2010 (12) TMI 8 - SC - Income Tax

Supreme Court directs Tribunal to reconsider rectification of order under Income Tax Act

The Supreme Court allowed the civil appeal, directing the Tribunal to decide the matter afresh regarding the rectification of an order under Section ... Order of ITAT - rectification of an order u/s 254(2) - Held that: - in view of the judgement of this Court in the case of Commissioner of Income Tax vs. Woodward Governor India Private Limited, reported in [2009 -TMI - 32906 - SUPREME COURT], we are of the view that the Income Tax Appellate Tribunal was wrong in refusing to rectify it's own order under Section 254(2) of the Income Tax Act, 1961, particularly when it has failed to appreciate that, in any event, the expenditure could have fallen on the Capital Account, which was specifically pleaded by the assessee as an alternate submission Issues Involved:Rectification of order under Section 254(2) of the Income Tax Act, 1961 for Assessment Year 1998-1999.Analysis:The Supreme Court, comprising Chief Justice S.H. Kapadia and Justice Swatanter Kumar, heard both sides and granted leave for the case. After examining the facts and circumstances, including previous assessment years and relevant case law, the Court found the Income Tax Appellate Tribunal's refusal to rectify its order under Section 254(2) of the Income Tax Act, 1961, to be incorrect. The Court noted that the expenditure could have been categorized under the Capital Account as per the assessee's alternate submission. Citing the case of Commissioner of Income Tax vs. Woodward Governor India Private Limited, the Court set aside the High Court's judgment and remitted the matter back to the Tribunal for a fresh decision in line with the law laid down in the Woodward Governor India Private Limited case and on the merits of the present case.The Court allowed the civil appeal, directing the Tribunal to decide the matter afresh. No costs were awarded in this case.