2022 (6) TMI 1376 - AT - Income Tax

Rectification of mistake - mistake apparent on record in the order on the issue of section 40(a)(ia) - Tribunal had decided the issue as been reversed by the Hon ble Supreme Court - Tribunal had followed the decision of CIT vs. Victor Shipping Services Pvt Ltd. 2015 (12) TMI 1131 - SC ORDER which had been reversed by the Hon ble Supreme Court in the case of Palam Gas Services vs CIT 2017 (5) TMI 242 - SUPREME COURT HELD THAT - The judicial precedence provides that when there is a speaking order by the Hon ble Supreme Court, that, takes the precedence over the simple rejection of SLP by the Hon ble Supreme Court. The Hon ble Supreme Court having reversed the proposition laid down in Victor Shipping Services Pvt Ltd (supra) in the case of Palam Gas Services Ltd (supra) that principles become the law of the land from beginning of time. In these circumstances, as clearly there is a mistake apparent on record in the order on the issue of section 40(a)(ia) decided by the Tribunal the same stands recalled and the issue is restored to the file of the Tribunal for readjudication. The date of hearing is fixed on 24.8.2022. As the date is pronounced in the open court, the notice of hearing is dispensed with. M,.A. of the revenue is allowed.

Summary

Issues:
1. Interpretation of provisions of section 40(a)(ia) of the Income Tax Act.
2. Impact of judicial precedents on the decision-making process.
3. Recalling and readjudication of the issue by the Tribunal.

Analysis:
1. The main issue in this case pertains to the interpretation of section 40(a)(ia) of the Income Tax Act. The revenue filed a miscellaneous application challenging the Tribunal's order dated 28.4.2017 for the assessment year 2007-08. The revenue argued that the Tribunal had relied on the decision of the Hon'ble Allahabad High Court in the case of CIT vs. Victor Shipping Services Pvt Ltd., but this decision was later reversed by the Hon'ble Supreme Court in the case of Palam Gas Services vs CIT. The revenue requested the appeal to be recalled for a fresh decision on merits.

2. The assessee, on the other hand, contended that the decision in the Victor Shipping Services Pvt Ltd. case had been subject to a Special Leave Petition (SLP) before the Supreme Court, which was dismissed earlier. The assessee argued that the Tribunal's decision was made before the judgment in the Palam Gas Services case was rendered. The assessee emphasized that the dismissal of the SLP implied that the issue was debatable and that the subsequent judgment should not automatically apply.

3. The Tribunal analyzed the rival submissions and considered the impact of judicial precedents on the case. The Tribunal noted that when the Supreme Court issues a speaking order reversing a proposition, it takes precedence over a mere rejection of an SLP. In this case, the Supreme Court had reversed the principles laid down in the Victor Shipping Services case in the Palam Gas Services case. Therefore, the Tribunal found a mistake apparent on record in its earlier order regarding section 40(a)(ia) and decided to recall the issue for readjudication. The Tribunal scheduled a new hearing for 24.8.2022 without the need for a formal notice, as the date was announced in open court.

In conclusion, the Tribunal allowed the revenue's miscellaneous application, setting the stage for a fresh adjudication of the issue in light of the Supreme Court's judgment in the Palam Gas Services case.