2011 (9) TMI 281 - HC - Income Tax

Deduction u/s 80P - Cooperative society - Rectification of order - The point for consideration in this appeal is as to whether the order of the Tribunal dated 23.9.1998 could be rectified in view of retrospective amendment made by the Income Tax (Second Amendment) Act, 1998 effective from 1.4.1968. - Held that - The Tribunal while rejecting the contention of the assessee, following the decision of the Apex Court in the case of J.M. Bhatia AAC and others v. J.M. Shah (1985 (9) TMI 4 - SUPREME Court), held that the order dated 23.9.1998 could be rectified as there was mistake of law which was apparent on the record. - Further in view of full bench decision in Commissioner of Income Tax v. Smt. Aruna Luthra (2001 (8) TMI 84 - PUNJAB AND HARYANA High Court) the order of ITAT sustained - decided in favor of revenue.

Summary

Issues:
1. Rectification of order based on retrospective amendment of Section 80P(2)(a)(iii) of the Income Tax Act, 1961.

Analysis:
1. The case involved appeals filed by the assessee against the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, related to assessment years 1992-93 and 1993-94. The key issue was whether the Tribunal could rectify its earlier order dated 23.9.1998 in light of the retrospective amendment made by the Income Tax (Second Amendment) Act, 1998, effective from 1.4.1968.

2. The Tribunal justified its decision to rectify the order based on the retrospective amendment, citing the mistake of law apparent on the record. It relied on the decision in the case of J.M. Bhatia AAC and others v. J.M. Shah (1985) 156 ITR 474. The Tribunal emphasized that the amended law must be considered as in force at the time of the earlier order, leading to a mistake of law that needed rectification.

3. The Full Bench of the Court in Commissioner of Income Tax v. Smt. Aruna Luthra [2001] 252 ITR 76 discussed the scope of power under Section 154 for rectification of mistakes apparent on the record. It clarified that the mistake must be patent and ex facie from the record, not debatable. The judgment highlighted that if an authority's view contradicts the decision of a higher court post-order, it constitutes a mistake that should be rectified, as the legislative intent is to correct errors and not allow them to persist.

4. Ultimately, the Court found no illegality or perversity in the Tribunal's order of 22.7.2003, which rectified the earlier decision. The substantial questions of law were answered against the assessee, upholding the rectification based on the retrospective amendment. Consequently, the appeals filed by the assessee were dismissed.