INCOME TAX OFFICER v. RAMESHWARPUR COLD STORAGE (P) LTD
[Citation -1987-LL-0605-2]

Citation 1987-LL-0605-2
Appellant Name INCOME TAX OFFICER
Respondent Name RAMESHWARPUR COLD STORAGE (P) LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 05/06/1987
Assessment Year 1978-79 TO 1980-81
Judgment View Judgment
Keyword Tags industrial undertaking • investment allowance • rectification order • industrial company • mistake apparent • debatable issue • mistake of law • cold storage
Bot Summary: The only common ground raised in these appeals states that on the facts and in the circumstances of the case, the CIT(A) erred in holding that the order passed by the ITO under s. 154 of the IT Act, 1961 were not exigible and thereby cancelling the said rectification orders. Departmental Representative admitted that the assessee company which was engaged in the business of cold storage was not an industrial company within the meaning of s. 32A(2)(b)(iii) and s. 80HH of the IT Act, 1961 as it did not manufacture or produce any article or thing. CIT vs. Farrukhabad Cold Storage Ltd. 107 ITR 816 held that the assessee engaged in the business of running of cold storage was an industrial company within the meaning of s. 2(6)(d) of the Finance Act, 1968 and s. 2(6)(c) of the Finance Act, 1969 as it was engaged in processing of goods. The question whether the assessee in that case was an industrial undertaking manufacturing or producing any article or thing and if so, whether it was entitled to investment allowance under s. 32A and relief under s. 80HH was not at all involved in that case. The crux of the matter is whether there was a mistake in the assessment orders which was apparent from the record and whether the ITO was justified in resorting to s. 152 for withdrawing reliefs allowed to the assessee company in the assessment orders under s. 32A and 80HH. The issue whether t h e assessee company running a cold storage is an industrial undertaking manufacturing or producing an article or thing is a debatable issue on which there may conceivably be two opinions. In the instant case it cannot be disputed that the issue whether the assessee running a cold storage should be treated as an industrial undertaking for the purpose of s. 32A and s. 80HH is a debatable and controversial issue. Respectfully following the aforesaid decision of the Supreme Court it must be held that the original assessment orders framed by the ITO allowing investment allowance under s. 32A and relief under s. 80HH do not suffer from a patent mistake of law or a mistake which is apparent from the record.


As all these departmental appeals directed against consolidated order dt. 24th March, 1986 passed by CIT(A) for asst. yrs. 1978-79, 1979-80 and 1980-81 give rise to common issue, they were heard together and for sake of convenience, they are disposed of by this single order. only common ground raised in these appeals states that on facts and in circumstances of case, CIT(A) erred in holding that order passed by ITO under s. 154 of IT Act, 1961 were not exigible and thereby cancelling said rectification orders. relevant facts briefly stated are that assessee is limited Company carrying on business of running cold storage. For asst. yrs. 1978-79, 1979-80 and 1980-81 ITO allowed investment allowance under s. 32A and relief under s. 80HH to assessee company. On 15th Nov., 1985, ITO passed separate but similar order under s. 154. He was of view that investment allowance and relief under s. 80HH were wrongly allowed for assessment year under consideration though assessee was not legally entitled to such relief as it has been decided by Hon'ble High Court in case of CIT vs. Radha Nagar Cold Storage (P) Ltd. (1980) 18 CTR (Cal) 166: (1980) 126 ITR 66 (Cal) that act of cold storage was act of processing and it does not produce or manufacture any article or thing. ITO was of view that in view of decision of Calcutta High Court, assessee company which operated cold storage was not entitled to relief under s. 80HH and investment allowance under s. 32A. ITO did not accept contention advanced on behalf of assessee that there was no mistake apparent from record. ITO accordingly withdrew investment allowance and relief under s. 80HH and rectified assessment orders accordingly for three assessment years. assessee appealed to CIT(A) who following decision of Supreme Court in case of T.S. Balaram, ITO vs. Volkart Bros. & Ors. (1971) 82 ITR 50 (SC) held that assessment orders were not rectifiable under s. 154 and he was of view that issue involved was arguable one and there could be two opinions about mistake sought to be rectified. rectification order was accordingly cancelled. Aggrieved, Department has come up in second appeals before Tribunal for three years under consideration. Shri S.K. Lahiri, ld. Departmental Representative admitted that assessee company which was engaged in business of cold storage was not industrial company within meaning of s. 32A(2)(b)(iii) and s. 80HH of IT Act, 1961 as it did not manufacture or produce any article or thing. It was thus contended that action of ITO in allowing investment allowance under s. 32A and relief under s. 80HH in original assessments was clearly mistake of law apparent from record, and, therefore, ITO was justified in rectifying assessment orders under s. 154. It was further contended that CIT(A) was not justified in cancelling rectification orders passed by ITO under s. 154. Learned authorised representative for assessee has, on other hand, fully supported orders of CIT(A). It was submitted that issue involved was debatable one and that there was no mistake apparent from record in original assessment framed by ITO and therefore, he had no jurisdiction to rectify assessment orders under s. 154. rectification orders passed by ITO are based on decision of Calcutta High Court in case of Radhanagar Cold Storage (P) Ltd. (supra). According to ITO, it was held in said case by Calcutta High Court that cold storage does not produce or manufacture any article or thing. We have gone through said decision. In case Calcutta High Court following decision of Allahabad High Court in case of Addl. CIT vs. Farrukhabad Cold Storage (P) Ltd. (1977) 107 ITR 816 (All) held that assessee engaged in business of running of cold storage was industrial company within meaning of s. 2(6)(d) of Finance Act, 1968 and s. 2(6)(c) of Finance Act, 1969 as it was engaged in processing of goods. It was further held in that case that potatoes kept in cold storage preserved their original state and their normal decay was prevented. This amounted to processing of goods within meaning of said Act. It was further held that expression "processing" was distinct and different from expression 'manufacture'. In that case their Lordships of Calcutta High Court were not concerned with construction of expression 'manufacture' as has been observed by their Lordships at page 69 of report. question whether assessee in that case was industrial undertaking manufacturing or producing any article or thing and if so, whether it was entitled to investment allowance under s. 32A and relief under s. 80HH was not at all involved in that case. No where in that case it was held that cold storage does not manufacture or produce any article or thing. ITO was, therefore, not justified in passing rectification order on ground that issue is not covered by aforesaid decision of Calcutta High Court. However, crux of matter is whether there was mistake in assessment orders which was apparent from record and whether ITO was justified in resorting to s. 152 for withdrawing reliefs allowed to assessee company in assessment orders under s. 32A and 80HH. issue whether t h e assessee company running cold storage is industrial undertaking manufacturing or producing article or thing is debatable issue on which there may conceivably be two opinions. It is well-settled that scope of s. 154 has very limited application and it enables rectification of any mistake apparent from record. powers under s. 154 could be exercised by ITO to correct obvious errors of law and those mistakes which are apparent from record. As has been held by Supreme Court in case of T.S. Balaram, ITO vs. Volkart Bros. (supra) mistake apparent on record must be obvious and patent mistake and not some thing which could be established by long drawn process or reasoning on points on which there may be conceivably two opinions. decision on debatable point of law is not mistake apparent from record. In instant case it cannot be disputed that issue whether assessee running cold storage should be treated as industrial undertaking for purpose of s. 32A and s. 80HH is debatable and controversial issue. Respectfully following aforesaid decision of Supreme Court it must, therefore, be held that original assessment orders framed by ITO allowing investment allowance under s. 32A and relief under s. 80HH do not suffer from patent mistake of law or mistake which is apparent from record. In this case, therefore, ITO had no jurisdiction to rectify assessment orders for purpose of withdrawing relief under s. 80HH and investment allowance under s. 32A. In view of what has been said above, we confirm order of CIT(A). In view of what has been said above, we confirm order of CIT(A). departmental appeals accordingly fail and are hereby dismissed. *** INCOME TAX OFFICER v. RAMESHWARPUR COLD STORAGE (P) LTD.
Report Error