1. This is an application praying for correction of a mistake said to be apparent from the record. The question in dispute was the allowability of depreciation and development rebate in respect of additional liability incurred due to exchange rate differences. The Commissioner (Appeals) had directed the ITO to allow the depreciation on additional liability of Rs. 3,70,998 for the expenditure incurred on account of devaluation during this year. The Tribunal further appears to have accepted the assessee's contention that the claim for depreciation and development rebate should have been allowed on a sum of Rs. 23,61,713 because as a result of difference in the exchange rate, the assessee's liability had increased to this extent. It has now been contended by the revenue that this was an entirely new position and was contested by the representative of the department at the time of hearing. The actual increase in the liability whether on account of mercantile system of accounts or otherwise had never been pleaded, examined or considered for allowance by any of the lower authorities.
Therefore, the Tribunal could not have allowed this claim at this stage and the order of the Tribunal should be rectified.
2. The application has been strongly contested by raising the following pleas : 2. That the content of the application is untrue. The claim in question was duly made before the Commissioner of Income-tax (Appeals) : vide copy enclosed.
3. That according to settled law the said Commissioner, not having dealt with the said grounds raised before him, must be deemed to have decided the same against the appellant.
4. That in the circumstances the Tribunal was perfectly justified in allowing the point to be argued before it.
5. That, without prejudice, the matter does not fall within the purview of section 254(2)." A rejoinder was filed to this reply wherein detailed arguments were also put forward in support of the allegations made in this application and to rebut the pleas raised in reply. Thereafter, the assessee filed a reply to this rejoinder contradicting some of the allegations made in the rejoinder. We have heard the representatives of the parties at length over all the matters raised in this application.
3. Before dealing with the merits of this application, we shall dispose of the preliminary objection raised by the assessee's representative that the application was unauthorised. The substance of this objection is that the application has been made on behalf of the ITO, Calcutta, but it has only been signed by Shri N.K. Nayak, senior authorised representative, in the Calcutta Benches of the Tribunal who had no locus standi to do so. According to the assessee, at the time of hearing of the main appeal the department was represented by Shri K.Subbarao. Therefore, either the ITO concerned should have himself signed the application or Shri K. Subbarao, the departmental representative, who appeared and acted on behalf of the revenue in the main appeal. Any other representative could not have signed the application on behalf of the department. Even the rejoinder filed to contradict the pleas in reply has been signed by Shri S.P. Chaliha and not by Shri K. Subbarao or by the ITO. Therefore, the defect in the application, i.e., of being unauthorised, continues. After going through the entire matter, we are of the opinion that there is no substance in this objection. The representative of the assessee himself conceded that the position of an authorised representative in relation to an assessee is a person duly authorised by the assessee under section 288 of the Income-tax Act, 1961 ('the Act'), to attend before the Tribunal but in relation to an income-tax authority who is a party to any proceeding before the Tribunal, the authorised representative is a person duly appointed by the Central Government by notification in the Official Gazette as authorised representative to appear, plead and act for such authority in any such proceeding and any other person acting on behalf of the person so appointed. Therefore, the position of the authorised representative in relation to income-tax authorities is much stronger. Now, all the persons, S/Shri K. Subbarao, N.K. Nayak and S.P. Chaliha, are authorised representatives appointed by the Central Government by notification in the Official Gazette. They did not have to file powers of attorney in each case and have often been appearing in different cases before different Benches without any distinction.
Since all of them are authorised not only to attend but to appear, plead and act on behalf of the income-tax authorities, the application signed by Shri N.K. Nayak cannot be said to be unauthorised.
4. Coming to the merits of the application, we find that the Tribunal had directed the allowance of depreciation and development rebate on a higher amount on the ground that as a result of devaluation, the assessee's liability had increased by Rs. 23,61,713. Though the actual payment may have to be made later, as per chart furnished by the representative of the assessee at pages 4, 5 and 6 of the paper book, the assessee's liability had gone up during the current year and since the assessee was having mercantile system of accounting, obviously the entire increase would go towards increase in the capital cost incurred by the assessee and, consequently, the assessee was entitled to claim depreciation, etc., on this increased cost. Since in this application, the reply and the rejoinders, various allegations alleging mistakes of fact and law committed by the Tribunal had been made, which were contradicted by the opposite parties, we have tried to ascertain all the facts in dispute and have also gone through the relevant portion of the file of the Commissioner (Appeals). The following facts emerge out from the record : 5. The original claim before the ITO was for a sum of Rs. 3,70,998 on account of the additional expenditure incurred by the assessee due to exchange rate-differences.
This was claimed as a revenue expenditure and as such there was no extra claim for depreciation or development rebate. The ITO rejected the claim as being of the nature of capital expenditure. In the original grounds filed before the Commissioner (Appeals), the assessee had challenged this conclusion of the ITO and claimed it as a revenue expenditure.
In the alternative, the assessee had claimed depreciation thereon.
There was no claim for enhancement of this amount of Rs. 23,61,713 but before the hearing of the appeal the following amplified grounds of appeal were filed before the Commissioner (Appeals) : "in paragraph 7 of the grounds of appeal, the appellant had claimed that the amount of Rs. 3,70,998 should be allowed as revenue expenditure rather than as capital expenditure under section 43A of the Income-tax Act. In the alternative, the appellant had also claimed that depreciation should be allowed on the enhanced cost of plant and machinery in case the increase in the cost was capitalised under section 43A of the Income-tax Act.
In the latter case, the appellant would like to clarify that two consequences should logically follow : (i) For the purpose of calculating depreciation, the cost of the relevant capital assets should be written up to the extent of the full amount of the additional rupee liability incurred on account of the difference in exchange rate. This is quite clear from the interpretation of section 43A as provided by the Ministry of Finance as per their D.O. Letter dated 4-1-1967 to the Federation of Indian Chambers of Commerce and Industrya copy of which is attached. In terms of that clarification, the relevant fixed assets would be written up by an amount of Rs. 23,61,713 which should be considered for purposes of depreciation thereon as per the Income-tax Act and Rules.
(ii) Development rebate should also be allowed on the aforesaid amount of Rs. 23,61,713 in view of the decision of the Gujarat High Court in Arvincl Mills Ltd. v. CIT  112 ITR 64.
The appellant, therefore, respectfully requests that the learned ITO may be directed to allow depreciation and development rebate, accordingly." 6. The discussion by the Commissioner (Appeals) is in para 7 which shows that the amplified ground for claiming the depreciation on the higher amount was not at all considered by him. Thereafter, the assessee put in an application under section 154 of the Act before the Commissioner (Appeals) alleging that through oversight the above additional ground of appeal taken at the time of hearing had not been taken into consideration while passing the order. The application remained pending before the Commissioner and on 20-1-1981, he asked the assessee's representative as to when the additional grounds in question had been filed. The case was fixed for hearing on the next day when the assessee's representative contended that he was referring to ground No.7, which we have already quoted in extenso above. Thereafter, the Commissioner did not pass an order but the assessee raised the following grounds of appeal before the Tribunal in this behalf : 5. For that the learned IAC (Assessment) and the learned Commissioner (Appeals) wholly erred and have incorrectly treated Rs. 3,70,998 as capital expenditure within the meaning of Section 43A(2) and in view of the facts and circumstances, such action of the learned IAC (Assessment) and the learned Commissioner (Appeals) was wholly bad, illegal and unjustified and in view of the facts and circumstances, an aggregate sum of Rs. 23,61,713 comprised of Rs. 3,70,998 being exchange rate difference on loans repaid during the year and Rs. 19,90,715 being the exchange rate difference on the outstanding loans as on 31-3-1976 should be treated as revenue expenditure.
6. (a) For that the learned Commissioner (Appeals) has erred in ignoring the amplified ground filed before the learned Commissioner (Appeals) in relation to ground No. 7 of the grounds of appeal before the Commissioner (Appeals) wherein depreciation and development rebate was claimed on Rs. 23,61,713 instead of Rs. 3,70,998. Without prejudice to the claim of appellant mentioned in ground No. 5, the appellant is even otherwise entitled to depreciation and development rebate on the aforesaid entire amount of Rs. 23,61,713.
(b) For that the learned Commissioner (Appeals) having held that the appellant is entitled to depreciation on additional rupee liability incurred on account of the exchange rate difference in respect of the loan in foreign currency in terms of Section 43A should have specifically directed the IAC (Assessment) for allowing depreciation on Rs. 23,61,713.
(c) For that the learned Commissioner (Appeals) wholly erred in law as well as on fact in not allowing development rebate on the exchange rate difference amounting to Rs. 23,61,713.
7. From our Log Book it transpires that no objection to the admissibility of the assessee's claim for depreciation, etc., on the higher amount before the Tribunal was taken by the departmental representative and that is probably the reason why he did not personally sign the present application, nor has anybody filed any affidavit in support of this allegation. Therefore, the Tribunal allowed the assessee to raise this ground and adjudicated the claim, accordingly.
8. It, however, transpires that the chart relating to various liabilities and the increase therein, as a result of devaluation which is stated to be at pages 4, 5 and 6 of the paper book, was not filed before any of the authorities below. Moreover, none of the authorities below had any occasion to consider whether the conditions prescribed for allowance of development rebate had been fulfilled by the assessee so as to enable it to claim the allowance for development rebate on the enhanced cost.
'1. Whether the assessee could be permitted to take up this plea in the present circumstances 2. Once the Tribunal has allowed the assessee to take up the plea and also allowed the same on merits, whether now the order can be rectified and to what extent can the rectification extend to 10. So far as the first question is concerned, reliance was placed by the representative of the department upon the Supreme Court judgment in Addl. C/T V. Gurjargravures (P.) Ltd.  111 ITR 1 wherein one of the grounds of appeal raised by the respondent in an appeal before the AAC was that the ITO had erred in not giving the respondent the benefit of section 84 of the Act. No such claim had been made before the ITO when he completed the assessment, nor was there material on record supporting such a claim. In subsequent years relief under section 84 had been allowed to the respondent. The appeal was dismissed by the AAC on the ground that the question of error on the part of the ITO did not arise as no claim for exemption under section 84 had been made before the officer. On further appeal, the Tribunal held that, since the entire assessment was open before the AAC, there was no reason for his not entertaining the claim and directed the ITO to allow the appropriate relief. On a reference, the High Court held that it was competent for the Tribunal to so hold and give the direction. On appeal to the Hon'ble Supreme Court, reversing the decision of the High Court, it was held : . . . that, as neither was any claim made before the Income-tax Officer regarding the relief under section 84 nor was there any material on record in support thereof, and from the mere fact that such a claim had been allowed in subsequent years it could not be assumed that the prescribed conditions justifying a claim for exemption under section 84 were also fulfilled, the Tribunal was not competent to hold that the Appellate Assistant Commissioner should have entertained the question of relief under section 84 or to direct the Income-tax Officer to allow the relief.
11. Next reliance was placed upon a decision of the Supreme Court in CIT V. Rai Bahadur Hardutroy Motilal Chamaria  66 ITR 443 for the proposition that there must be something in the assessment order to show that the ITO applied his mind to the particular subject-matter and the particular source of income with a view to consider its taxability or non-taxability and not to any incidental connection. Reference was also made to CIT V. Mahalakshmi Textile Mills Ltd.  66 ITR 710 (SC) for the proposition that the Tribunal could determine only such question as had been raised by the income-tax authorities but could not go beyond that. Reference was next made to CIT v. Jagadhri Electric Supply & Industrial Co.  140 ITR 490 (Punj. & Har.), which lays down that the Tribunal cannot substitute grounds in the order of the Commissioner under section 263 of the Act which he himself did not take up while passing the order.
12. Again, reliance was placed upon Hukumchand & Mannalal Co. v. CIT  126 ITR 251 (MP), which lays down that if there is no appeal to the AAC on a question decided by the ITO, the Tribunal cannot allow the assessee to raise that question in second appeal before it. Reference was also placed upon another judgment of the Madhya Pradesh High Court in CIT v. Nirbheram Daluram  127 ITR 491 in which the Tribunal had held that the AAC had no jurisdiction to add an income from undisclosed sources when these sources were not considered by the ITO and this conclusion was upheld by their Lordships. Lastly, reference was made to R. L. Rajgharia v. ITO  107 ITR 347 (Cal.), wherein the controversy before the ITO and the AAC was as to whether the loss of Rs. 23,100 should be treated as speculative loss or business loss.
On a second appeal, the Tribunal remanded the matter to the AAC with a direction to find out whether the loss was capital or not. It was held that the Tribunal had exceeded its jurisdiction and, consequently, the order of the Tribunal was quashed.
13. On behalf of the assessee it was argued that since the claim for depreciation on the higher amount had been put in before the Commissioner, even though he had not considered it; it should be deemed to have been considered and decided against him and, therefore, the Tribunal was entitled to go into this matter even though there is no discussion by the Commissioner in this behalf. In this behalf we may refer to a decision of the Andhra Pradesh High Court in CIT v. Gangappa Cables Ltd.  116 ITR 778 wherein it was held that the Tribunal disposing of an appeal under the Act has got the power to allow the assessee to put forward a new claim, notwithstanding the fact that such a claim was not raised by him before the ITO or the AAC, provided there is sufficient material on record to allow the \ same. The decision in Gurjargravures (P.) Ltd.''s case (supra) was distinguished in this case.
14. After careful consideration of the facts and circumstances of the case, we are of the opinion that had the matter been properly argued before the Tribunal in the first instance in the manner in which it was done at the time of hearing of this petition, we would not have permitted the assessee to raise the claim for additional depreciation, since the claim was neither considered by the ITO nor by the Commissioner (Appeals) and the assessee had already moved the Commissioner (Appeals) for reconsideration thereof under section 154, who could consider the same and even the material for adjudicating the ground had not been produced before the authorities below.
15. But the matter does not end there. The lengthy arguments that were addressed before the Tribunal now, were not all addressed in the first instance and the representative of the department had to argue for at least a couple of hours to persuade us to hold that the claim for depreciation on the higher amount should not have been considered by the Bench.
The very fact that such lengthy arguments' had to be addressed before us shows that the point is not free from difficulty and the Tribunal also could have allowed the assessee to make this claim. Moreover, now that the Tribunal has already allowed it, the application of the assessee before the Commissioner (Appeals) has become infructuous inasmuch as the order of the Commissioner (Appeals) has already merged in the order of the Tribunal. It has been held in T.S. Balaram, ITO v.Volkart Bros.  82 ITR 50 (SC) that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. Further, it has been held in Shew Paper Exchange v. ITO  93 ITR 186 (Cal.) that the Tribunal has only a power to rectify any mistake in its order provided the mistake is apparent from the record. It has no power to review its order. Therefore, by refusing to allow the assessee to make the claim for depreciation on the higher amount we would, in effect, be reviewing the order passed by the Tribunal earlier which we are not expected to do. If the Tribunal has allowed the assessee to raise a plea which was contrary to the balance of authority, the proper remedy for the department now is to get a verdict from the Hon'ble High Court.
16. We are, however, of the opinion that some amendment in the order is called for. One obvious mistake that the Tribunal has done is that relying upon a chart furnished by the assessee showing the increase in its liability as a result of devaluation copy of which is at pages 4, 5 and 6 of the paper book, it has observed that the entire increase should be considered for the purpose of assessee's claim for depreciation and impliedly for development rebate also. As pointed out above, this chart and the papers referred to by the Tribunal were not before the authorities below. Therefore, the Tribunal certainly committed a mistake of fact in accepting the chart without proper verification. The question as to on what amount the assessee should be entitled to depreciation and development rebate in this year was, as pointed out above, not considered by the authorities below in the manner in which it was sought to be considered before the Tribunal.
Therefore, verification of the figures was absolutely necessary.
17. This apart, as it happens, the dictating member while sitting in Bench 'C of the Tribunal had an occasion to hear the assessee's appeal in IT Appeal No, 1156 (Cal.) of 1981 relating to the next year, i.e., 1977-78 wherein it was noticed that the Commissioner (Appeals) in para 13 of his order had again held that the assessee was entitled to depreciation on the additional rupee liability incurred on account of exchange rate difference in respect of loan in foreign exchange currency in terms of Section 43A of the Act. According to the Commissioner (Appeals), such additional rupee liability would include not only the actual additional payment made in respect of loan but also the additional amount payable on the loan at the end of the year. He has, therefore, directed the 1AC to allow the depreciation as above on the assessee's furnishing the full particulars of the machinery required. Therefore, this matter has to be verified in respect of the assessee's claim for the later year. Since the present order of the Tribunal has been passed without verifying the correctness of the figures and without going through the question of its effect on the assessments for the other years, it would be proper that instead of allowing the claim straightaway the matter be referred back to the 1TO for allowing it after verification in terms of the order of the Tribunal. It may be added that the matter has already been referred back to the authorities below in respect of some other grounds raised in the appeal. Therefore, this ground shall also be verified by them.
18. in the result, the following words are added at the end of para 10 of the order : The claim of the assessee in this behalf shall, therefore, be considered afresh by the I.TO in the light of our observations made in the order passed in M.A. No. 32 (Cal.) of 1983.
Although there is no prayer for rectification of para 11 of the order, it may be further clarified that the discussion in para 11 in respect of the assessee's claim for development rebate was confined only to the additional rupee liability to the extent of Rs. 3,70,998 which had been disallowed by the Commissioner (Appeals) and did not relate to the claim for development rebate on the enhanced cost referred to in para 10 of the order, which should be decided afresh in the light of this order.