2019 (4) TMI 52 - AT - Income Tax

Rectification u/s 254 - Mistake apparent from record - Disallowance of deduction u/s 80IC - substantial expansion undertaken by the assessee - claim @ 100% of the eligible profits on substantial expansion undertaken, after having claimed deduction @ 100% of the profits for five eligible years - HELD THAT - It is now settled law that even a new undertaking which has claimed deduction of its eligible profits @ 100% thereof for the first five years is entitled to claim deduction @ 100% of its profits thereafter on account of substantial expansion undertaken by it and the decision of the apex court in Classic Binding 2018 (8) TMI 1209 - SUPREME COURT OF INDIA stands overruled. This in itself constitutes a mistake apparent from record. A binding decision is always retrospective and the decision overruled was never the law of the land. When a court decides a matter it only interprets law and applies it to the facts of the case. If the interpretation of law is found to be contrary in the light of judicial pronouncement rendered subsequently, it discloses a mistake apparent from record. Considering the entirety of facts in the present case, we are therefore of the opinion that this is a fit case for recalling the order for fresh hearing, which we hereby do. The appeal is accordingly recalled for hearing. The order was pronounced in open court. At the request of both the counsels who pointed out that the issue in the impugned appeal was covered by the decision of the Hon ble Apex Court in the case of Pr.CIT, Shimla vs. M/s Aarham Softronics 2019 (2) TMI 1285 - SUPREME COURT the appeal was posted for hearing today itself i.e. 28.03.2019.

Summary

Issues Involved:
Recall of Tribunal's order regarding disallowance of deduction u/s 80IC of the Income Tax Act, 1961 based on subsequent judgment by Hon'ble Apex Court.

Analysis:
1. The applicant filed a Miscellaneous Application for recalling the Tribunal's order dated 28.09.2018 in relation to assessment year 2014-15, concerning the disallowance of deduction u/s 80IC of the Income Tax Act, 1961.
2. The issue involved the disallowance of deduction @ 100% of eligible profits due to substantial expansion, following the decision in the case of CIT vs Classic Binding Industries. The applicant argued that a subsequent judgment by the Hon'ble Apex Court in the case of Pr.CIT, Shimla vs. M/s Aarham Softronics reversed the earlier decision, making it a mistake apparent from the record.
3. The Tribunal noted that the Hon'ble Apex Court reversed its decision in the Aarham Softronics case, stating that the earlier judgment in Classic Binding Industries did not lay down the correct law. The new interpretation allowed new undertakings to claim deduction @ 100% of profits for the first five years and subsequently for substantial expansions as well.
4. The Tribunal acknowledged that the decision in Classic Binding Industries was overruled, making it a mistake apparent from the record. A binding decision is retrospective, and when a court interprets law differently in subsequent judgments, it discloses a mistake.
5. Considering the change in law due to the subsequent judgment, the Tribunal found it appropriate to recall the order for fresh hearing. The appeal was accordingly recalled for a new hearing based on the updated legal position.
6. The Miscellaneous Application filed by the assessee was allowed, and the order was pronounced in the Open Court on 28th March, 2019, based on the request of both counsels citing the relevant judgment of the Hon'ble Apex Court in the Pr.CIT, Shimla vs. M/s Aarham Softronics case.