TaxTMI 
TaxTMI 
2010 (11) TMI 351
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....ction of the Assessing Officer. On further appeal by the assessee, the Tribunal vide order dated 9.5.2008 allowed the claim of the assessee based on the decision of the Special Bench of the Tribunal in the case of JCIT vs Usha Martine Industries Ltd reported in 104 ITD 249. 3. Now, the revenue, through these Miscellaneous Applications, has stated that in view of the amendment of sec. 115JA by Finance Act, 2009 with retrospective effect from 1.4.1998, the Tribunal erred in directing the Assessing Officer not to add provision for bad and doubtful debts and for rural advances for the purpose of sec. 115JA of the I T Act. Therefore, the order of the Tribunal has to be modified. 3.1 The identical grounds raised by the revenue in both the Miscellaneous Applications are as under: "On the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in directing the AO not to add provision for bad and doubtful debts and provision for rural advances for the purposes of section 115JA of the I T Act 1861. The appellant prays that the order of the Hon'ble ITAT on the above grounds be set aside and that of the AO restored." 4. Th....
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....be restored. 5.1 The ld counsel for the assessee, on the other hand submitted that the Tribunal had allowed the claim of the assessee based on the decision of the Special Bench in the case of Usha Matine Industries Ltd (supra). The issue was also subsequently decided in favour of the assessee by the Hon'ble Supreme Court in the case of CIT vs HCL Comet Systems and Services Ltd reported in 305 ITR 409 and the order dated 23.9.2008. The section was subsequently amended by the Finance (No.2) Act 2009 dated 19.8.2009 by inserting Explanation (g) to sec. 115JA(2) with retrospective effect from 1.4.1998 whereby the amounts set aside as provisions for diminution in the value of any asset was to be added while computing the book profits. He submitted that the order of the Tribunal was passed on 9.5.2008 whereas the retrospective amendment to sec. 115JA by Finance Act 2009 came to the statute book subsequent there to and hence Law on the date when the Tribunal passed the order was in favour of the respondent. 5.2 Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs Max India Ltd 295 ITR 282(SC), he submitted that the Hon'ble Apex Court in the said....
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....or to the insertion of the provisions with retrospective effect can be rectified or not. 7.1 We find an identical issue had come up before the Hon'ble Supreme Court in the case of ITO vs Bombay Dyeingand Mfg Company Ltd reported in 34 ITR 143(SC): The facts in that case are as under: "The assessment was completed on the company by an order, dated October 9, 1952, whereunder the ITO gave credit for a sum of Rs.50,063 being interest at two per cent. on the advance tax paid by the company under s. 18A(5) of the Indian I.T. Act, 1922. This order became final. After the making of this order, Parliament enacted the I.T. (Amend.) Act, 1953, with retrospective effect from April 1, 1952. This Amendment Act, inter alia, inserted a proviso to s. 18A(5), the effect of which was that the assessee was entitled to interest, not on the whole of the advance tax so paid by him, but only on the difference between the advance tax so paid and the amount of tax determined on regular assessment. In view of this retrospective amendment, the ITO, exercising his powers under s. 35 of the 1922 Act, rectified the order of assessment and reduced the amount of interest to which the company w....
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....1952. If that be the true position, then the order which he made giving credit to the respondent for Rs.50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act. If, as a result of the said fiction, we must read the subsequently inserted proviso as forming part of section 18A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record. That is why we think that the Income....