1983 (7) TMI 76 - AT - Income Tax

Summary

Issues Involved:

1. Failure to consider the Supreme Court decision in Chainrup Sampatram v. CIT.
2. Bifurcation of territory 'K' under rule 9A of the Income-tax Rules, 1962.
3. Rectification of mistakes apparent from the record under section 254(2) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Failure to Consider the Supreme Court Decision in Chainrup Sampatram v. CIT:

The assessee argued that the Tribunal failed to consider the Supreme Court decision in Chainrup Sampatram v. CIT [1953] 24 ITR 481, which was cited during the hearing. The Tribunal acknowledged that the decision was cited but not mentioned in its order. It held that the Tribunal must consider the decision explicitly and either follow it or provide reasons for not doing so. The failure to do this constituted a "mistake apparent from the record" that needed rectification. The Tribunal concluded that the application of the assessee should be accepted on this ground alone.

2. Bifurcation of Territory 'K' under Rule 9A of the Income-tax Rules, 1962:

The assessee contended that each territory specified in the Table under rule 9A is a unit as a whole and cannot be bifurcated. The Tribunal initially held that the film 'Balika Badhu' was a feature film and that the assessee sold the rights of exhibition in some territories. It was argued that if the film is released in any part of a territory, it should be treated as released in the entire territory. The Tribunal agreed with this interpretation, stating that the territory cannot be bifurcated into its areas, and if there is exhibition and sale of the film in any part of the territory, it is considered as being in the entire territory. The Tribunal admitted that it made a mistake in holding otherwise and rectified this by accepting the assessee's application.

3. Rectification of Mistakes Apparent from the Record under Section 254(2) of the Income-tax Act, 1961:

The Tribunal reviewed whether the mistakes pointed out by the assessee were apparent from the record. The Judicial Member found that the omission to consider the Supreme Court decision and the improper bifurcation of territory 'K' were indeed mistakes apparent from the record. However, the Accountant Member disagreed, stating that the Tribunal had considered the points raised by the assessee in its original order and that the application was essentially a request for review, which the Tribunal has no power to entertain under section 254. The matter was referred to a Third Member due to this disagreement.

Third Member's Decision:

The Third Member reviewed the points of difference and concluded that the Tribunal had indeed considered the arguments raised by the assessee in its original order. It was noted that the principles laid down in Chainrup Sampatram's case were general principles of stock valuation, which are superseded by the specific provisions of rule 9A for motion picture films. The Third Member also found that the Tribunal's method of bifurcating the territory was a matter of interpretation and not a mistake apparent from the record. Therefore, the Third Member agreed with the Accountant Member that the miscellaneous application should be rejected.

Conclusion:

The Tribunal, after considering the Third Member's opinion, concluded that the points raised in the miscellaneous application were not mistakes apparent from the record and thus did not warrant rectification. The application was ultimately rejected, and the original order of the Tribunal stood as it was.