TaxTMI 
TaxTMI 
2008 (3) TMI 301
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....-tax (Appeals) (for short "the CIT(A)") and also the Tribunal itself. 2. Stated in nutshell the facts leading to the present appeal are as under: (a) The assessee, namely, McDowell Co. Ltd. which is the respondent herein, has been manufacturing and selling Indian made foreign liquor. For the assessment year 1993-94, this assessee filed its return of income on December 31, 1993, and thereafter it also filed a revised return on September 18, 1995. In the said return, the assessee claimed several items of deductions. The Assessing Officer passed his assessment order dated March 29, 1996, allowing some of the items of deductions and disallowing some others of them. One of the deductions disallowed by the Assessing Officer was a sum of Rs.3,82,03,140 which was claimed by the assessee as revenue expenditure. (b) Aggrieved by the said order of assessment, the assessee-company filed its appeal before the Commissioner of Income-tax (Appeals) and the same came to be allowed in part and some of the items of deductions claimed by the assessee disallowed by the Assessing Officer were allowed by the learned Commissioner of Income-tax (Appeals). However, the learned Commissioner of Incom....
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....hether the Tribunal was justified in passing the impugned order dated October 23, 2002, in exercise of its jurisdiction under section 254(2) of the Income-tax Act modifying paragraph No. 14 of its earlier common order dated September 25, 2000, passed in the appeals filed by the assessee and the Revenue and thereby reversing its findings therein and directing the Assessing Officer to allow deduction of Rs. 3,67,34,886 treating the same as 'revenue expenditure' which deduction was disallowed by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) treating the same as capital expenditure." 4. Our findings on this substantial question of law is in the "negative" and in favour of the appellant-Revenue for the following Reasons: 5. The facts constituting the assessee's claim for deduction of Rs. 3.82 crores which came to be disallowed by the Assessing Officer, confirmed by the Commissioner of Income-tax (Appeals) and allowed by the Tribunal in exercise of its power under section 254(2) of the Income-tax Act are: The assessee incurred during the relevant year, an expenditure of Rs. 4,24,47,933 in respect of issuance of shares with a view to increase its....
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....as not entitled to claim the said amount as depreciation. Thereafter, the assessee moved an application under section 254(2) of the Income-tax Act before the Tribunal seeking rectification of mistake on the ground that the Tribunal had arrived at the conclusion that the said amount was not allowable as depreciation by not considering the decision of its co-ordinate Bench in the case of Samtel Colour Ltd. The Tribunal had not considered the said decision while disposing of the said appeal though it was cited and relied upon by the learned counsel for the assessee therein, and, therefore, it considered the said judgment and then allowed the rectification application of the assessee by passing a considered order under section 254(2) of the Income-tax Act. Aggrieved by the said order, the Department filed its appeal before the High Court. The High Court came to the conclusion that the power to rectify any mistake was not equivalent of power to review or recall the order sought to be rectified and, therefore, in the guise of rectification the Tribunal in fact, reviewed its earlier order which fell outside the scope of section 254(2) of Income-tax Act and, consequently, the High Court se....
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....g the ratio in the decisions of the hon'ble Supreme Court in (i) Brooke Bond India Ltd. v. CIT reported in [1997] 225 ITR 798; 140 CTR 598, (ii) Punjab State Industrial Development Corporation Ltd. v. CIT reported in [1997] 225 ITR 792 (SC) the Tribunal arrived at the conclusion that the said deduction was not allowable under section 37(1) of the Income-tax Act as revenue expenditure. It is pertinent to note that the Tribunal has recorded its finding in paragraph No. 14 of its order as "applying the ratio in the decisions of Supreme Court reported in Brooke Bond India v. CIT reported in [1997] 225 ITR 798 and Punjab State Industrial Development Corporation Ltd. v. CIT reported in [1997] 225 ITR 792 (SC) it is clear that the entire expenditure relating to share issue expenses has to be disallowed as capital in nature". (The page number of first citation, i.e., Brooke Bond India v. CIT reported in [1997] 225 ITR 798 is incorrectly mentioned in the said paragraph as "225 ITR 728" and therefore the said page number is to be read as "798") 8. Though the failure to consider by the Tribunal a decision or a fact relied upon by a party to an appeal may amount to a mistake apparent from t....
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....er the Tribunal was justified in reversing its findings recorded in its earlier order dated September 25, 2000, in exercise of its power under section 254(2) of the Income-tax Act?" Therefore, we need not discuss in detail the principles laid down in the said three decisions. 11. In order to find answer to the question "whether the Tribunal was justified in passing the impugned order reversing its findings in its said earlier order in exercise of its power under section 254(2) of the Income-tax Act?" we have to see whether the impugned order dated October 23, 2002, passed by the Tribunal amounts to only a "rectification of mistake apparent from the record" as contended by the learned counsel for the assessee- company or it amounts to reviewing of its earlier said order by the Tribunal resulting in reversal of its finding therein. 12. As could be seen from the earlier order of the Tribunal dated September 25, 2000, at paragraph Nos. 10 to 14 therein (from page Nos. 4 to 10 of the order) the Tribunal, after considering in detail ground Nos. 9 and 10 urged by the assessee-company in its appeal before the Tribunal and discussing the principles laid down in various decisions relie....