TaxTMI 
TaxTMI 
2011 (4) TMI 867
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....B of the Income-tax Act. In support of its contention, the order of the Tribunal in the case of Dy. CIT v. Glenmark Laboratories [2010] 127 TTJ (Mum.) 719 was relied on by the assessee. The judgment of the Bombay High Court in the case of CIT v. Ajanta Pharma Ltd. [2009] 180 Taxman 494 was distinguished by the assessee with the submission that issue before the Mumbai High Court is entirely different than the issue raised in the case of Dy. CIT v. Syncome Formulations (I) Ltd. [2007] 106 ITD 193 (Mum.) (SB). Therefore the impugned issue is covered by the order of the special bench of the Tribunal. The Tribunal has wrongly observed that the order of the Tribunal in the case of Glenmark Laboratories (supra) was not placed before the Tribunal during the course of hearing, whereas its copy was filed at pg.nos.6 and 7 of the compilation in the form of precedents filed by the assessees. The two judgments of the Madras High Court in the case of CIT v. Ambika Cotton Mills Ltd. [2010] 321 ITR 448 and CIT v. K.G. Denim Ltd. [2009] 180 Taxman 590 were relied on but it was not taken into account by the Tribunal while adjudicating the impugned issue. Therefore, the non-consideration of the judgm....
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....d to the computation of amount of profit eligible for deduction under section 80HHC still holds the field and as such the same be followed while adjudicating the impugned issue. 5. While adjudicating the issue of computation of amount of profits eligible for deduction under section 80HHC for the purpose of determining the book profit under section 115JB of the Act, the Tribunal has examined the relevant provisions of section 115JB and 115JA of the I.T. Act in the light of the order of the Tribunal in the case of Syncome Formulations (I) Ltd. (supra) and the judgment of the Bombay High Court in the case of Ajanta Pharma Ltd. (supra) and the Tribunal has taken a view that the order of the special bench of the Tribunal in the case of Syncome Formulations (I) Ltd. (supra) has been overruled by the jurisdictional Bombay High Court in the case of Ajanta Pharma Ltd. (supra). Now the Ld. Counsel for the assessee has contended that judgment of the Ajanta Pharma Ltd. (supra) has been reversed by the Apex Court and the judgment is Ajanta Pharma Ltd. v. CIT [2010] 194 Taxman 358. Therefore, once the Supreme Court has reversed the judgment of the Bombay High court in the case of Ajanta Pharm....
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....me Formulations (I) Ltd. (supra) has been overruled by the Bombay High Court in the case of Ajanta Pharma Ltd. (supra), though the question raised before the Bombay High Court in Ajanta Pharma Ltd.'s case (supra) was on different grounds. In the case of Ajanta Pharma Ltd.'s case (supra) the question referred before the Bombay High Court is; "whether in law for the purpose of calculating book profit under section 115JB of the Income-tax Act under explanation 1 sub-clause (IV) the export profit to be excluded from the book profits would be the export profit allowed as deduction under section 80HHC after restricting the deduction as per provisions of sub-section (1B) of section 80HHC of the Act or the export profit calculated as per sub-section (3) and (3A) of section 80HHC before applying the restriction contained in sub-section (1B) of section 80HHC?". The Bombay High Court has answered this question, having examined the relevant provisions of law in the light of various judicial pronouncements and held that, for the purpose of calculating book profit under section 115JB of the Income-tax Act under explanation 1 sub-clause (IV), the export profit to be excluded from the book profits....
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....the judgment of Bombay High Court the Hon'ble Apex Court have categorically held that clause IV of the explanation to section 115JB covers full export profit of 100% as eligible profit and the same cannot be reduced to 80% by relying on section 80HHC(IB). The relevant observations of the apex court is extracted hereunder: "One of the contentions raised on behalf of the Department was that if clause (iv) of Explanation to section 115JB is read in entirety including the last line thereof (which reads as "subject to the conditions specified in that section"), it becomes clear that the amount of profits eligible for deduction under section 80HHC, computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A), as the case may be, is subject to the conditions specified in that section. According to the Department, the assessee herein is trying to read the various provisions of section 80HHC in isolation whereas as per clause (iv) of Explanation to section 115JB, it is clear that book profit shall be reduced by the amount of profits eligible for deduction under section 80HHC as computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub....
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....uired to re-examine the issue in dispute in miscellaneous application yet we have examined the relevant provisions of the section 115J and 115JB and the circular No.680, dated 21-2-1994 which were considered by the special bench of the Tribunal in the case of Syncome Formulations (I) Ltd. (supra) in order to find out whether the findings of the Tribunal in the instant case is in accordance with law or not. The relevant clauses which deals with the impugned issue are clause (iii) of explanation below sub-section (1A) of section 115J and clause (iv) of Explanation 1 below sub-section (ii) of 115JB of the Act. The language used in these clauses are different, therefore, they have to be interpreted differently. For the sake of reference, we extract these clauses as under: "115J. (1) Notwithstanding anything contained in any other provision of this Act,................................ (1A)...................... Explanation.......................... .............. ............. (i)....................... (ii)...................... (iii) the amounts [as arrived at after increasing the net profit by the amounts referred to in clauses (a) to (f) and reducing the net ....
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....ed under section 80HHC(3A)(b) or, as the case may be, the proportion of the receipts specified in section 80HHD(2) to the total receipts of the business carried on by the assessee should be determined and the said proportion should be applied to the amount arrived at (ii) above to determine the quantum of deduction under section 115J." 13. No circular has been issued with reference to the clause (iv) of Explanation 1 to section 115JB of the Act as there was no ambiguity in the said provision. But the language used in this proviso is entirely different from the language used in clause (iii) of Explanation in section 115J of the Act. In clause (iii) it has been specifically mentioned that the amount, as arrived at after adjusting the net profit as shown in the profit & loss account in the relevant previous year by the adjustment referred to in clauses (a) to (f) and (i) & (ii) of the said Explanation should be allowed as deduction, computing the deduction, however, in the manner specified under section 80HHC(3) or (3A) or 80HHD(3). But in clause (iv) of Explanation 1 to section 115JB it is specifically clear that the amounts of profits eligible for deduction under section 80HHC co....
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....y stated in clause (iv) is that deduction of export profit in the computation of book profit is the same "amount of profit eligible for deduction under section 80HHC" computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A) of the said section. So much so, computation of export profit has to be done only in accordance with the method provided under section 80HHC which is in fact done in the computation of business profit if the assessment was on the total income computed under the other provisions of the Act. MAT assessment is only an alternative scheme of assessment and what is clear from clause (iv) above is that even in the alternative scheme of assessment under section 115JB the assessee is entitled to deduction of export profit under section 80HHC. In other words, export profit eligible for deduction under section 80HHC is allowable under both the scheme of assessment. So much so, the assessees are certainly entitled to deduction under section 80HHC but it is only by following the method provided under sub-sections (3) and (3A) of section 80HHC. However, by virtue of the decision of the Supreme Court above referred, we feel the restriction c....
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....Act as the Tribunal is not empowered by the statute to review its own order. In the case of CIT v. Vardhman Spg. [1997] 226 ITR 296/93 Taxman 453 their Lordships of the Punjab and Haryana High Court have held in specific terms that "the Appellate Tribunal is creation of statutes and it can exercise only those powers which have been conferred upon it. The only power conferred on the Tribunal under section 254(2) of the I.T. Act, 1961 is to rectify any mistake apparent from record. The jurisdiction to review or modify orders passed by the authorities under the Act cannot be interfered with on the basis of supposed inherent rights. Under section 254(1) of the Act, the Appellate Tribunal, after hearing the contesting parties, can pass such order as it deems fit. Sec. 254(2) of the Act specifically empowers the Appellate Tribunal at any time within four years of the date of an order to amend any order passed by it under section 254(1) of the Act with a view to rectify any mistake apparent from record either suo motu or on an application made. What can be rectified under this section is a mistake which is apparent and patent. The mistake has to be such for which no elaborate reasons or i....
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....s in any appeal filed before it as it thinks fit. Sub-section (2) of section 254 postulates that the Tribunal may amend any order passed by it under sub-sec. (1) of section 254 with a view to rectifying any mistake apparent from the record. The power of the Tribunal conferred by sub-section (2) of section 254 for rectifying any mistake apparent from the record cannot be exercised by the Tribunal to recall any order passed by it under section 254(2). Further, reviewing and recalling an order is one thing and rectifying a mistake in the order which is apparent from the record is quite another. In the absence of any statutory provision for review by Tribunal, the order passed by the Tribunal cannot be recalled or reviewed under section 254(2) of the Act." The provisions of section 254 were also examined by the Hon'ble High Court of M.P. in the case of Prakash Chand Mehta v. CIT [1996] 220 ITR 277 in which their Lordship have held that scope of section 254(2) of the Income-tax Act is very limited and it is only the apparent error which can be rectified. 20. Their Lordships of the Apex court in the case of T.S. Balaram ITO v. Volkart Brothers [1971] 82 ITR 50 have held that a mistake....
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....gh Court have held in specific terms that "the Income-tax Appellate Tribunal is a creature of the statute. It has not been vested with the review jurisdiction by the statute creating it. The Tribunal does not have any power to review its own judgments or orders. The grounds on which the courts may open or vacate their judgments are generally matters which render the judgment void or which are specified in the statutes authorizing such sections. The language of section 254(2) of the Income-tax Act, 1961 is clear. The foundation for the exercising the jurisdiction is "with a view to rectify any mistake apparent on the record" and the object is achieved by "amending any order passed by it". A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent on the record". 22. Similar views have also been expressed by the Guwahati High Court in the case of CIT v. Prahlad Rai Todi [2001] 251 ITR 833/[2003] 128 Taxman 451 by holding that "A bare look at section 254(2) will show tha....