TaxTMI 
TaxTMI 
2016 (2) TMI 525
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.... dividend income, rental income, interest income and "Vyaj Badla". In some AYs, the Petitioner earned income from "Vyaj Badla". However, in all the AYs from AY 1999-2000 onwards up to AY 2012-13, the Petitioner earned interest income. The interest income earned by the Assessee, even in a particular AY when it did not earn any income from the Vyaj Badla business, has been treated as business income. 3. Aggrieved by the order of the Assessing Officer (AO) treating the interest income earned during the AY 2006-07 as income from other sources and not as business income, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. In the order dated 26th November 2009 dismissing the appeal, the CIT(A) did not specifically deal with the issue of interest income being treated as business income. 4. Against the said order of the CIT(A), the Petitioner filed ITA No.427/Del/2010 before the ITAT. By the order dated 12th October 2012, the ITAT affirmed the order of the AO and the CIT(A). In para 6 of the said order it was noted by the ITAT that the counsel for the Assessee was unable to demonstrate "how the rental income, interest income or dividend income of th....
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....onda Siel Power Products Ltd. v CIT (2007) 295 ITR 466 (SC), the Assessee decided to file a rectification application since there was a fundamental legal error with the ITAT declining to apply the rule of consistency and failing to appreciate that for all earlier AYs and even the subsequent AYs, the Revenue itself had treated the interest income earned by the Assessee as business income. 8. Mr Rahul Choudhary, learned Senior Standing counsel for the Revenue, on the other hand submitted that by entertaining the present writ petition, the Court would be virtually giving the Assessee another round of appeal before the ITAT which would defeat the very object of Section 254(2) of the Act. He submitted that it would be recognising a power of review of the ITAT which clearly was not permissible within the scope of Section 254(2) of the Act. Having failed to avail the remedy of filing an appeal against the original order of the ITAT dated 12th October, 2012 the Petitioner could not be permitted to indirectly seek the same relief. 9. What the scope of powers of the ITAT under Section 254(2) of the Act is, was explained by this Court earlier in four decisions CIT v. K. L. Bhatia (1990)....
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....hat a judgment is neither to be read as Euclid's theorem nor is to be read out of context. Mechanical application of a decision treating as a precedent without appreciating the underlying principle is not allowable. In Honda Siel Power Products Ltd., (supra), the Division Bench of this court considered the stance of the counsel that the decision in K.L. Bhatia [1990] 182 ITR 361 (Delhi) and the other decisions that have followed it, forbids recall of the Tribunal's entire decision on the basis that in the grab of rectification, the order cannot be recalled. When the matter travelled to the apex court, their Lordships as is evident from the paragraphs quoted hereinbefore, took note of the fact that the application for rectification was filed as the Tribunal had not taken note of a binding precedent though the same was cited before the Tribunal. In that factual background, their Lordships have held that the power of rectification has been conferred on the Tribunal to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record. Their Lordships further opined that atonement to the wronged party by the court or....
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....decisions has gone by the concepts which are fundamentally founded on the power of review, rehearing and the limited concept of recall. But what has been stated by the apex court in Honda Siel Power Products Ltd. [2007] 295 ITR 466 (SC) is based on the doctrine of prejudice. Their Lordships have clarified that they were not proceeding on the doctrine or concept of inherent power. Analyzed from this perspective, there can be no trace or shadow of doubt that the said decision is an authority for the proposition that the Tribunal in certain circumstances can recall its own order and section 254(2) of the Act does not totally prohibit so." 11. Ultimately, the Full Bench of this Court in Laxman Das (supra) overruled the earlier decisions in K. L. Bhatia (supra), J. N. Sahni (supra), Baljeet Jolly (supra) and Deeksha Suri (supra) to be not laying down the correct law. 12. The result of the above discussion of the legal position is that, it will be open for the ITAT in application of Section 254(2) of the Act, to also examine whether the order sought to be rectified has an apparent error of law not limited to mistakes of fact apparent on the face of the record. 13. In the present....