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Stadmed Private Ltd. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberAppeal from Original Order No. 238 of 1976
Judge
Reported in[1983]140ITR361(Cal)
ActsIncome Tax Act, 1922 - Sections 10(2), 10(4A) and 35; ;Constitution of India - Article 226
AppellantStadmed Private Ltd.
RespondentCommissioner of Income-tax
Appellant AdvocateK. Ray and ;R. Dutt, Advs.
Respondent AdvocateBalai Pal and ;Ajit Sengupta, Advs.
Excerpt:
- m.m. dutt, j.1. in this appeal, the appellant, stadmed p. ltd., has challenged the propriety of the judgment of sabyasachi mukharji j., whereby the learned judge has made the rule nisi obtained by the commissioner, west bengal-iv, calcutta, on his application under article 226 of the constitution, absolute.2. the appellant-company was an assessee under the indian i.t. act, 1922. for the assessment year 1961-62, the appellant claimed exemption from tax of the remuneration paid by it to its two joint managing directors, namely, rs. 1,500 per month and commission calculated at 1% on the sales paid to shri a. das and rs. 750 per month and a commission of 1% on sales paid to smt. sujata saha. having regard to the legitimate business needs of the appellant-company and the benefit derived by or.....
Judgment:

M.M. Dutt, J.

1. In this appeal, the appellant, Stadmed P. Ltd., has challenged the propriety of the judgment of Sabyasachi Mukharji J., whereby the learned judge has made the rule nisi obtained by the Commissioner, West Bengal-IV, Calcutta, on his application under Article 226 of the Constitution, absolute.

2. The appellant-company was an assessee under the Indian I.T. Act, 1922. For the assessment year 1961-62, the appellant claimed exemption from tax of the remuneration paid by it to its two joint managing directors, namely, Rs. 1,500 per month and commission calculated at 1% on the sales paid to Shri A. Das and Rs. 750 per month and a commission of 1% on sales paid to Smt. Sujata Saha. Having regard to the legitimate business needs of the appellant-company and the benefit derived by or accruing to it from the payment of remuneration to its managing directors, the ITO held that the allowable remuneration should be Rs. 750 per month for each of the said two managing directors. As regards commission, he held that 1% paid to Shri A. Das was reasonable, but there was no justification for the payment of commission to Smt. Sujata Saha. Accordingly, he completed the assessment for the assessment year 1961-62, under Section 23(3) of the Indian I.T. Act, 1922, hereinafter referred to as the Act. The appellant preferred an appeal to the AAC against the order of assessment of the ITO. The AAC raised the allowable remuneration in the case of Shri A. Das from Rs. 750 to Rs. 1,000 per month. As regards Smt. Saha, he agreed with the ITO that Rs. 750 per month would represent a reasonable remuneration in her case. However, he allowed for her a commission of 1/2% on the sales, whereas the ITO had allowed nothing in that regard. Being aggrieved by the said order of the AAC, the appellant preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal by its order dated February 24, 1971, inter alia, held as follows:

'It, therefore, appears to us that the remuneration of Rs. 1,500 per month which has been claimed in respect of Shri A. Das is quite fair and cannot be considered to be either excessive or unreasonable within the meaning of that expression in Section 10(4A) of the Indian Income-tax Act, 1922. We would, therefore, direct that the remuneration paid to him be allowed in full.

In so far as Smt. Sujata Saha is concerned the remuneration of Rs. 750 per month plus commission at 1/2% on sales, which has been allowed by the AAC is sufficiently liberal and no enhancement of the allowance is accordingly necessary. The ground relating to the remuneration paid to the joint managing directors is disposed of accordingly.'

3. Being aggrieved by the said order of the Tribunal, the appellant made an application under Section 256(1) of the I.T. Act, 1961, on April 30, 1971, requiring the Tribunal to draw up a statement of case and to refer four questions of law arising out of the said order of the Tribunal. After hearing the appellant and the Department on the said application for reference, the Tribunal framed the following questions for reference to the High Court:

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in applying the provisions of Section 10(4A) of the Indian Income-tax Act, 1922, to the case of the assessee and in disallowing Rs. 34,925 out of the remuneration and commission paid to one of the two joint directors, namely, Smt. Sujata Saha ?'

4. A draft statement of the case was also prepared by the Tribunal and was sent to the appellant and the Department. The Tribunal also fixed the hearing on the draft statement. Before the hearing could be concluded, on August 14, 1971, the appellant filed an application before the Tribunal praying for an order recalling and quashing the said order of the Tribunal dated February 24, 1971, and to dispose of the appeal on merits according to law. It was, inter alia, stated in the application that the question of disallowance of a part of the remuneration of the joint managing directors came up for consideration before the Tribunal in respect of the assessment year 1959-60. The Tribunal upheld such disallowance in part relying on a decision of this court in Bengal Enamel Works Ltd. v. CIT : [1966]59ITR472(Cal) , and another of the Supreme Court in Swadeshi Cotton Mills Co. Ltd. v. CIT : [1967]63ITR57(SC) , both the said decisions relating to Section 10(2)(xv) of the Act. In the assessment year in question, that is, assessment year 1961-62, the ITO had disallowed a part of the remuneration paid to the directors. On appeal, the AAC noticed that the point had come up in appeal before the Tribunal on a previous occasion in respect of the assessment year 1959-60, and that in deciding the question the Tribunal had relied on the said two decisions on Section 10(2)(xv) of the Act. The AAC also relied on the said decisions and partially maintained the disallowance made by the ITO. It was pointed out that in the appeal before the Tribunal, the appellant had placed reliance on two decisions, one of the Supreme Court and the other of the Madras High Court, both on Section 10(2)(xv) of the Act. The Tribunal, however, proceeded on the basis that for the assessment year 1959-60, it had considered the matter from the standpoint of Section 10(4A) and disposed of the appeal on the basis of Section 10(4A) and not Section 10(2)(xv). Accordingly, it was submitted that the Tribunal had committed a palpable mistake in deciding the appeal preferred by the appellant.

5. The Tribunal, after hearing the parties, took the view that there was a mistake apparent from the record. In that view of the matter, the Tribunal by its order dated October 27, 1971, allowed the said application of the appellant, set aside its order dated February 24, 1971, and directed the appeal to be disposed of in accordance with law. In allowing the said application, the Tribunal observed as follows i

'We have given due consideration to the rival contentions after going through the relevant orders referred to before us and the decisions relied upon on behalf of the assessee. We are of opinion that the contentions raised on behalf of the assessee have a reasonable bearing in the sense that there was a mistake apparent from the record which calls for a rectification of the impugned order. The Tribunal in para. 4 of the aforesaid order discussed the applicability of the provisions of Section 10(4A) to the facts of the case to the exclusion of Section 10(2)(xv). This is against the trend of the discussions made by the Appellate Assistant Commissioner in his order. It is an admitted fact that the cases referred to in all the relevant orders were relating to the applicability of the provisions of Section 10(2)(xv). The two sections, namely, Section 10(2)(xv) and Section 10(4A) being completely of different import specially when the Appellate Assistant Commissioner did not specifically mention Section 10(4A), the observations of the Income-tax Officer in the assessment order lost all its relevance. Hence, we are of opinion that the assessee's miscellaneous application should be entertained for proper rectification of the order of the Tribunal. As the rectification would involve substantially the point in issue and in view of the decision in the case of Mangat Ram Kuthiala we decide to quash the impugned order, for the original appeal to be disposed of by the Tribunal, in accordance with law. In the circumstances stated above, the assessee's miscellaneous application is allowed.'

6. Against the said order of the Tribunal, the Commissioner made an application to the Tribunal praying for a reference to the High Court of certain questions of law arising out of the said order of the Tribunal. The Tribunal, however, rejected the said application. Thereafter, the Commissioner moved this court under Article 226 of the Constitution challenging the legality and validity of the order of the Tribunal dated October 27, 1971, whereby the Tribunal set aside its previous order dated February 24, 1971, and directed a fresh hearing of the appeal on merits in accordance with law. A rule nisi, out of which this appeal arises, was issued on the said application under Article 226 of the Constitution.

7. At the hearing of the rule nisi, it was, inter alia, contended on behalf of the Revenue that the Tribunal had no jurisdiction to set aside its own order dated February 24, 1971. It was submitted that there was no mistake apparent from the record which could justify the Tribunal in recalling its order. On the other hand, it was contended on behalf of the appellant that as there was an error apparent from the record, the Tribunal was perfectly justified in the exercise of its inherent power in setting aside its previous order dated February 24, 1971, and in directing the hearing of the appeal afresh.

8. On the question whether the Tribunal has inherent power or not, it has been observed by the learned judge that a Tribunal, like the Income-tax Appellate Tribunal, cannot be said to have inherent jurisdiction like a civil court. Such Tribunals have ancillary and implied powers to exercise the jurisdiction vested in them and, as part of that ancillary and incidental powers, certain amount of authority may be considered to be inherent in the implied and ancillary powers. Beyond that it cannot be said that such Tribunals exercise inherent powers. Further, it has been observed by the learned judge that when express power is conferred on a Tribunal, the question of exercise of inherent power does not arise. The learned judge points out that in the instant case, Section 35 of the Act is applicable and; therefore, the question that requires to be considered is whether there is a mistake apparent from the record. The learned judge has, however, come to the conclusion that there was no mistake apparent from the record which would justify the Tribunal to exercise its powers under Section 35 of the Act. In that view of the matter, the learned judge set aside the impugned order of the Tribunal, recalling its order dated February 24, 1971, and directing a fresh hearing of the appeal. Hence, this appeal.

9. Mr. Ray, learned counsel appearing on behalf of the appellant has placed reliance on some decisions in order to persuade us to hold that the Tribunal has inherent power to recall its order and direct a fresh hearing of the appeal. In our opinion, in view of the observations made by the learned judge as referred to above, the question whether the Tribunal has inherent power or not, does not arise. The Tribunal has undoubtedly the power to rectify its mistake apparent from the record as provided in Section 35 of the Act. There can be no doubt that if the Tribunal finds that there is a mistake apparent from the record, it can recall its order containing the mistake and direct a fresh hearing of the appeal. The learned judge, in our opinion, seems to have taken the same view. In the circumstances, the consideration of the question whether the Tribunal has inherent power or not will be academic and, as such, we do not think that we are called upon to decide the same. In any event, we may proceed on the footing that if there is a mistake apparent from the record, the Tribunal has the power to rectify such mistake by setting aside its order and hearing the appeal afresh.

10. The real question, however, is whether there was a mistake apparent from the record. It is not disputed before us that the ITO in disallowing a part of the remuneration of the joint managing directors as unreasonable, having regard to the legitimate business needs of the appellant-company and the benefit derived by or accruing to it therefrom, applied the provision of Section 10(4A) of the Act. It is, however, contended that the AAC, in the appeal preferred by the appellant against the order of the ITO, considered the question of allowable remuneration of the joint managing directors from the point of view of Section 10(2)(xv) of the Act. It is submitted that the Tribunal committed an error apparent from the record in applying the provision of Section 10(4A) to the facts of the case on the erroneous assumption that the AAC had disposed of the appeal from the standpoint of Section 10(4A) and not Section 10(2)(xv).

11. On the other hand, Mr. Pal, learned counsel appearing on behalf of the Revenue, has strenuously urged that the AAC did not dispose of the appeal preferred by the appellant on the basis of Section 10(2)(xv) alone, but also on a consideration of the provision of Section 10(4A). It has been observed by the learned judge that it is not manifest that the AAC had proceeded only on the basis of Section 10(2)(xv). The question naturally arises whether the AAC has really disposed of the appeal solely on the basis of Section 10(2)(xv). In considering the said question, the learned judge quoted in extenso the order of the AAC. We may, however, refer to some relevant observations of the AAC, which are as follows :

'It was stated that she (Smt. Sujata Saha) was not even a matriculate. Nothing could be brought on record even at the appellate stage about her previous business experience although it was stated that she had acted as a director previously for some time during her husband's lifetime..... It is now settled law that the question whether an item of expenditure is wholly and exclusively laid out for the purpose of the assessee's business must be decided on the facts of each case. Smt. Saha was holding a large number of shares in the company and she had also a controlling interest in the company. The company was previously run by her husband. The extent of services rendered by these two managing directors have not been brought out in the records... No tangible evidence has been produced about the efforts put forward by the lady in maintaining or pushing up the sales. Considering the fact that the commission of 2 1/2% on sales have been allowed in the past to the managing director and keeping in view that the lady stepped into the shoes of her husband and was attending office regularly, I would allow her a commission @ 1/2% on the sales. ITO is directed to allow a commission @ 1/2% to the lady. Her remuneration Rs. 750 p.m. is quite reasonable and no interference is called for under the same.'

12. The observations which are quoted above are not at all germane to the provision of Section 10(2)(xv). These observations also suggest that the AAC had in his mind the provision of Section 10(4A). In other words,( the AAC was considering the reasonableness of the remuneration paid to Smt. Saha. The Tribunal took the view that the AAC was only considering Section 10(2)(xv) and not Section 10(4A). The reason given by the Tribunal in support of that view is that the cases referred to by the AAC in his order were on the provision of Section 10(2)(xv). It has been already pointed out by us that some of the observations of the AAC were in the light of Section 10(4A). In any event, it is very much doubtful whether the AAC had solely relied on Section 10(2)(xv) or he had also, relied on Section 10(4A) in considering the case of the appellant in regard to the allowable remuneration of the managing directors including Smt. Saha. The Tribunal, however, thought that although the AAC had proceeded on the basis of Section 10(2)(xv), the Tribunal overlooked the same and considered the claim of the appellant only on the basis of Section 10(4A), and that it was a mistake apparent from the record.

13. We may proceed on the assumption that the AAC had only applied the provision of Section 10(2)(xv) to the facts of the case and not Section 10(4A). On such assumption, let us consider whether the Tribunal committed a palpable mistake in proceeding on the basis of Section 10(4A).

14. Under Section 10(1) of the Act, the tax shall be payable by an assesseeunder the head 'Profits and gains of business, profession or vocation'carried on by him. ;

The provisions of Section 10(2)(xv) and Section 10(4A) are as follows :

'10. (2) Such profits or gains shall be computed after making the following allowances, namely :--.....

(xv) any expenditure (not being an allowance of the nature described in any of the Clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation.'

'10. (4A) Nothing in Sub-section (2) shall, in the computation ofthe profits and gains of a company be deemed to authorise the makingof-- :

(a) any allowance in respect of any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or a person who has a substantial interest in the company within the meaning of Sub-clause (iii) of Clause (6C) of Section 2, or

(b) any allowance in respect of any assets of the company used by any person referred to in Clause (a) either wholly or partly for his own purposes or benefit,

if in the opinion of the Income-tax Officer any such allowance is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom.

Explanation.--The provisions of this sub-section shall apply notwithstanding that any amount disallowed under this sub-section is included in the total income of any person referred to in Clause (a).' .

15. It is apparent that the provision of Section 10(2)(xv) is subject to the provision of Section 10(4A) in a case where Section 10(4A) is applicable. If under Section 10(2)(xv), any allowance is made of an expenditure which is incurred by a company for payment of remuneration to its director, the propriety of such allowance has further to be tested in the light of the provision of Section 10(4A). The company claiming such allowance on account of the remuneration paid to the director must furnish evidence not only for the purpose of Section 10(2)(xv), but also for the purpose of Section 10(4A). In a case where Section 10(4A) applies, it will be the duty of the ITO to consider the question of allowance of an expenditure not only from the point of view of Section 10(2)(xv), but also of Section 10(4A)., In CIT v. Indian Molasses Co. P. Ltd. : [1970]78ITR474(SC) , it was observed by the Supreme Court that before Section 10(2)(xv) could be called in aid to support the claim of the company, it had to be established that it represented expenditure laid out or expended wholly and exclusively for the purpose of the business, and that it was authorised under Section 10(4A). So any claim for the allowance of an expenditure should stand the tests laid down in Sections 10(2)(xv) and 10(4A).

16. In the instant case, it has been already assumed that the AAC has only applied Section 10(2)(xv) and not Section 10(4A). It is urged on behalf of the appellant that as the AAC has decided the question of allowing the expenditure made by the appellant by payment of remuneration to its two managing directors only on the basis of Section 10(2)(xv), it was the duty of the Tribunal to examine the propriety of the order of the AAC from the point of view of Section 10(2)(xv). It is submitted that the Tribunal committed an error apparent from the record in proceeding on the footing that the AAC in the instant case and, in the previous, proceeding relating to the assessment year 1959-60, the Tribunal also considered the claim of the appellant with reference to Section 10(4A). In proceeding on that erroneous assumption, the Tribunal decided the appeal of the appellant from the point of view of Section 10(4A) which, it is (contended, is a mistake apparent from the record within the meaning of Section 35 of the Act.

17. As discussed above, where Section 10(4A) is applicable, both Section 10(2)(xv) and Section 10(4A) have to be considered for the purpose of considering the claim of a company to the allowance of an expenditure. We have assumed that the AAC has only considered the question of allowable remuneration of the managing directors applying only the provision of Section 10(2)(xv). On appeal, the Tribunal has applied only Section 10(4A). .The combined effect of the decisions of AAC and of the Tribunal on appeal is that the requirement of law has been complied with. It is, however, argued that the Tribunal had not at all applied its mind to Section 10(2)(xv) in considering the claim of the appellant. As we have already pointed out the allowance granted under Section 10(2)(xv) is subject to a further scrutiny in the light of Section 10(4A); the Tribunal having only considered whether the remuneration paid by the appellant to its managing directors in respect of which the allowance was claimed, was excessive or unreasonable having regard to the legitimate business needs of the appellant and the benefit derived by or accruing to it therefrom, it may be regarded that the Tribunal was satisfied that such remuneration was allowable under Section 10(2)(xv). In our opinion, a decision on Section 10(2)(xv) was implied in the decision of the Tribunal under Section 10(4A).

18. The contention of the appellant that as the AAC has only considered Section 10(2)(xv), the Tribunal cannot decide the question on the basis of Section 10(4A) is, in our opinion, without any substance for the reasons given above. In our view, where the AAC does not consider the reasonablenessof the allowance claimed by the company, or, in other words, where he doesnot advert to Section 10(4A) though it is applicable, the Tribunal has jurisdictionto examine the propriety of the order of the AAC with reference to Section 10(4A). It is not disputed before us and indeed it is conceded by thelearned counsel for the appellant that if the re-hearing of the appeal takesplace as directed by the Tribunal, the Tribunal will be competent to decidethe appeal by the application of both Section 10(2)(xy) and Section 10(4A). It is, however, contended by the learned counsel that as there are no materialsbefore the Tribunal to consider the reasonableness of the allowance claimedby the appellant under s, 10(4A), on such rehearing of the appeal, theTribunal has to send the case back on remand to the appropriate authority. The learned counsel for the appellant submits that as there was nomaterial before the Tribunal, it would not have applied the provision of Section 10(4A) but for the mistake it had committed in proceeding on theerroneous assumption that the AAC had also applied s, 10(4A). In supportof the contention as to the necessity of materials for the purpose of Section 10(4A), the learned counsel for the appellant has placed, reliance on adecision of the Madras High Court in Natesan and Co. (P.) Ltd. v. CIT [1964] 51 ITR 386, where it has been observed that in exercising his power under Section 10(4A)of the Act, to disallow such portion of the remuneration paid toa director as he considers excessive or unreasonable, the ITO must applyhis mind to the nature of the business of the company, the actual workdone by the directors, the quantum of income earned by the company, thenecessity to pay the remuneration to the director and other allied considerations, to form an opinion whether or not the payment is unreasonable or excessive. Further, it has been observed that the mere ipsi dixit ofthe officer unrelated to the criteria laid down in the statute wouldnot be a considered opinion, but a dogmatic assertion, and the statute doesnot permit the department to adopt such a course.

19. There can be no doubt that materials are required to be considered for the purpose of forming an opinion by the ITO as to the reasonableness of the allowance under Section 10(4A) as laid down in the case of Natesan and Co. (P.) Ltd. [1964] 51 ITR 386 . We are not called upon to consider in this appeal whether there were sufficient materials on reeord for the purpose of forming an opinion under Section 10(4A); but we are unable to hold that there was absence of any material for the observations of the AAC, to which, we have referred to earlier, disclose that there were materials for the purpose of Section 10(4A). The admitted fact is that the ITO proceeded only on the basis of Section 10(4A), and it is not complained before us that there was absence of any material before him. Mr. Pal, learned counsel for the Revenue, has placed reliance on a decision of the Allahabad High Court in Garg Association P. Ltd. v. CIT : [1979]119ITR705(All) , where more or less on similar materials, it was held that it could not be said that the conclusion of the Tribunal under Section 40(c) of the I.T. Act, 1961, which is similar to Section 10(4A) of the Act, was arbitrary or was based on no materials. Indeed, in the instant case, the Tribunal has based its decision under Section 10(4A) on certain materials and the decision of the Tribunal is in favour of the appellant so far as the remuneration and commission of Shri A. Das, one of the joint managing directors, are concerned. Thus, it appears that the appellant has not been prejudiced because the Tribunal had only applied Section 10(4A) of the Act.

20. When a claim to the allowance of an expenditure is made by the company under Section 10(2)(xv), it has been stated already that the Supreme Court in CIT v. Indian Molasses Co, P. Lid. : [1970]78ITR474(SC) , held that before Section 10(2)(xv) could be called in aid to support the claim of the company it had to be established that it represented expenditure laid out or expended wholly or exclusively for the purpose of the business, and it was authorised under Section 10(4A). This observation of the Supreme Court clearly lays down that the onus is on the company to establish that the allowance claimed under Section 10(2)(xv) is not also excessive or unreasonable within the meaning of Section 10(4A). In other words, it is the duty of the company claiming the allowance under Section 10(2)(xv) to produce all materials for the purpose of consideration of the reasonableness of the allowance under Section 10(4A). In another decision on Section 10(4A) in Nund & Samont Co. P. Ltd. v. CIT : [1970]78ITR268(SC) , it has been observed by the Supreme Court that it is for the taxpayer to establish by evidence that a particular allowance is justifiable, and that it cannot be said that even if the taxpayer does not produce any evidence in support of the claim for allowance, the ITO must independently collect evidence and decide that the allowance claimed is excessive or unreasonable having regard to the legitimate business needs of the assessee before the power under Section 10(4A) may be exercised. So, in view of the above decisions of the Supreme Court, if there is no material before the Tribunal as contended on behalf of the appellant, the appellant has only to blame itself. As stated already, it is not correct to say that there was absence of any material before the Tribunal for the purpose of a decision under Section 10(4A). Thus, it appears that even assuming that the AAC had confined its decision only to the consideration of the provision of Section 10(2)(xv), the Tribunal cannot be held to have committed an error, far less an error apparent from the record, in deciding the appeal on the basis of the provision of Section 10(4A).

21. The learned judge, in our opinion, has rightly observed that the subject-matter of the appeal was not whether Section 10(4A) or Section 10(2)(xv) should be applied. The subject-matter was whether the company was entitled to an exemption from tax to the extent of the remuneration paid by it to the two managing directors. This claim of the company was to be decided in accordance with law, that is, in accordance with the provisions of both Section 10(2)(xv) and Section 10(4A). As the learned judge has observed, even if the AAC had proceeded solely on the basis of Section 10(2)(xv), it would be a doubtful controversy whether the Tribunal is competent to decide the appeal on the basis of Section 10(4A). So, regarding the competence of the Tribunal, two views are possible to be taken. A mistake apparent from the record must be an obvious and patent mistake and not something which can be established by along drawn process of reasoning on points on which there may be conceivably two opinions: T. S. Balaram, ITO v. Volkart Brothers : [1971]82ITR50(SC) . In the instant case, as there can be conceivably two views as to whether the Tribunal had committed any error, though we have held that it has not, it is difficult to hold that there is an error apparent from the record justifying the Tribunal to recall its order disposing of the appeal. Moreover, much argument has been made on behalf of the appellant in support of the contention that the Tribunal had committed such an error and that is more the reason to hold that the error, even if it be an error so to say, is not apparent from the record.

22. The learned counsel for the appellant has pointed out to us that in some places of his judgment the learned judge has used the expression 'error apparent on the face of the record'. It is contended that there is a difference between an error 'apparent on the face of the record' and a mistake 'apparent from the record' as used in Section 35 of the Act. It is submitted that the doctrine of the possibility of two views applies in considering whether an error is one apparent on the face of the record and not one apparent from the record, and that the learned judge was not justified in applying the said doctrine in deciding whether there was a mistake apparent from the record. In support of the contention reliance has been placed on behalf of the appellant on a decision of the Supreme Court in ITO v. Asok Textiles Ltd. : [1961]41ITR732(SC) , where the Supreme Court has made a distinction in the two types of errors. On the other hand, in a later decision of the Supreme Court in T. S. Balaram, ITO v. Volkart Brothers : [1971]82ITR50(SC) , the Supreme Court did not feel inclined to spell out the distinction between the two expressions. We are also not inclined to examine whether there is such a distinction between the two expressions, but suffice it to say that if there be two views, and the mistake is required to be substantiated by lengthy arguments and by placing reliance on decisions, it will not be an error or mistake that can be said to be either 'apparent on the face of the record' or 'apparent from the record'. Moreover, we have held that the Tribunal has not committed any mistake in-proceeding on the basis of Section 10(4A). The contention of the appellant is, therefore, without any substance and is overruled.

23. Lastly, it has been urged on behalf of the appellant that as the Tribunal has itself come to the rinding that it had committed a mistake apparent from the record, this court should not, in the exercise of its' jurisdiction under Article 226 of the Constitution, interfere with the said finding of the Tribunal, even assuming that the said finding of the Tribunal is wrong. We are unable to accept the contention. The jurisdiction of the Tribunal to rectify depends on whether or not there is a mistake apparent from the record. If there be no mistake apparent from the record, the exercise of the jurisdiction by the Tribunal under Section 35 of the Act will be illegal and improper. Therefore, there is a question as to the jurisdiction of the Tribunal and this court is entitled to see whether the Tribunal has properly exercised the jurisdiction vested in it by Section 35 of the Act. The contention of the appellant, therefore, fails. No other point has been urged on behalf of the appellant.

24. For the reasons aforesaid, this appeal is dismissed, but in view of the facts and circumstances of the case, there will be no order as to costs.

25. On behalf of the appellant it is prayed that a certificate for appeal to the Supreme Court may be granted under Article 134A of the Constitution. In our opinion, the appeal does not involve any substantial question of law of general importance and, accordingly, the prayer for a certificate is disallowed.

A. K. Sarkar, J.

26. I agree.


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