Krishak Bharati Coop. Ltd. v. Commissioner of Income-tax
[Citation -2015-LL-0406-3]

Citation 2015-LL-0406-3
Appellant Name Krishak Bharati Coop. Ltd.
Respondent Name Commissioner of Income-tax
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 06/04/2015
Assessment Year 1992-93
Judgment View Judgment
Keyword Tags deduction under section 80-i • opportunity of being heard • business expenditure • rectification order • eligible business • mistake apparent • business profit
Bot Summary: Whether the Tribunal erred in holding that the Assessing Officer was justified in invoking Section 154 of the Income Tax Act, 1961 and rectifying his order dated 12th May 1995 2. The order of the AO under Section 250 granted the relief in terms claimed, i.e. to the tune of 18,26,481/-; revised forms were apparently issued to the assessee. The assessee contends that this notice was received much later - on 30.05.1995 - and that before it could be taken into consideration, the order withdrawing/rectifying the previous order dated 12.05.1995 was passed on 31.05.1995. The rectification order under Sections 154/250 reads as follows: Order u/s.154/250 The Ld. CIT(A) has passed an order u/s 250 of the IT Act on 29.03.1995 in the case of the assessee for the Assessment Year 1992-1993 in Appeal No.694/94-95. Income of the assessee is computed as under: Income computed as per order u/s Rs.1,50,98,00,960/- 250 dated 12.05.1995 ADD: Further deduction u/s 80I still Rs.18,26,481/- to be decided but inadvertently deducted from income in order u/s 250 dated 12.05.1995, as discussed Revised Taxable Income Rs.1,51,16,27,441/- TA 57/2002 Page 3 Or Rs.1,51,16,27,440/- Issue revised forms. In view of this position, the assessing officer was wrong in passing the rectification order u/s 154, this order is hereby quashed and the assessee is entitled to deduction u/s 80I of an amount of Rs.18,26,481/-. Learned counsel for the revenue urged that this Court should not interfere with the order of the ITAT. He submitted that given the language of Section 43B, the assessee could not have claimed that the payment to the Cooperative Education Funds were in the nature of a statutory impost or cess falling within the purview of Section 43B. Consequently, the AO, in the rectification order and the ITAT correctly deduced that the relief was wrongly granted.


$ 3 * IN HIGH COURT OF DELHI AT NEW DELHI Decided on : 06.04.2015 + ITA 57/2002 KRISHAK BHARATI COOP. LTD. ..... Appellant Through : Ms. Surekha Raman, Advocate. versus COMMISSIONER OF INCOME TAX ..... Respondent Through : Sh. P. Roychaudhuri, Advocate. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K. GAUBA MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) % 1. Following questions of law arise for consideration: 1. Whether Tribunal erred in holding that Assessing Officer was justified in invoking Section 154 of Income Tax Act, 1961 and rectifying his order dated 12th May 1995? 2. Whether while calculating eligible business profits for purposes of deduction under Section 80I of Income Tax Act, 1961 assessee is entitled to include sum of Rs.91,32,404, amount actually contributed in assessment year 1992-93 to Cooperative Education Fund under Section 61(1)(b) of Multi State Cooperative Societies Act, 1984? 3. Whether Tribunal was justified in holding that contribution to Cooperative Education Fund was not cess falling within purview of Section 43B of Income Tax Act, 1961? TA 57/2002 Page 1 2. appellant is aggrieved by order of Income Tax Appellate Tribunal (ITAT) dated 29.08.2001. ITAT allowed Revenue s appeal against order of CIT(A). 3. brief facts are that assessee had inter alia claimed business expenditure under Section 43B of Income Tax Act, 1961 (hereafter referred to as Act ) to tune of `91,32,404/-. Assessing Officer (AO), by his original order dated 31.01.1995 disallowed claim. At that stage, assessee had inter alia urged that relief was to be given under Section 80-I after benefit of deduction under Section 43B of Act. effect of order was to bring to tax said amount. assessee preferred appeal. CIT(A), by order dated 29.03.1995 observed that since claim for eligible profits would go up in computation under Section 80-I, which directed 20% of sum claimed, in effect, deduction would further go up by `18,26,481/-. assessee had claimed benefit and relied upon ruling of Supreme Court in CIT v. Canara Workshops (P) Ltd. 1986 (161) ITR 320. In light of these, CIT(A) was of opinion that AO had to verify details mentioned by assessee before claims could be considered and benefit of Section 80-I given. This remand led to AO considering submissions of appellant, who had provided necessary details under cover of letter dated 24.04.1995. order of AO under Section 250 granted relief in terms claimed, i.e. to tune of `18,26,481/-; revised forms were apparently issued to assessee. Whilst so, on 22.05.1995 after effect was given on 12.05.1995, AO issued Show Cause Notice stating that relief given on 12.05.1995 was on account of inadvertent mistake. TA 57/2002 Page 2 4. assessee contends that this notice was received much later - on 30.05.1995 - and that before it could be taken into consideration, order withdrawing/rectifying previous order dated 12.05.1995 was passed on 31.05.1995. rectification order under Sections 154/250 reads as follows: Order u/s.154/250 Ld. CIT(A) has passed order u/s 250 of IT Act on 29.03.1995 in case of assessee for Assessment Year 1992-1993 in Appeal No.694/94-95. Amongst other points, Ld. CIT(A) has directed in his order to verify claim of assessee regarding deduction u/s 80-I on Rs.91,32,404/- which was paid to Cooperative Education Fund u/s 61 (1)(b) of Multi State Cooperative Education Fund Act, 1984 after giving opportunity of being heard and thereafter to allow same on merit. However, at time of giving effect to above order of Ld. CIT(A) on other points, claim was also allowed on this point inadvertently through oversight whereas issue is still to be decided and for which letter dated 03.05.1995 has already been served on assessee on 12.05.1995 requesting them to attend and explain point in question. mistake being apparent on records is rectified u/s 154 of Income Tax Act. Income of assessee is computed as under: Income computed as per order u/s Rs.1,50,98,00,960/- 250 dated 12.05.1995 ADD: Further deduction u/s 80I still Rs.18,26,481/- to be decided but inadvertently deducted from income in order u/s 250 dated 12.05.1995, as discussed Revised Taxable Income Rs.1,51,16,27,441/- TA 57/2002 Page 3 Or Rs.1,51,16,27,440/- Issue revised forms. Sd/- (VIRENDRA SINGH) Deputy Commissioner of Income Tax Special Range-12, New Delhi. Copy to assessee Date: 31st of May 1995 5. assessee again approached CIT(A) which, after recapitulating facts, reversed rectification order on basis of following reasoning: 4. After hearing arguments of AR, I feel that firstly, assessing officer has gone wrong in rectifying this order. It was correctly argued by AR that it is not mistake apparent from record and involved debatable point. Therefore, it cannot be rectified. Secondly, even on merits assessing officer was not right in not allowing full claim of deduction u/s 80 I on total income of this year and excluding amount of Rs.91,32,404/-. It must be noted that cess on education has been allowed this year but it pertains to A.Y. 1990-1991 and cannot go in reducing total income. In view of this position, assessing officer was wrong in passing rectification order u/s 154, this order is hereby quashed and assessee is entitled to deduction u/s 80I of amount of Rs.18,26,481/-. TA 57/2002 Page 4 6. revenue s appeal was accepted by impugned order. ITAT was of opinion that AO correctly rectified order of 12.05.1995 on 31.05.1995 since on merits, payments to Cooperative Education Funds were not in form of cess and benefit of Section 43B could not be given. 7. Learned counsel for assessee relies upon decision of this Court in its own case for same assessment year in respect of some other income. In that instance too, for A.Y. 1992-93, when assessment for subsequent year 1993-94 was taken-up, AO felt that order for 1992- 93 required rectification and proceeded to do so. On that occasion too, relief with respect to Section 80-I was in question. matter eventually travelled to this Court by way of revenue s appeal in CIT v. Krishak Bharti Cooperative Ltd. 2004 (266) 208 (Del). Learned counsel relied upon said order to say that once appeal effect is given, it is open to authorities be it AO or CIT(A) to seek recourse to rectification proceedings if issue or question of law is debatable. Learned counsel for revenue urged that this Court should not interfere with order of ITAT. He submitted that given language of Section 43B, assessee could not have claimed that payment to Cooperative Education Funds were in nature of statutory impost or cess falling within purview of Section 43B. Consequently, AO, in rectification order and ITAT correctly deduced that relief was wrongly granted. TA 57/2002 Page 5 8. In Krishak (supra) where for subsequent year 1993-94, revenue was of opinion that benefit of Section 80-I would not be given, power of rectification was sought to be utilized. This Court affirmed findings of ITAT which had then held that in view of decision of Supreme Court in T.S. Balaram, ITO v. Volcart Brothers 1971 (82) ITR 50 (SC), it is only obvious and patent mistake and which cannot be established by long process of reasoning that fall within jurisdiction to rectify. This Court had observed as follows: only issue which arose for consideration before Tribunal was whether part of relief granted to respondent/assessee under section 80-I of Act could be withdrawn by taking recourse of section 154 of Act. Tribunal, by placing reliance on various decisions of apex court and of this court has come to conclusion, and rightly so, that since question whether assessee is entitled to deduction under section 80-I or not, is debatable, relief granted under section could not be said to be mistake apparent from record, within meaning of section154 of Act. While interpreting scope of Section 154 of Act, Supreme Court in T.S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50, held that mistake apparent on record within meaning of Section 154 of Act must be obvious and patent mistake and not something which can be established by long drawn process of reasoning on points on which there may be conceivably two opinions. decision on debatable point of law is not mistake apparent from record. In light of settled legal position, no fault can be found with impugned order. appeal is accordingly dismissed. 9. In present case too, view canvassed by revenue is untenable. CIT(A) had relied upon Supreme Court s ruling in Canara (supra) to hold that relief was, in circumstances of case, TA 57/2002 Page 6 admissible. Given that this issue as to admissibility of relief either before benefit of Section 80-I could be granted or thereafter, was matter which required debate and some process of reasoning, decision in T.S. Balaram, ITO (supra) clearly held field. In other words, revenue could not legitimately contend that view expressed by CIT(A) given effect to by AO in his initial order of 12.05.1995, was utterly implausible. Such being case, issue was debatable. Therefore, recourse to power of rectification under Section 154 was unwarranted in given facts of this case. first question of law is answered in favour of assessee. Consequently, other questions do not arise for consideration. appeal is therefore, allowed. S. RAVINDRA BHAT (JUDGE) R.K. GAUBA (JUDGE) APRIL06, 2015 jk TA 57/2002 Page 7 Krishak Bharati Coop. Ltd. v. Commissioner of Income-tax
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