the rectification application filed by the assessee was within this time limit. The Tribunal also considered various judicial pronouncements, including decisions by the Supreme Court and High Courts, which supported the view that subsequent judicial decisions can constitute a mistake apparent from the record.

Conclusion:
The Tribunal held that the matter was covered by the orders of the Coordinate Bench of the Tribunal and the judgment of the Hon'ble Supreme Court. Therefore, the appeal of the assessee was allowed, directing the AO to treat the subsidies as capital receipts and rectify the order accordingly.

Order Pronounced:
The appeal of the assessee was allowed, and the order was pronounced in the open court on 18/01/2024.

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