2010 (1) TMI 789 - AT - Income Tax

Whether duty draw back can be considered as income derived from the industrial undertaking itself for the purpose of computing relief u/s 80I - Held that - duty draw back and DEPB cannot be considered as income derived from industrial undertaking for the purpose of computing relief u/s 80I. Liberty India (2009 - TMI - 34471 - SUPREME COURT) Rectification of mistake u/s 254(2) - held that - In this case on hand, the Hon ble Supreme Court has laid down the principle of law which is applicable across the Board Application of these principles of law needs no factual verification as there is no dispute on facts. Thus, even going by the decision of the Apex Court in the case of Mepco Industries Ltd. (2009 -TMI - 35015 - SUPREME COURT), the Miscellaneous Application of the Revenue has to be allowed.

Summary

Issues:
Rectification of order regarding duty draw back as income for computing relief u/s 80I.

Analysis:
The Appellate Tribunal, ITAT Mumbai, addressed a Miscellaneous Petition filed by the Revenue seeking rectification of an order on whether duty draw back can be considered as income derived from the industrial undertaking for computing relief under section 80I. The Revenue argued that duty draw back is a trading receipt of the industrial undertaking and should be eligible for deduction under section 80I based on a recent decision of the Supreme Court. On the other hand, the assessee contended that the issue is debatable and not within the jurisdiction of rectification under section 254(2), citing a decision of the Madras High Court. The Tribunal noted that while duty draw back is linked with production cost, the Supreme Court held that it cannot be considered income derived from the industrial undertaking for the purpose of relief under section 80I.

Regarding the applicability of subsequent decisions on rectification, the Tribunal examined case laws cited by both parties. The Tribunal distinguished a case involving a decision of the jurisdictional High Court from those involving non-jurisdictional High Courts or the Supreme Court. The Tribunal also considered decisions where the Tribunal failed to consider relevant judgments, emphasizing the importance of rectification to prevent prejudice to any party. The Tribunal highlighted the retrospective effect of judicial decisions and the principle that rectification is warranted when a decision contrary to that of the jurisdictional High Court is made without considering the relevant legal position.

In light of the principles discussed, the Tribunal found that the decision of the Supreme Court regarding duty draw back as income for relief under section 80I was applicable across the board without the need for factual verification. Therefore, the Tribunal rectified its order by modifying the relevant paragraph and allowing the ground of the Revenue based on the Supreme Court's decision in the case of Liberty India Ltd. The Miscellaneous Application filed by the Revenue seeking rectification was allowed by the Tribunal.