Assessee company had taken a term loan in foreign exchange for import of machinery. The liability of the assessee to repay the loan in terms of rupees went\u00a0 up by Rs. 7,10,910 on account of fluctuation in foreign exchange rate during the<\/p>\n
F.Y. 1990-91 relevant to A.Y. 1991-92. While filing the Return of Income for A.Y. 1991-92, the assessee enhanced the WDV of the block of assets by Rs. 7,10,910 in accordance with the provisions of section 43A of the Act and claimed depreciation \u00a0on such enhanced amount of WDV. The assessing officer came to the conclusion that such revision in the actual cost was not permissible. As per the assessing officer the adjustment to the actual cost of the machinery was permissible only,\u00a0\u00a0\u00a0 \u00a0if the liability is actually paid and in the case where the liability of loan remains unpaid such adjustment was\u00a0 not\u00a0 allowable. On\u00a0 appeal to\u00a0 the\u00a0 CIT\u00a0 (A), \u00a0the\u00a0 CIT<\/p>\n
(A) allowed the claim of the assessee. While allowing the claim of the assesse,\u00a0\u00a0\u00a0\u00a0 the CIT (A) relied on his own order in another case namely,\u00a0 Samtel Colour Ltd.\u00a0 The department preferred appeal to the Tribunal. During the course of the hearing before the\u00a0 Tribunal,\u00a0 the\u00a0 assessee brought on\u00a0 record\u00a0 that\u00a0 the\u00a0 order of\u00a0 the CIT<\/p>\n
(A) in the case of Samtel Colour Ltd. has also been confirmed by the Tribunal.\u00a0\u00a0\u00a0 The assessee also filed a copy of the order of the Tribunal in the case of Samtel Colour Ltd. However, the Tribunal decided the appeal of the department against\u00a0 the assessee. While deciding the appeal, the Tribunal failed to take cognizance of the order of the Co-ordinate Bench of the Tribunal in the case of Samtel Colour Ltd., which was filed by the assessee.<\/p>\n
The assessee preferred a Miscellaneous Application against the order of the Tribunal under section 254(2) of the Act. The assessee contended before the Tribunal\u00a0 that the non-consideration of the decision of the co-ordinate bench was\u00a0\u00a0\u00a0 a mistake apparent from the records and hence the order passed in the appeal requires to be rectified. The Tribunal acknowledged the mistake\u00a0 on\u00a0 its\u00a0 part in not following the said order of the co-ordinate bench and rectified the order in appeal accordingly. The revenue filed an appeal to the Delhi High Court against\u00a0 the order of the Tribunal in the Miscellaneous Application. The Delhi High Court held that under section 254 of the Act, there is no inherent power available to review its own order. Considering that no express power has been given to the Tribunal, it is not permissible to the Tribunal to indirectly review its order under section 254(2) of the Act. The action of the Tribunal amounted to review of the order already passed by the Tribunal and the same is not permissible under<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
section 254(2) of the Act. The High Court also held that the fact that a decision\u00a0\u00a0\u00a0\u00a0\u00a0 of co-ordinate bench was cited and placed on record but the same had escaped attention of the bench can hardly be construed as a mistake apparent from the record. Accordingly, the DelhiHigh Court set aside the order passed by the Tribunal in the Miscellaneous Application [CIT v. Honda Siel Power Products\u00a0 Ltd. (2007) 293 ITR 132 (Delhi)(HC). <\/em><\/strong>Aggrieved by the said order of the Delhi\u00a0\u00a0 High Court, the assessee preferred the appealto the Supreme Court.<\/p>\n \u00a0<\/p>\n The issue before the Hon. Supreme Court was whether not considering the decision of a co-ordinate bench is a mistake apparent from records and therefore whether the Tribunal was justified in correcting the same u\/s. 254(2) of the Act.<\/p>\n \u00a0<\/p>\n The Supreme Court observed that the expression \u201crectification of mistake from the record\u201d occurs in section 154. It also finds place in section 254(2). The purpose behind enactment of section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do\u00a0 with the inherent powers of\u00a0 the Tribunal.\u00a0 One of\u00a0 the important reasons for giving the power of rectification to the Tribunal is to\u00a0\u00a0\u00a0\u00a0 see that no prejudice is\u00a0 caused to\u00a0 either of\u00a0 the\u00a0 parties appearing before it by\u00a0 its decision based on a mistake apparent from the record. The\u00a0 Supreme Court also explained that \u201cRule of precedent\u201d is an important aspect of legal certainty\u00a0\u00a0\u00a0\u00a0 in rule of law. That principle is not obliterated by section 254(2) of the IT Act,\u00a0 1961. When prejudice results from an order attributable to the Tribunal\u2019s mistake, error or omission, then it is the duty of the Tribunal\u00a0 to set it right. Atonement to\u00a0 the wronged party by the Court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review.<\/p>\n \u00a0<\/p>\n The Supreme Court held that in\u00a0 the present case, the Tribunal\u00a0 was justified \u00a0in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the co-ordinate Bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record. The Tribunal has acknowledged its mistake and has accordingly rectified its\u00a0 order. The High Court was not justified in interfering with the said order. (AY. 1991-92) (CA No. 5412 of 2007 dt. 26-11-2007)<\/p>\n Editorial <\/em><\/strong>: In the case of Lachmandas Bhatia Hingwala Pvt. Ltd. v. ACIT (2011) 330 ITR 243 (Delhi) (HC)<\/em><\/strong>, the full bench of the Delhi High Court following the decision of Supreme Court in Honda Siel Power Products Ltd. (supra) has held\u00a0\u00a0 that under section 254, fundamental principle is that no party appearing before\u00a0\u00a0 the Tribunal should suffer on account of any mistake committed by the Tribunal and no prejudice is caused to either of the parties before the Tribunal which is attributable to the Tribunal\u2019s mistake, omission or commission and if the same error is a manifest error, then the Tribunal would be justified to recall its order. While exercising the power of rectification under section 254(2), Tribunal can recall its order in entirety, if it is satisfied that prejudice has resulted to the party which is attributable to the Tribunal\u2019s mistake, error or omission and which error is a manifest error and it has nothing to do with the doctrine or concept of inherent power of review.<\/p>\n \u201cMy imperfections and failures are as much\u00a0\u00a0 a blessing from God as mysuccesses and my<\/em><\/p>\n talents and I lay them both at his feet.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" S. 254(2) : Appellate Tribunal – Rectification of mistake apparent from record \u2013 Not considering the decision of a co-ordinate Bench of the Tribunal is a mistake apparent from records. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13469","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3vf","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13469"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13469\/revisions"}],"predecessor-version":[{"id":13470,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13469\/revisions\/13470"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Issue<\/h3>\n
View<\/h3>\n
Held<\/h3>\n