M/s. Chennai Central Co-Operative Bank Limited, CHENNAI v. ITO, CHENNAI

MA 120/CHNY/2010 | 2006-2007
Pronouncement Date: 23-07-2010 | Result: Dismissed

Appeal Details

RSA Number 12021724 RSA 2010
Assessee PAN AAAAC0982C
Bench Chennai
Appeal Number MA 120/CHNY/2010
Duration Of Justice 1 month(s) 12 day(s)
Appellant M/s. Chennai Central Co-Operative Bank Limited, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Miscellaneous Application
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 23-07-2010
Assessment Year 2006-2007
Appeal Filed On 11-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER) M.A. NO. 120/MDS/2010 (IN I.T.A. NO. 1073/MDS/2009) ASSESSMENT YEAR : 2006-07 M/S CHENNAI CENTRAL CO- OPERATIVE BANK LTD. 114/1 PRAKASAM STREET CHENNAI - 600 108. PAN : AAAAC0982C (APPLICANT) V. THE INCOME TAX OFFICER BUSINESS WARD VIII(2) CHENNAI - 600 006. (RESPONDENT) APPLICANT BY: SHRI K. ULAGANAATHAN S HANKAR RESPONDENT BY: SHRI SHAJI P. JACOB O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : IN THIS APPLICATION FILED BY THE ASSESSEE ITS GRI EVANCE IS THAT THE TRIBUNAL OVERLOOKED THE LEGAL POSITION THAT THE ASS ESSEE WAS A CO- OPERATIVE BANK AND NOT AN ORDINARY CREDIT SOCIETY. ACCORDING TO THE ASSESSEE TRIBUNAL HAD RELIED ON THE DECISION OF HO N'BLE APEX COURT IN THE CASE OF TOTGAR CO-OPERATIVE SALES SOCIETY LI MITED V. ITO (CA 1622/10 DATED 8.2.2010) BUT SUCH CASE WAS CLEARLY DISTINGUISHABLE THE ASSESSEE BEING A CO-OPERATIVE BANK. M.A. NO.120/MDS/10 2 2. ARGUMENT OF THE ASSESSEE BEFORE THIS TRIBUNAL WA S THAT DEPOSITS MADE IN TIDCO AND TNEB WERE ON ACCOUNT OF BUSINESS EXPEDIENCY FOR GETTING HIGHER RATE OF INTEREST AND THIS WAS AUTHORIZED BY SECTION 6 OF BANKING REGULATIONS ACT 1949. THI S TRIBUNAL RELYING ON THE DECISION OF APEX COURT IN THE CASE OF TOTGAR CO-OPERATIVE SALES SOCIETY LIMITED V. ITO (SUPRA) HELD THAT WHET HER IT WAS CO- OPERATIVE SOCIETY DOING BANKING BUSINESS OR OTHERWI SE DEPOSITS IN EXCESS OF SLR REQUIREMENT COULD ONLY BE CONSIDERED AS DEPOSIT OF SURPLUS WHICH WAS NOT IMMEDIATELY REQUIRED FOR ITS BUSINESS PURPOSE. THUS WE FIND THAT THE TRIBUNAL HAD GIVEN DUE CONSID ERATION OF THE ARGUMENT OF THE ASSESSEE. THE INTEREST RECEIVED ON THE INVESTMENTS MADE IN TIDCO AND TNEB WERE NOT CONSIDERED AS PROFI TS AND GAINS OF THE BUSINESS ATTRIBUTABLE TO THE ACTIVITY CARRIE D ON BY THE ASSESSEE. 3. THUS IT IS EVIDENT THAT ASSESSEE IS SEEKING REVI EW OF THE ORDER IN THE GUISE OF A RECTIFICATION PROCEEDINGS. THE CRUC IAL EXPRESSION MISTAKE APPARENT FROM THE RECORD CAME UP FOR ADJU DICATION BEFORE THE HON'BLE SUPREME COURT IN THE CELEBRATED CASE OF T.S. BALARAM ITO V. VOKART BR. (1971) 82 ITR 50. IN THIS CASE I T WAS HELD THAT: A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS A ND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN M.A. NO.120/MDS/10 3 PROCESS OF REASONING ON POINTS ON WHICH THERE MAY B E CONCEIVABLY TWO OPINIONS. A DECISION ON DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD. THE HON'BLE SUPREME COUR T IN THE CASE OF CIT V. HERO CYCLES (P.) LTD. (1997) 228 ITR 463 (1) CONSIDERED THE SCOPE OF RECTIFICATION PROCEEDINGS. IN THIS CASE T HE CLAIM FOR DEDUCTION U/S 35B WAS NOT ORIGINALLY ALLOWED AT ALL . AN ORDER WAS PASSED BY THE CIT(A) ON ASSESSEES APPLICATION DIRE CTING CERTAIN ALLOWANCE TO BE GIVEN ON PROPORTIONATE BASIS AFTER VERIFICATION OF THE ASSESSEES CLAIM U/S 35B. THE ITO THEREAFTER ENTER TAINED THE ASSESSEES PRAYER FOR RECTIFICATION OF THE ORDER AN D ALLOWED THE ASSESSEES CLAIM IN RESPECT OF MATTERS LIKE COLOURE D ALBUMS EXPORT STAFF TRAVELLING EXPENSES EXPORT SALES COMMISSION ETC. WHEN THE MATTER TRAVELLED TO THE HON'BLE SUMMIT COURT REITE RATING THE WELL SETTLED POSITION IN LAW IT WAS HELD THAT : RECTI FICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. MOREOVER THE POINT WHI CH WAS NOT EXAMINED ON FACTS OR IN LAW CANNOT BE DEALT AS MIST AKE APPARENT ON THE RECORD. MORE RECENTLY THE HON'BLE SUPREME COU RT IN THE CASE OF ACIT V. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (305 I TR 227) CAME TO HOLD AS UNDER:- A PATENT MANIFEST AND SELF-EVIDENT ERROR WHICH DOE S NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENT TO EST ABLISH IT CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE REC ORD AND CAN BE M.A. NO.120/MDS/10 4 CORRECTED WHILE EXERCISING CERTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ON E HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGEMENT IS C ORRECT OR NOT. AN ERROR APPARENT ON THE RECORD MEANS AN ERROR WHIC H STRIKES ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN OUT PRO CESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVAB LY TWO OPINIONS. SUCH ERROR SHOULD NOT REQUIRE ANY EXTRAN EOUS MATTER TO SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN O N RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGEMEN T IS ONE OF POSSIBLE VIEWS THE CASE CANNOT BE SAID TO BE COVER ED BY AN ERROR APPARENT ON THE FACE OF THE RECORD 4. A SURVEY OF THE AFORE-NOTED THREE JUDGEMENTS OF THE HON'BLE APEX COURT MAKES IT CLEAR THAT THE SCOPE OF PROCEED INGS U/S 254(2) IS CONFINED TO RECTIFYING ANY MISTAKE WHICH IS APPAREN T ON THE VERY FACE OF IT. IF THE POINT NEEDS TO BE PROVED ON THE STRE NGTH OF DIFFERENT FACETS OF REASONING THE SAME WOULD BECOME DEBATABLE. ONC E A PARTICULAR POINT FALLS IN THE REALM OF DEBATABLE ISSUE THAT AUTOMATICALLY GOES OUT OF THE DOMAIN OF SUB-SECTION (2) OF SECTION 254 . THUS THE ERROR CAPABLE OF RECTIFICATION UNDER THIS SUB-SECTION MU ST BE ONE WHICH IS APPARENT ON THE FACE OR ORDER ITSELF. FURTHER IF T WO VIEWS ARE POSSIBLE ON A PARTICULAR POINT AND THE TRIBUNAL HAS PREFERRE D ONE VIEW OVER THE OTHER NO RECTIFICATION APPLICATION LIES FOR IMPRES SING UPON THE TRIBUNAL TO CHOOSE THE OTHER POSSIBLE VIEW IN PREFERENCE OVE R THE ONE ALREADY ADOPTED BY IT. IF HOWEVER THE ORDER PASSED BY THE TRIBUNAL IS NOT IN M.A. NO.120/MDS/10 5 CONFORMITY WITH THE JUDGEMENT OF THE HON'BLE SUPREM E COURT OR THAT OF THE JURISDICTIONAL HIGH COURT RENDERED PRIOR TO OR SUBSEQUENT TO THE IMPUGNED ORDER THE SAME CONSTITUTES A MISTAKE FROM RECORD CAPABLE OF RECTIFICATION U/S 254(2). IN THE SAME BREATH IT WILL BE AN ERROR APPARENT FROM RECORD IF THE ORDER IS NOT IN CONFORM ITY WITH THE RETROSPECTIVE AMENDMENT CARRIED OUT TO THE STATUTOR Y PROVISION COVERING THE PERIOD AND POINT IN DISPUTE OF COURSE SUBJECT TO THE FULFILLMENT OF OTHER CONDITIONS PRESCRIBED IN THE A CT SUCH AS LIMITATION PERIOD ETC. 5. IT IS THEREFORE CLEAR THAT THE POWER GIVEN TO THE TRIBUNAL U/S 254(2) IS CONFINED TO RECTIFYING ANY MISTAKE WHICH IS APPARENT FROM THE RECORD. THE TRIBUNAL IS NOT EMPOWERED TO REVIE W ITS ORDER IN THE GARB OF RECTIFICATION U/S 254(2). THE HON'BLE MUMBA I HIGH COURT IN THE CASE OF RAMESH ELECTRIC & TRADING CO. (203 ITR 497) CONSIDERED A CASE IN WHICH THE TRIBUNAL WAS REQUIRED TO DECIDE WHETHER THE COMMISSION PAYMENT OF ` 54 000 WAS DEDUCTIBLE U/S 37. AFTER EXAMINING THE CIRCUMSTANCES IT CAME TO THE CONCLUSI ON THAT THE AMOUNT WAS NOT DEDUCTIBLE. THE ASSESSEE MOVED MISC ELLANEOUS APPLICATION U/S 254(2) STATING THAT ALTHOUGH THE AP PEAL MEMO CONTAINED FIVE DIFFERENT GROUNDS OF APPEAL BUT THE ORDER OF THE TRIBUNAL DID NOT MENTION THREE OF THE GROUNDS. IT WAS CONTENDED THAT M.A. NO.120/MDS/10 6 THE ORDER OF THE TRIBUNAL DID NOT CONSIDER SOME OF THE ARGUMENTS ADVANCED BY THE ASSESSEE. SUCH APPLICATION WAS ENT ERTAINED BY THE TRIBUNAL. ON RE-HEARING THE MATTER THE ASSESSEE WA S ALLOWED DEDUCTION OF THE COMMISSION PAYMENT BY THE TRIBUNAL . ON APPEAL THE HON'BLE BOMBAY HIGH COURT HELD AS UNDER:- THESE TWO ARGUMENTS ACCORDING TO THE TRIBUNAL WER E OVERLOOKED BY IT WHILE PASSING THE EARLIER ORDER AND HENCE IT PURPORTED TO EXERCISE ITS POWER OF RECTIFICATION BY RE-EXAMINING ALL THE CIRCUMSTANCES RELATING TO THIS TRANSACTION AND UPHO LDING IT. CLEARLY THIS COULD NOT HAVE BEEN DONE IN THE EXERCISE OF AN Y POWER OF RECTIFICATION. IN THE PRESENT CASE IN THE FIRST O RDER THERE IS NO MISTAKE WHICH IS APPARENT FROM THE RECORD AT ALL. THE TRIBUNAL WAS REQUIRED TO DECIDE WHETHER THE COMMISSION PAYMENT O F ` 54 000 WAS DEDUCTIBLE UNDER SECTION 37 OF THE INCOME-TAX ACT. AFTER EXAMINING THE CIRCUMSTANCES THE TRIBUNAL CAME TO THE CONCLUS ION THAT IT WAS NOT SO DEDUCTIBLE. THE TRIBUNAL CANNOT IN EXERCIS E OF ITS POWER OF RECTIFICATION LOOK INTO SOME OTHER CIRCUMSTANCES W HICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION SO ARRIVED AT . THE MISTAKE WHICH THE TRIBUNAL IS ENTITLED TO CORRECT IS NOT AN ERROR OF JUDGEMENT BUT A MISTAKE WHICH IS APPARENT FROM THE RECORD ITS ELF. NO SUCH MISTAKE WAS APPARENT FROM THE RECORD. IN FACT WE DOUBT IF THIS SORT OF AN EXERCISE COULD HAVE BEEN DONE BY THE TRIBUNAL EVEN IF IT HAD THE POWER OF REVIEW. THE TRIBUNAL HAS PATENTLY F AR EXCEEDED ITS JURISDICTION UNDER SECTION 254(2) OF THE INCOME-TAX ACT IN REDECIDING THE ENTIRE DISPUTE WHICH WAS BEFORE IT IN THIS FASH ION AND THE TRIBUNAL HAS COMMITTED A GROSS AND INEXPLICABLE ERR OR FOR REASONS WHICH WE FAIL TO UNDERSTAND. M.A. NO.120/MDS/10 7 6. THUS IT IS EVIDENT THAT THE TRIBUNAL HAS ONLY GO T A LIMITED POWER OF RECTIFYING A MISTAKE WHICH IS APPARENT FROM THE RECORD ITSELF AND EVEN AN ERROR OF JUDGEMENT IS OUTSIDE THE AMBIT OF SECTION 254(2) OF THE ACT. THE OFT-QUOTED JUDGEMENT OF THE HON'BLE R AJASTHAN HIGH COURT IN CIT V. RAMESH CHAND MODI (2001) 249 ITR 32 3(2) DISTINGUISHING THE JUDGEMENT OF THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF RAMESH ELECTRIC & TRADING CO. (SUPRA) NEEDS TO BE EXAMINED. IN THE LATTER CASE THE TRIBUNAL OMITTED TO DECIDE SOME OF THE GROUNDS OF THE APPEAL BY OVERSIGHT. THE HON'BL E RAJASTHAN HIGH COURT APPROVED THE VIEW TAKEN BY THE TRIBUNAL IN EX ERCISING ITS POWER U/S 254(2) BY RECALLING THE ORDER TO MAKE A FRESH O RDER DECIDING THE ISSUES WHICH WERE LEFT UNDECIDED. THE HON'BLE RAJAS THAN HIGH COURT DISCUSSED IN PARA 5 THE JUDGEMENT OF THE HON'BLE MU MBAI HIGH COURT IN RAMESH ELECTRIC & TRADING CO. (SUPRA) AND HELD T HAT THE ISSUE RAISED BEFORE IT WAS DIFFERENT FROM THE ONE CONSIDE RED BY THE HON'BLE BOMBAY HIGH COURT. IT WAS CLARIFIED THAT THE RATIO DECIDENDI OF RAMESH ELECTRIC & TRADING CO. (SUPRA) WAS THAT WHIL E DECIDING AN ISSUE THE TRIBUNAL DID NOT TAKE INTO CONSIDERATION SOME OF THE ARGUMENTS AND IT WAS UNDER THOSE CIRCUMSTANCES THAT THE MISCELLANEOUS APPLICATION WAS HELD TO BE NOT MAINTA INABLE. FURTHER IT WAS CLARIFIED THAT THE CASE BEFORE THE HON'BLE RAJA STHAN HIGH COURT M.A. NO.120/MDS/10 8 WAS ON THE FAILURE TO DECIDE THE GROUNDS RAISED BY THE ASSESSEE IN APPEAL MEMO. IT IS THEREFORE AXIOMATIC THAT THE JUDGEMENT OF THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF RAMESH ELEC TRIC & TRADING CO. (SUPRA) HAS NOT BEEN DILUTED IN ANY MANNER BY A NY OTHER COURTS INCLUDING THE RAJASTHAN HIGH COURT IN RAMESH CHAND MODI (SUPRA). STILL RECENTLY IN RAS BIHARI BANSAL V. CIT (2007) 2 93 ITR 365(3) HON'BLE DELHI HIGH COURT RULED THAT SECTION 254(2) E NABLES THE TRIBUNAL TO RECTIFY ANY MISTAKE WHICH IS ONLY APPAR ENT FROM THE RECORD THAT AN OVERSIGHT OF A FACT CANNOT CONSTITUTE AN AP PARENT MISTAKE RECTIFIABLE UNDER THIS SECTION. FAILURE OF THE TRI BUNAL TO CONSIDER THE JUDGEMENT OF A NON-JURISDICTIONAL HIGH COURT CITED BY PARTY BEFORE IT ALSO COULD NOT BE A MISTAKE APPARENT FROM THE RECOR D AMENABLE TO PROCEEDINGS UNDER SECTION 254(2) AS HELD BY THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VISWAS PROMOTERS P. LTD. V. ACIT (2009) 30 DTR 65. SIMILARLY FAILURE OF THE TRIBUNAL TO CONS IDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSI ON IS NOT AN ERROR APPARENT ON THE RECORD ALTHOUGH IT MAY BE AN ERROR OF JUDGEMENT. THE MERE FACT THAT THE TRIBUNAL HAD NOT ALLOWED A D EDUCTION WILL BE NO GROUND FOR MOVING AN APPLICATION UNDER SECTION 2 54(2). AN ERRONEOUS ORDER CAN ONLY BE RECTIFIED OR MODIFIED O R SET ASIDE IN A PROCEDURE KNOWN TO THE LAW AND NOT IN A PROCEEDING UNDER SECTION M.A. NO.120/MDS/10 9 254(2) AS HELD BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF EXPRESS NEWSPAPERS LTD. V. DCIT IN W.P. NO.3919 OF 2001 DATED 17.11.2009. THUS IN THE GRAB OF AN APPLICATION FO R RECTIFICATION THE ASSESSEE CANNOT BE PERMITTED TO REOPEN AND RE-ARGUE THE WHOLE MATTER WHICH IS BEYOND THE SCOPE OF THE SECTION. 7. IN THE RESULT WE FIND NO MERITS IN THIS M.A. WH ICH THEREFORE STANDS DISMISSED. THE ORDER WAS PRONOUNCED ON 23.07.2010. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEM BER CHENNAI. DATED THE 23 RD JULY 2010. KRI. COPY TO: (1) APPLICANT (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE