2022 (1) TMI 847 - HC - Income Tax

Rectification of mistake u/s 154 - debatable issue - apparent mistake for the assessing officer to exercise the jurisdiction u/s 154 - jurisdiction of AO u/s 154 to adjust the unabsorbed depreciation loss of earlier assessment years against the current year's business income, while computing deduction u/s 80HHC - HELD THAT - Though appellant would agree that the issue, as to whether it is permissible to adjust unabsorbed depreciation loss of the earlier assessment year, while computing deduction under section 80HHC, stands decided against the appellant/assessee, he attempted to suggest that the said issue was debatable, when the assessing officer sought to invoke his power under section 15 on the premise that the said issue was finally resolved in favour of the Revenue in the case of Commissioner of Income Tax v. Shirke Construction Equipment Ltd. 2007 (5) TMI 194 - SUPREME COURT in which, the decision rendered by the Bombay High Court, in the case of Commissioner of Income Tax v. Shirke Construction Equipment Ltd, 2000 (7) TMI 40 - BOMBAY HIGH COURT was reversed. Hon'ble Supreme Court in the decision in IPCA Laboratories Ltd 2004 (3) TMI 9 - SUPREME COURT had already overruled the decision of the Bombay High Court in the case of Commissioner of Income Tax v. Shirke Constructions Equipments Ltd (supra). Importantly, it is to be noted that the said decision in IPCA Laboratories Ltd. (supra) was delivered on 11.03.2004 much prior to the order of assessment dated 28.03.2006. Thus, we are of the view that the submission of the learned counsel for the appellant that the issue was debatable, when the assessing officer invoked section 154, lacks merit. An order contrary to law declared by the Hon'ble Supreme Court, would constitute an error apparent on the face of record. Therefore, the order passed by the assessing officer exercising his jurisdiction conferred under section 154 of the Income Tax Act, 1961, as affirmed by the Appellate Authority as well as the Appellate Tribunal, warrants no interference at the hands of this court. - Decided against assessee.

Summary

Issues:
Challenge to order by Income Tax Appellate Tribunal regarding adjusting unabsorbed depreciation loss against current year's business income for deduction u/s 80HHC.

Analysis:
The appellant, engaged in the business of manufacturing and sale of cotton yarn, cotton fabrics, and staple fibre yarn, filed its return for the assessment year 2001-02 admitting a total income of ?3,98,17,147/-. After scrutiny, the assessment under section 143(3) was completed on 30.03.2004, determining total income at ?4,69,55,518/-. Subsequently, the assessment was reopened, and a reassessment order was passed on 28.03.2006, adjusting unabsorbed depreciation of earlier years against the business income. The appellant challenged the adjustment made under section 154 regarding deduction u/s 80HHC. The assessing officer issued a notice under section 154, as an apparent mistake was found in the calculation of 80HHC deduction, which was allowed excessively due to an error in adjusted business profits. The assessing officer revised the assessment based on the decision in IPCA Laboratories Ltd. v. Deputy Commissioner of Income Tax, 266 ITR 521, stating that section 80AB would override other provisions.

The appellant appealed the rectification of assessment, but the Commissioner of Income Tax (Appeals) upheld the revision order under section 154, citing the overriding effect of section 80AB in computing total income. The appellant then appealed to the Income Tax Appellate Tribunal, which affirmed the order of the Appellate Authority, stating that the exercise of jurisdiction under section 154 was valid. The Tribunal referred to the decision in IPCA Laboratories Ltd., which held that section 80AB would override section 80HHC. The Tribunal found no error in the rectification order passed by the assessing officer.

The appellant contended that the issue was debatable when the assessing officer invoked section 154, citing a decision by the Hon'ble Supreme Court in Commissioner of Income Tax v. Shirke Construction Equipment Ltd. The Court noted that the decision in IPCA Laboratories Ltd. had already overruled the Bombay High Court decision, and it was delivered before the assessment order. The Court held that an order contrary to law declared by the Supreme Court constituted an error apparent on the face of the record. Therefore, the orders passed by the assessing officer, Appellate Authority, and Appellate Tribunal were upheld, dismissing the appeal in favor of the Revenue.