2018 (3) TMI 964 - HC - Income Tax

Scope of order of rectification - review v/s rectification - Held that - The rectification application of the Revenue calls upon the Court to re-appreciate its understanding of the order passed by the Tribunal in the case of its sister concern for Assessment Years 1996-97 to 2000-01. This on the ground that the earlier orders did not correctly understand/ interpret the order passed by the Tribunal in respect of Assessment Year 1995-96 in the case of Petitioner s sister concern. This, itself would in effect amount to Review. Therefore, outside the scope of rectification. Besides, it seeks to sit in appeal our order passed by its Coordinate Bench for Assessment Years 1996-97 to 2000-01. This is not permissible. Moreover, the Revenue has filed appeals in the sister concern case for the Assessment Years 1996-97 to 2000-01 under Section 260A of the Act to this Court. The question raised therein is on the issue of appropriate classification of the rent/ compensation under the head income from the other sources or under the head income from the house property . The aforesaid appeals have been admitted and are awaiting consideration for final disposal. Therefore, even if the Revenue seek to contend to the contrary it would be a debatable issue. This cannot be a subject matter of rectification. - Decided against revenue

Summary

Issues:
Challenge to the order passed by the Income Tax Appellate Tribunal allowing the Revenue's rectification application under Section 254(2) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged the Tribunal's order allowing the Revenue's rectification application, arguing that it was without jurisdiction as it amounted to a review of the earlier order passed after due consideration. The petitioner contended that the issue raised was debatable and thus outside the scope of rectification under Section 254(2) of the Act.

The Tribunal had initially classified the amount received by the petitioner as rent/compensation from its sister concern as 'income from other sources' after considering various contentions. The Revenue filed a rectification application, claiming that the earlier order was passed without considering their written submissions and relied on incorrect precedents. The Tribunal's subsequent order recalled the earlier decision based on the second ground raised by the Revenue.

The Court noted that the Tribunal's reliance on the orders related to the petitioner's sister concern for the classification of rent/compensation was justified as all the cases had similar issues regarding the classification under different heads of income. The Revenue's rectification application essentially sought a re-evaluation of the Tribunal's understanding of the earlier orders, which would amount to a review and was beyond the scope of rectification.

The Court highlighted that the Revenue had already filed appeals in the sister concern's case, raising similar classification issues, which were pending consideration. Until those orders were set aside or stayed, the Tribunal's decisions would remain binding. Therefore, the issue raised by the Revenue was debatable and not suitable for rectification.

Consequently, the Court set aside the Tribunal's order allowing the Revenue's rectification application, ruling in favor of the petitioner. No costs were awarded in the matter.