2012 (11) TMI 659 - AT - Income Tax

Rectification of error - erroneous order of AO or ITAT - held that - in a situation when a Revenue Officer either do not follow an order of the Supreme Court or do not correctly apply the ratio laid down therein or if do not follow the law laid down therein, then he is the one who has committed the mistake. As far as the Tribunal is concerned, the appeal of the assessee was allowed following the cited decisions and once an appeal has been allowed, then consequential effect ought to have been given by the AO. Due to this reason, there should not be any grievance against the order of the Tribunal but it should be, if at all, against the order of the AO while giving effect to the order of the Tribunal. That is why on enquiry, ld.AR Mr.Patel has made a statement at the Bar that against the order giving effect to the ITAT s order, a remedial action has already been taken by filing an application u/s.154 of IT Act, as also an appeal has already been filed. Under these circumstances, we hereby hold that there was no mistake on the part of the Tribunal so as to rectify u/s.254(2) of IT Act - miscellaneous petition dismissed.

Summary

Issues:
1. Interpretation of provisions under section 80P(2)(a)(i) of the Income Tax Act, 1961 regarding deduction of income earned on investments in Government Securities.
2. Failure to consider specific grounds raised in the appeal for A.Y. 2002-03 by the Hon'ble ITAT 'B' Bench, Ahmedabad.
3. Discrepancy in granting relief by the Revenue Officer in respect of capital gain and income from other sources following the Tribunal's order.

Analysis:

1. The case involved a dispute over the treatment of investment in Government Securities as capital assets and the deduction of income earned on their sale under section 80P(2)(a)(i) of the Income Tax Act, 1961. The Appellant contended that the income should be eligible for deduction as business income. The Tribunal referred to relevant precedents, including decisions of the Hon'ble Supreme Court and the Jurisdictional High Court, to support its decision to grant relief to the assessee based on the business nature of the income. The Tribunal held that the ld. CIT(A) was wrong in not allowing the deduction and reversed the order, allowing the appeals of the assessee.

2. The Appellant raised specific grounds for A.Y. 2002-03, alleging that the Hon'ble ITAT 'B' Bench did not consider these grounds while passing the order. These grounds included the treatment of income earned on investments with various entities as not covered for deduction under section 80P(2)(a)(i) of the Act. The Appellant argued that the Tribunal failed to address these specific grounds in its order, leading to a discrepancy in the decision-making process.

3. The Appellant also highlighted a discrepancy in the relief granted by the Revenue Officer concerning capital gain and income from other sources following the Tribunal's order. The Revenue Officer, while following the Supreme Court decision as directed by the Tribunal, did not grant the necessary exemption or reduction from the total income. This resulted in an assessment being made on income that should have been exempt from tax. The Appellant contended that the AO's failure to correctly apply the Tribunal's order or follow the law laid down therein constituted a mistake on the AO's part, rather than any error by the Tribunal. The Tribunal held that the AO should have given the consequential effect to the Tribunal's order and dismissed the Appellant's miscellaneous petition, stating that any grievance should be directed towards the AO's actions in implementing the Tribunal's decision.

This comprehensive analysis of the judgment addresses the key issues involved and provides a detailed examination of the legal reasoning and decisions made by the Tribunal in the case.