2016 (5) TMI 1525 - AT - Income Tax

Rectification of mistake - Revised order invoking the provisions of section 154 - input / CENVAT credit on capital goods claimed by the assessee as business expenditure - HELD THAT - From the facts of the case it is apparent that the learned AO has invoked the provisions of section 154 of the Act after passing orders under section 143(3) r.w.s. 147 of the Act on an issue which is debatable and to be decided by a conscious thought process. Therefore we are of the considered view that, the learned Commissioner of Income Tax (Appeals) has rightly relied in the decision in the cases of Dimosaur Steels Ltd. and JCIT 2012 (9) TMI 839 - SUPREME COURT and in the case of CIT Vs. Soora Subramanian 2009 (10) TMI 579 - MADRAS HIGH COURT wherein it was held that section 154 of the Act can only be invoked for rectifying mistake which is apparent on the face of the record but not in respect of an issue which is debatable in nature. In these circumstances, we do not find it necessary to interfere with the order of the learned Commissioner of Income Tax (Appeals) on this issue. - Decided against revenue.

Summary

Issues:
Revenue's appeal against deletion of disallowance for CENVAT credit on capital goods under section 154 of the Income Tax Act.

Analysis:
The appeal was filed by the Revenue challenging the order of the Commissioner of Income Tax, Appeals, which deleted the disallowance made by the Assessing Officer for CENVAT credit on capital goods claimed as business expenditure. The Revenue contended that the CENVAT payment should only be adjusted against future liabilities and not claimed as a deduction for the relevant assessment year. The Commissioner, however, relying on judicial precedents, held that the disallowance under section 36(1)(vii) was not a mistake apparent on record and thus cannot be rectified under section 154. The Commissioner allowed the appeal of the assessee and deleted the disallowance.

The Departmental Representative reiterated the Assessing Officer's stance that the CENVAT payment should not be claimed as a deduction for the relevant assessment year. On the other hand, the Authorized Representative argued that the assessee was justified in writing off the CENVAT credit during the relevant assessment year as it could not be set off against future liabilities. The Authorized Representative emphasized that the issue was debatable and not a mistake apparent on record, thus supporting the decision of the Commissioner.

After hearing both parties, the Tribunal observed that the Assessing Officer invoked section 154 on a debatable issue that required a conscious decision-making process. The Tribunal concurred with the Commissioner's reliance on judicial decisions that section 154 can only rectify mistakes apparent on record, not debatable issues. Citing relevant case laws, the Tribunal upheld the Commissioner's decision to delete the disallowance. Consequently, the Revenue's appeal was dismissed, affirming the Commissioner's order.

In conclusion, the Tribunal upheld the Commissioner's decision to delete the disallowance of CENVAT credit on capital goods, emphasizing that section 154 cannot rectify debatable issues. The judgment serves as a reminder that rectification under section 154 is limited to correcting mistakes apparent on the face of the record, not issues requiring deliberation and interpretation.