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Indian Aluminium Co. Ltd. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 88 of 1979
Judge
Reported in[1983]141ITR258(Cal)
ActsIncome Tax Act, 1961 - Sections 84, 80J, 154 and 197(3)
AppellantIndian Aluminium Co. Ltd.
RespondentCommissioner of Income-tax
Appellant AdvocateS.R. Banerjee, ;Soumen Mukherjee and ;D.C. Nandi, Advs.
Respondent AdvocateSuhas Sen, Adv.
Cases ReferredNavnit Lal C. Javeri v. K. K. Sen
Excerpt:
- sabyasachi mukharji, j.1. this reference arises out of the proceedings for the rectification of certain assessments relating to the assessment years 1967-68, 1968-69 and 1969-70. the assessee is a public limited company engaged in the manufacture and production of aluminium at different places during the relevant years such as alupuram, muri, belur, kalwa and hirakucl. the company produces aluminium ingots and also sheets, circles, foils, extrusions, aluminium powder, paste (pigments), etc., required in various machinery like textile machinery, jute machinery, metallurgical machinery, chemical machinery, earthmoving machinery, irrigation equipment, etc. the relevant previous years for the three assessment years with which we are concerned were 31st december, 1966, 31st december, 1967, and.....
Judgment:

Sabyasachi Mukharji, J.

1. This reference arises out of the proceedings for the rectification of certain assessments relating to the assessment years 1967-68, 1968-69 and 1969-70. The assessee is a public limited company engaged in the manufacture and production of aluminium at different places during the relevant years such as Alupuram, Muri, Belur, Kalwa and Hirakucl. The company produces aluminium ingots and also sheets, circles, foils, extrusions, aluminium powder, paste (pigments), etc., required in various machinery like textile machinery, jute machinery, metallurgical machinery, chemical machinery, earthmoving machinery, irrigation equipment, etc. The relevant previous years for the three assessment years with which we are concerned were 31st December, 1966, 31st December, 1967, and 31st December, 1968, respectively. The ITO completed the assessments without computing the statutory relief allowable to the asses-see under Section 80J(3) of the I.T. Act, 1961, with regard to the assessee's new Foil Mill Unit at Kalwa, and to carry forward such deficiency for adjustment against future profits. The original assessment had been completed by the ITO under Section 143(3) of the Act on 21st March, 1972. It appears from the order of the Appellate Tribunal, where the matter went up finally, that the assessee had not claimed any relief either under Section 84 or under Section 80J for the carry forward of deficiency in the applications under Section 154 in respect of the unit. In the returns also the assessee did not make any claim under Section 84 or under Section 80J and even during the assessment proceedings, the Tribunal observed, no such claim was put up by the assessee before the ITO. This is a finding of fact recorded by the Tribunal in the instant case which has not been challenged. Learned advocate for the assessee, however, drew our attention to the grounds of appeal from the order of the ITO to rectify the assessments under Section 154 wherein the assessee had contended, inter alia, as follows :

'(iv) The ITO was wrong to observe that no claim with regard to the deficiency of rebate under Section 84 concerning the Foil Unit was made at the assessment stage because it was duly brought to the notice of the ITO before the assessment order was passed through an application for certificate under Section 197(3), dated 22nd April, 1968, and otherwise,'

2. In this connection learned advocate drew our attention to the said note referred to therein in the grounds of appeal which stated as follows :

' (2) Capital profit on devaluation,--Where shares were issued for financing a new Foil Mill at Kalwa and a new Smelter at Alupuram, the Government of India stipulated that the foreign share money should be kept abroad to be utilised for purchase of capital equipments abroad. Based on this stipulation import licences were issued with a specific note and as and when payments were made they were recorded in the licence. In this year, i.e., 1966 the rupee was devalued and as a result the balance held abroad at foreign banks appreciated. Such appreciation amounted to Rs. 15,98,102 and this has been referred to in Note No. 1, to our printed balance-sheet. This being a capital profit was transferred to the capital reserve account through the profit and loss appropriation account.'

3. We are afraid we cannot read either in the said note or anywhere any fact suggesting that in the original assessment the assessee had claimed any relief under Section 80J(3) of the Act. Therefore, it appears to us that apart from the fact that no question challenging any finding of fact by the Tribunal had been posed before us, the finding of the Tribunal that at the time of the assessment no such claim had been made at the hearing stage was a correct one. The original assessments had been completed by the ITO under Section 143(3) of the Act on the 21st March, 1972, where the ITO referred to the claim of relief under Section 84/80J(3) in respect of other units and rejected such claim on the ground of the units' alleged expansion of business. In respect of the ascertainment of statutory relief relating to the new Foil Mill Unit at Kalwa and to carry forward deficiency, the assessment orders did not record any finding as there was no claim or contention made before the ITO. The assessee thereafter submitted a petition under Section 154 on 22nd January, 1974, enclosing therein the computation of relief due under Section 84/80J(3) of the I.T. Act, 1961, for the material years. In the first application for the assessment year 1967-68, the other applications being more or less in identical terms, the assessee stated as follows :

'While passing the order under Section 143(3) dated 21st March, 1972, you appear to have forgotten to ascertain the statutory relief or deficiency allowable to the assessee in accordance with Section 84 of the Act with regard to the Foil Unit at Kalwa and to carry the deficiency forward.

We, therefore, request you to kindly ascertain the deficiency and let the assessee have the benefit of the carry forward thereof, by using your jurisdiction under Section 154 of the Act.

A computation of the relief under Section 84 for the relevant year is annexed herewith.'

4. Thereafter the assessee referred to the capital employed at the New Foil Mill at Kalwa as on 1st January, 1966, viz., Rs. 3,26,78,847 and 6% of the capital employed, Rs. 19,60,730. Beyond that no further particulars were given. It appears that thereafter on or about 19th April, 1974, the assessee filed a further clarification wherein the assessee stated, inter alia, as follows :

'1. The relief/rebate under Section 80J/84 was not shown in the return as there was no provision in the relevant return form to indicate the amount of relief/rebate to be carried forward.

2. In our application for certificate under Section 197(3) dated 22nd April, 1968, we not only indicated that the relief/rebate under Section 80J/84 will be available for the new foil mill at Kalwa but also mentioned the quantum of relief/rebate allowable according to our calculation. This application was the first application by us after Section 80J(3) was enacted which specifically provided for the carry forward of any such unabsorbed relief/rebate.

3. The relevant certificate under Section 197(3) was issued by you on 10th April, 1970, incorporating therein the relief with reference to the new foil mill at Kalwa as claimed by us in our application.

4. The assessment order for this year was passed by you on 21st March, 1972, and as usual, before finalisation of this assessment, you must have referred to the provisional certificates issued under Section 197(3) already issued by you before such date.

5. From the above facts it will be quite evident that at the time of assessment proceeding for the year, you were well aware of the statutory relief/rebate due under Section 80J/84 with regard to the foil mill at Kalwa. However, from the assessment order it is quite obvious that you have through inadvertence forgotten to consider the necessary relief/ rebate allowable under Section 80J/84 for the foil unit as in the said order you have discussed the applicability of the provision of Section 80J/84 only with regard to smelter stage I (Alupuram) and Belur II units and not with regard to foil mill. '

5. The assessee thereafter claimed appropriate relief and rebate under Section 80J/84 of the Act. The assessee contended before the ITO that relief under Section 84/80J(3) was not shown in the returns for the material years as there was no provision in the return form to indicate the amount of relief to be carried forward and in the assessee's application for a certificate under Section 197(3) of the Act, dated 6th April, 1967, it was not only indicated that the relief under Section 84/80J(3) would be available to the new foil mill at Kalwa but also mentioned the quantum of relief allowable according to its calculation. Whether the certificate under Section 84/80J(3) referred to the availability in respect of the new foil mill unit at Kalwa would better be understood if a reference is made to the application which appears at p. 177 of the paper book and which is dated 6th April, 1967. But there was no mention of any profit as indeed there was no profit from the said Unit which is under dispute here, that is to say, the new foil mill unit at Kalwa. The certificate under Section 197(3) naturally did not refer to any profit of the said new foil mill unit at Kalwa. The certificate was as follows:

'Certificate

According to the information supplied the directors of Indian Aluminium Company Limited at their 190th meeting held on 12th February, 1968, resolved that a final dividend of Re. TOO on each ordinary share of the company (to be proportionately on shares partly paid), over and above the interim dividend of Rs. 0.75 paid earlier in November, 1967, to theholder of the ordinary shares and also of Rs. 6'25 subject to income-tax payable by the company on each preference share of the company as on 28th May, 1968, will be paid in respect of the year ended 31st December, 1967. On a representation made to me and on the basis of figures supplied by the company I hereby certify (provisionally subject to final assessment) that 11.59 per cent. of the said dividend on ordinary including interim dividend and preference shares will be exempt in the hands of the respective shareholders as per provisions of Section 80K (formerly sec. 85) of the I.T. Act, 1961. The Indian Aluminium Company Limited is hereby authorised not to deduct any income-tax on such proportionate amount.

This certificate is issued under the provisions of Section 197(3) of the Income-tax Act, 1961.' Dealing with this aspect the AAC had noted as follows:

'7. It is not a fact that the assessee applied for a certificate under Section 197(3) for this year on 22nd April, 1968. In fact such an application for this year was for the first time made on 6th April, 1967, under cover of which total profit exempt from tax under Section 81 of the I.T. Act, 1961, was shown as under :

Rs.

1.Alupuram Stage I (Second year)

10,31,540

2.Alupuram Stage II (First year)

--

3.Properzi Plant (First year)

--

4. FoilMill (Second year)

--

5.Belur-II (Last year)

12,32,015

22,63,555

This petition was elaborated by a follow-up petition dated 17th April, 1967, wherein no mention made about foil mill. In para. 1 of the said petition it was stated as under: Your certificate was sought in respect of the profits earned in 1966 at only two new undertakings, viz., Belur-II and Alupuram.' '

6. It appears that it was further contended before the ITO in the application under Section 154 that the relief under Section 84/80J(3) was not shown in the return for the material year as there was no provision in the return form to indicate the amount of relief to be carried forward and in the assessee's application for certificate under Section 197(3) of the Act dated 6th April, 1967, according to the assessee, it was not only indicated that the relief under Section 84/80J(3) would be available to the new foil mill at Kalwa but also mentioned the quantum of relief allowable according to its calculation. We, however, have not been able to find from the certificate any reference to any profit from the new foil mill unit at Kalwa as it could not be, as indeed there was no profit in that year. The form of return was changed from the assessment year 1972-73 to provide for certain claims according to the assessee. That application was the first application made by the company after Section 80J(3) was enacted by the Finance (No, 2) Act of 1967 with effect from the 1st April, 1968, which specifically provided for a carry forward of any such unabsorbed relief. The certificate under Section 197(3) was issued on the 10th April, 1970, relating to the assessment year 1970-71 incorporating therein the relief with reference to the new foil mill unit at Kalwa but the assessment orders were passed on the 21st March, 1972, and the ITO, according to the assessee, must have referred to the certificate issued under Section 197(3) which had been issued by him before the completion of the assessment. It was further contended that on the above facts it was quite evident that at the time of the completion of the assessments the ITO was well aware of the statutory relief due under Section 84/80J of the Act with regard to the new foil mill unit at Kalwa. Further, the ITO's specific attention, according to the assessee, was drawn to the specific claim of relief relating to this new industrial undertaking as it had been filed while claiming certificate under Section 197(3) of the Act, through the letter dated 6th April, 1967, through a note submitted at the time of the assessment on 8th March, 1972. We have set out the said note wherein we have not been able to find such claim. It was claimed, therefore, that there was a mistake, a mistake which was clearly apparent from the record rectifiable under Section 154 of the I.T. Act, 1961. The ITO, however, passed an order refusing to rectify any carry forward deficiency relating to the assessee's new foil company at Kalwa on the ground that the certificate under Section 197(3) had been issued long before the date of the assessment and that the certificate, according to the ITO, had no relevancy to the completion of the assessment under Section 143(3) of the Act and that the record showed that the company did not make any claim for the relief either in the return during the assessment proceedings though such a claim was made in respect of other units and that no appeal had been filed on such a point even though the appeal was there on other points.

7. Being aggrieved by the said order of the ITO, the assessee went up in appeal before the AAC. It was contended before him that the relief under Section 84/80J(3) of the Act was a statutory one. The ITO had failed to appreciate that there was no provision in the return form to indicate the amount of deficiency to be carried forward and that the computation filed along with the return was only the computation of assessable income where the question of mentioning the deficiency did not arise. The ITO, it was contended, was wrong to observe that no claim with regard to deficiency to be carried forward in respect of the new foil mill had been made before the assessment or at the assessment stage but mere non agitation of the point before the AAC, on an appeal, did not take away the assessee's right to claim the sum under Section 154 of the Act and the ITO, according to the assessee, was wrong to observe that there was no mistake apparent from the records because, according to the assessee, in the instant case 'records ' included and consisted of records also of the proceedings ending with the grant of the certificate by the ITO under Section 197(3) of the Act. Several decisions were referred to. The AAC, however, did not agree with all the submissions and held that there was no proper claim made under Section 84/80J(3) of the I.T. Act in respect of the assessee's new foil company unit at Kalwa and as such, according to the AAC, there was no apparent mistake from the records. He, accordingly, dismissed the assessee's appeal.

8. The assessee thereafter went up in further appeal before the Tribunal. It was contended that there was no provision in the return form to claim such a relief and it was further urged it was a statutory obligation and duty of the ITO to grant such a relief. In fact, a certificate under Section 197(3) had been issued long before the completion of the assessments and to the proceedings and certificate the ITO's attention was specifically drawn at the time of assessments. The proceedings in respect of the issuance of the certificate under Section 197(3) of the Act formed part of the assessment records and the failure of the ITO to allow relief was only, therefore, a patent error of law. Thus, it was according to the assessee, a mistake which was apparent from the record. It was further urged that Section 80J(3) of the Act was a retrospective one and it was incumbent on the ITO to compute the deficiency in accordance with the law of the I.T. Rules in force and to carry forward the same for adjustment against future profits. Various decisions were cited before the Tribunal. The Tribunal, however, did not agree with the assessee's contention. According to the Tribunal, a mere mention of the new foil mill units in Section 197(3) proceedings was not enough and a specific claim should have been made in the return form under Section 84 or Section 80J(3). The Tribunal observed that this had not been done during the assessment year and the record did not form part of the proceedings under Section 197(3) of the Act and relying on certain decisions the Tribunal was of the view that the ITO was correct in rejecting this application under Section 154 because on this aspect the alleged mistake could not be said to be a mistake apparent from the face of the record. Upon these, on the application of the assessee, the following five questions have been referred to this court :

'(a) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the order of the Income-tax Officer refusing to pass the order under Section 154 of the Income-tax Act, 1961, was justified in law ?

(b) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the records relating to Section 197(3) proceedings for these years and also of assessment year 1970-71 do not form part of the 'records' as contemplated under Section 154 of the Income-tax Act, 1961 ?

(c) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the applicant-company should have claimed the relief under Section 84 of the Income-tax Act, 1961, in support of its new foil mill unit at Kalwa in the return form when the same did not provide for the same ?

(d) Whether, on the facts and in the circumstances of the case, the Tribunal did not err in appreciating the facts and issues involved in the Anchor Pressings (P.) Ltd. v. CIT : [1975]100ITR347(All) , and in applying the ratio of that judgment to the applicant's case ?

(e) Whether, on the facts and in the circumstances of the case, the Tribunal did not misdirect itself in law in not appreciating that the power to rectify a mistake apparent on the ' records ' in accordance with Section 154 of the Income-tax Act, 1961, is also coupled with a duty to exercise that power for the ends of justice and whether the Tribunal is right in law in ultimately holding that the applicant's instant case did not deserve the exercise of that power as a duty towards the applicant? '

9. The question, therefore, basically is whether in the facts as we have mentioned hereinbefore and as found by the Tribunal there was any mistake apparent from the record. It is true, as was contended on behalf of the assessee, that for the relevant year, there was no special column for claiming the loss, as such. It was done specifically from the assessment year 1972-73 by the Finance (No. 2) Act of 1977. Section 80J applied for deduction in respect of profits and gains from industrial undertakings or ships or hotel business in certain cases. It stipulated that where the gross total income of an assessee included certain types of income including the income of new industrial undertakings, certain relief had to be given to the assessee, upon the fulfilment of certain conditions, on a percentage of the profit. It is not necessary to spell out the exact terms of the conditions required to be fulfilled. Section 80J(3) also dealt with certain conditions for the application of such relief but the entire Section 80J was made applicable provided certain conditions, as stipulated under Section 80J(4), were fulfilled. There were other conditions to which it is not necessary for us to refer. In our opinion, in order to determine the question whether Section 154 could be properly applicable or attracted, in the facts and circumstances of the case, we have to find out whether there was any mistake at all and, secondly, whether such a mistake was apparent from the record. Now, in order to find out whether there was amistake at all, it is necessary to determine whether Section 80J(3) was applicable in the facts and circumstances of this case With this is also connected the question whether the assessee had indisputably, as we must proceed on that basis in view of the fact as held by the Tribunal that the assessee had not claimed such a relief in the original assessment, claimed the relief under Section 80J(3) and whether such relief could be granted to the assessee at all and in not granting such a relief the ITO had committed a mistake. In other words, whether Section 80J(3) or indeed Section 80J imposes an obligation on the statutory authority, viz., the ITO dealing with the assessment to grant the relief in any event even though particularly the assessee had not claimed any relief in the original assessment. Where all the material facts relating to a relief or deduction, to which the statement of case makes the assessee entitled, in certain cases, are there before the ITO, a point may legitimately be urged that it is the statutory obligation of the ITO to grant relief irrespective of whether any such claim was made or not. But in a case where the grant of such a relief was dependent on certain particulars being available before the ITO and upon consideration, on certain facts, where the assessee had not placed materials for consideration of such facts, the question is whether the granting of such relief was obligatory on the part of the ITO, and whether in the absence of such materials in not granting such a relief, had the ITO committed any mistake at all. This question, in our opinion, has been quite clearly dealt with by the Gujarat High Court in the decision in the case of Chokshi Metal Refinery v. CIT : [1977]107ITR63(Guj) . There, the assessee was a registered firm and was carrying on the business of refinery at Surat. The business was started in February, 1963. The order of assessment for the assessment year 1967-68 was passed on the 1st March, 1968, and the total income computed was Rs. 1,49,863. The assessment order for the assessment year 1968-69 was passed on the 14th February, 1969, and the total income computed was Rs. 1,57,570. On 27th February, 1970, the assessee applied to the ITO praying that the assessments for these two years should be rectified so as to grant relief to the assessee under Section 84 of the I.T. Act, 1961. so far as the assessment year 1967-68 was concerned and under Section 80J for the assessment year 1968-69, the provisions of Sections 84 and 80J being identical. The contention of the assessee was that all the contentions which would justify the relief under Section 84/80J were satisfied and the relief calculated at 6 per cent. of the capital employed would come to Rs. 30,543 and Rs. 31,020 for the two years, respectively. The application was, therefore, for the purpose of deduction of Rs. 30,543 and Rs. 31,020, respectively, for the two assessment years under reference in that case, from the total income computed for the two assessment years. The applicationswere filed by the assessee before the ITO on the ground that the assessee had not claimed the deductions under Section 84/80J in its return of income nor was the claim put forward during the assessment proceedings for the two years. On appeal, the AAC agreed with the ITO. On further appeal, the Appellate Tribunal held that none of the conditions required for granting the relief under Section 84/80J was specifically satisfied by the assessee in course of the assessment proceedings and the ITO would have to cull out all the materials from the information given to him by the assessee and even after gathering that material from the record, the ITO might perhaps have to debate the matter with the assessee and with that it might not be possible for the ITO to agree with the assessee that the assessee was entitled to the relief; as such, the High Court held that no mistake apparent from the record could be said to have arisen. On this aspect, the Division Bench of the Gujarat High Court was unable to agree with the views of the Allahabad High Court in the case of Anchor Pressings (P.) Ltd. v. CIT : [1975]100ITR347(All) , as also the decision in the case of Shard Prasad v. CIT : [1975]100ITR373(All) . It was held by the Gujarat High Court, in view of the circular of the CBR issued in June, 1955, and the decisions of the Supreme Court in the case of Navnit Lal C. Javeri v. K. K. Sen, AAC : [1965]56ITR198(SC) , although at the time of the original assessment, the assessee-firm, as well, did not claim relief under Section 80J and though the responsibility for claiming refund and relief rested with the assessee, the ITO should have drawn the attention of the assessee to the relevant sections, viz., Section 84/80J to which the assessee appeared to have been clearly so entitled to claim. But, as we have mentioned before, the main question will be, whether all the materials were there for which relief could be granted. The fact that regarding the applicability of either Section 84 or Section 80J there is a good deal of scope for debate was also expressed in the case of Jiyajeerao Cotton Mills Ltd, v. ITO : [1977]107ITR253(Cal) . It is true, as the learned advocate for the assessee pointed out, that that case dealt entirely with the applicability of Section 84 by the ITO, but, as was noted by the learned judge, the provisions of Sections 84 and 80J were identical. In this connection on behalf of the assessee reliance was placed very strongly on the observations of the Division Bench of this court in the case of Indian Aluminium Co. Ltd, v. CIT : [1980]122ITR660(Cal) . That was the case of the assessee in respect of the assessment for the assessment year 1970-71. The questions posed before the court on Section 80J were as follows (pp. 665-666):

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Kalwa foil mill unit of the assessee-company was entitled to relief under Section 80J and in that view directing the Income-tax Officer to determine the quantum of deficiency to be carried forward from earlier years and to set it off against the profit of assessment year 1970-71 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Belgaum smelter unit of the assessee-company was entitled to relief under Section 80J and in that view in directing the ITO to determine the quantum of deficiency of the current year to be carried forward for set off against future profit in accordance with law ?

3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that for obtaining the benefit of the carry forward of the deficiency of the earlier previous year and set-off thereof against the profits of the previous year in which the assessee actually earned profits it was not obligatory upon the assessee to make a claim under Section 80J(3) in respect of each of the earlier assessment years and get the deficiency determined and carried forward to the next following assessment year ?

4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to depreciation on fencing, culverts and drainage within the factory compound at the rate applicable to first class factory building '

10. Now the Tribunal for that year dealing with whether the conditions were fulfilled or not observed as follows :

' We have carefully considered the submissions placed before us. After perusing the authorities cited before us and after going through the provisions of Section 80J we are of the opinion that it is not necessary for the assessee to make a formal claim for relief under the above section in each year in spite of the fact that it had been suffering losses, as there was no such provision in the returns required to be submitted to the Department. This section was newly introduced in the statute by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968, and, in our opinion, it does not make it compulsory for the assessee to make a claim and get the deficiency determined in each year before it can claim the benefit of its set-off in the year in which it had actually earned a pro-lit. We, therefore, hold that the AAC went wrong in holding that the assessee's claim could not be entertained in the year under appeal.

The next question arising for our consideration is as to whether the ITO' is entitled to examine the matter again and hold whether the Kalwa unit is at all entitled to the relief under Section 80J. We find that the ITO dismissed the claim of the assessee summarily stating that it did not fall within the purview of Section 80J. The AAC endorsed this by stating that the primary condition had not been satisfied. We are unable to read in their orders as to which particular condition of the section had notbeen satisfied. We find it was a newly established undertaking as per the licence issued by the Govt. of India on 18th September, 1961. Entirely the assets were acquired for this new unit for which the financial lesouices were issue of rights shares, debentures and loan from Commonwealth Development Finance Corporation. We were told that the undertaking employed more than 10 workers and the manufacturing process was carried on with the aid of power. Ordinarily these facts should be sufficient to entitle the assessee to the claim of relief under Section 80J. However, some doubt has been raised at the time of hearing about the conectness of the figures given to us. We would, in the circumstances, restore the matter to the file of the ITO with a view to check up the figures as also the facts as stated before us, and then allow the relief under Section 80J including that permissible under Sub-section (3) of that section. '

11. When the matter came up before this court in reference in the aforesaid decision, the court observed after discussing several authorities, at p. 672, as follows :

'On a consideration of the scheme of Chap. VIA and in particular Section 80J, it appears to us that the contentions on behalf of the assessee are of substance and overrides the contention made on behalf of the Revenue to the contrary. We respectfully agree with the decisions cited on behalf on the assessee on this point. Admittedly, when Section 80J came into force in the assessment year 1969-70, it gave retrospective benefit to assessees whereby they could carry forward their loss and deficiency with effect from the 1st January, 1967. In such a case, there could not have been any prior determination or claim for carry forward of loss and deficiency. The section does not provide that in respect of assessment years subsequent to 1st April, 1968, the assessee is required to have its loss and deficiency in every year determined so that it could be carried forward. There is no procedure laid down in the Rules for prior determination of such loss and deficiency and the income-tax return forms do not have any column for making such a claim. It is not disputed that in the relevant earlier years the assessee while making a claim under Section 197(3) of the I.T. Act, 1961, had furnished fall details of the working of the Kalwa unit including the amount of capital employed in that unit to the ITO and the material facts came on record.'

12. Now, it would be apparent that the court was of the view that the section did not provide that in respect of the assessment years subsequent to 1st April, 1968, the assessee was required to have its loss and deficiency in every year determined so that it could be carried forward. The court was further of the opinion that there was no procedure laid down in the Rules for prior determination of such loss and deficiency and the income-tax return forms did not have any column for making such a claim. In those circumstances, there could not have been any prior determination of claim for carry forward of loss or deficiency and in those circumstances the assessee was entitled to relief. The facts with which we are concerned were not there. The question whether not having claimed depreciation before after the coming into operation of the Finance (No. 2) Act, the assessee was entitled to claim set-off in a year where profit had been earned or whether it was entitled to carry forward the deficiency for the purpose of setting off is different from the question with which we are concerned, that is to say, in respect of the years in which there was no profit but only loss. Therefore, in our opinion, the ratio of the said decision would not be applicable to the facts of the instant case, especially when we have to bear in mind the facts found by the Tribunal in the instant year, as we have set out hereinbefore. Another aspect which may be referred to is that though the court proceeded on the basis that there was no procedure laid down in the Rules, it was not quite clear whether the attention of the court had been drawn to Pt. II of the I.T. Rules, 1962, for the relevant year which appears at p. 500 of Kanga's Income Tax, 6th Edn., Vol. II, which provided a column for 'profits and gains from newly established industrial undertakings or ships or hotel business ' (Section 80J) where though deductions as such were not indicated, there was nothing to prevent an indication of the quantum of loss suffered; but in any event that is not a very material or relevant consideration in the facts of the instant case. Our attention was also drawn on behalf of the assessee to certain observations in the case of Bhauram Jawahirmal v. CIT : [1980]121ITR487(All) , where the Division Bench of the Allahabad High Court observed that the statement, that if a mistake was revealed in an order of assessment on the basis of a judgment of the High Court rendered subsequently, it would, under no circumstances, constitute a mistake apparent from the record, was too wide. What the court, therefore, meant was that in certain circumstances it might be a mistake apparent from the record and in other circumstances it might not be. What other circumstances in which it would be a mistake apparent from the record could not be spelt out in advance. But in our present case we need not detain ourselves with this question as we find that the claim had not been made and there was no investigation as to the nature of the conditions required to be fulfilled. It is true, as learned advocate for the assessee contended, that there was a certificate under Section 197(3). According to him, that certificate and those proceedings would also constitute a record in reference to which the mistake was apparent from the records. He tried to draw substance from the observations of the Supreme Court in the case of Maharana Mills (P.) Ltd. v. ITO : [1959]36ITR350(SC) . There the Supreme Court observed that therecord contemplated by Section 35 of the 1922 Act, which is similar to Section 154 of the present Act, did not mean only the order of assessment but it comprised all proceedings on which the assessment order was based and the ITO was entitled for the purpose of exercising his jurisdiction under Section 35 to look into the whole evidence and the law applicable to ascertain whether there was an error. There the question was about the written down value of the previous year. For claiming depreciation for a particular year the written down value of the previous year had to be found out, and that would depend upon the previous year's assessment. Therefore, the assessment records of the previous year would be the records contemplated under Section 35 of the Indian I.T. Act, 1922, under Section 154 of the I.T. Act, 1961, But the position of certificate under Section 197(3) is entirely different. Under the law before paying out dividend a company is under a statutory obligation to deduct certain percentage but in case certain companies fulfil certain conditions a provisional certificate entitling the company not to deduct the tax at a particular rate is given so that the company is under no obligation in those circumstances to deduct the tax and the assessee gets the benefit of that certificate. At that stage the certificate is provisional. At that stage there is no enquiry as to the conditions required for grant of such certificate. In the instant case, however, we have seen the application for the grant of the certificate under Section 197(3). That certificate had nothing to do with the foil mill unit at Kalwa because in the relevant years the foil mill unit was not making any profit. Therefore, no question of declaring any dividend, arising out of the profits made out of the operation of this unit, arises. Therefore, even if one looked to the records of the certificate under Section 197(3), in our opinion, that record did not indicate that either the conditions of Section 80J or of Section 84 were fulfilled. Therefore, on that plea, the asses-see, in our opinion, could not claim that there was a mistake apparent on the record. In that case, the Supreme Court had observed that a mistake apparent from the record must be an obvious and patent mistake and not something which would be established by long drawn process of reasoning between two opinions. A debatable point of law is not a mistake apparent from the record. It is quite clear that the conditions for the applicability of Section 80J are numerous and various and there have been divergent views, even on the applicability of Section 84, which is identical to s, 80J, of the Supreme Court. Now, in a case where there has been no investigation of the fact whether these conditions were fulfilled or not, in our opinion, it cannot be said that there was a mistake apparent from the record which could be rectified.

13. Our attention was drawn to certain observations of the Supreme Court in the case of CIT v. Calcutta Agency Ltd. : [1951]19ITR191(SC) , wherethe Supreme Court observed that the burden of proof which is a necessary fact in order to claim exemption under Section 13(2) of the Indian I.T. Act, 1922, was on the assessee. But the necessary facts, in that case, the Supreme Court found, had not been established by the assessee at any stage of the proceedings. Now, if the conditions that are required to be fulfilled for the applicability of Section 80J(3) had not been investigated at the initial stage, then, in our opinion, it cannot be said that subsequently the order could be rectified in the manner sought for.

14. Learned advocate for the assessee submitted that the Tribunal was in error in relying on the ratio of the decision of the Allahabad High Court 'in the case of Anchor Pressings (P.) Ltd. v. CIT : [1975]100ITR347(All) , and, according to him, the facts of the instant case were dissimilar. In the view we have taken, we need not express any opinion on this aspect of the matter.

15. On behalf of the Revenue our attention was drawn to certain observations of the Allahabad High Court in the case of Asckarajlal Ram Parkash v. CIT : [1973]90ITR477(All) . But, in that case, though the assessee in his claim did not claim depreciation for the purchase of a truck in the previous year nor gave the necessary particulars in the form of the return, the ITO if in the course of the assessment proceedings came to know of the relevant particulars necessary for the grant of deduction for depreciation, it was held that the ITO was bound to arrive at the true figure of profits and gains of the business of the assessee. The facts of the instant case are entirely different and, therefore, we need not detain ourselves considering that controversy. In view of the facts found by the Tribunal and well-settled principles of law, we are of the opinion that the Tribunal was correct in its conclusion and we would answer question (a) in the affirmative and in favour of the Revenue. We would answer question (b) by saying that so far as the records relating to Section 197(3) are concerned, this did not establish that the assessee was entitled to relief. Furthermore, in the facts and circumstances of the case, we are of the opinion that those records did not form part of the records as contemplated under Section 154 of the I.T. Act, 1961. This question is answered in favour of the Revenue.

16. In view of the facts that the assessee did not claim any relief in the return form or in the contentions urged before the ITO at the time of the original assessment or in an appeal from such assessment order, we are of the opinion that the assessee was not entitled to rectification under Section 154 of the Act. We, therefore, answer question (c)in the above manner and in favour of the Revenue.

17. In the view we have taken, question (d) is of an academic interest and we decline to answer this question.

18. We answer question (e) by saying that the Tribunal was right in holding that Section 154 of the I.T. Act, 1961, was not attracted in the facts and circumstances of this case. This question is also answered in favour of the Revenue.

19. In the facts and circumstances of the case, the parties will pay and bear their own costs.

Sudhindra Mohan Guha, J.

20. I agree.


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