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Issues Involved:
1. Whether an order of the Tribunal can be rectified under section 254(2) of the Income-tax Act, 1961, in view of a subsequent judgment of the jurisdictional High Court. Issue-wise Detailed Analysis: 1. Rectification of Tribunal Order under Section 254(2) based on Subsequent Judgment of Jurisdictional High Court: The core issue in this case is whether a Tribunal's order can be rectified under section 254(2) of the Income-tax Act, 1961, based on a subsequent judgment of the jurisdictional High Court. The Tribunal had previously ruled that "off period" salary for non-resident foreign technicians was not taxable under section 9(1)(ii) of the Act. However, a later judgment by the jurisdictional High Court (Uttaranchal High Court) held that such salary was indeed taxable under the same section. Divergent Views from Various High Courts: - Supporting Rectification: - Madhya Pradesh High Court in Nav Nirman (P.) Ltd. v. CIT [1988] 174 ITR 574 and Punjab & Haryana High Court in CIT v. Smt. Aruna Luthra [2001] 252 ITR 76 held that a mistake discovered based on a subsequent judgment of the jurisdictional High Court could be considered a mistake apparent from the record, thereby justifying rectification. - Kerala High Court in Kil Kotagiri Tea & Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 supported the view that a subsequent judicial pronouncement revealing an earlier interpretation to be wrong constitutes a mistake apparent from the record. - Opposing Rectification: - Calcutta High Court in Jiyajeerao Cotton Mills Ltd. v. ITO [1981] 130 ITR 710 argued that the principle of retrospective legislation does not apply to judicial decisions and that a subsequent decision does not obliterate the existence of prior judicial debate or conflict. - Andhra Pradesh High Court in CIT v. K. Venkateswara Rao [1988] 169 ITR 330 also held that an order could not be rectified based on a subsequent judgment. Supreme Court's Position: The Supreme Court in T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 clarified that a mistake apparent from the record must be obvious and patent, not something requiring extensive reasoning. In CIT v. G.M. Mittal Stainless Steel (P.) Ltd. [2003] 263 ITR 255, the Supreme Court held that the Assessing Officer's decision, based on a then-valid High Court judgment, could not be considered erroneous due to a subsequent Supreme Court ruling. Tribunal's Decision: The Tribunal, considering the conflicting views and the Supreme Court's stance, concluded that the issue of whether a Tribunal's order contains a mistake apparent from the record based on a subsequent judgment is debatable. Therefore, it held that the Tribunal's original order did not suffer from a mistake apparent from the record and dismissed the revenue's applications for rectification. Dissenting Opinion: The Accountant Member disagreed, citing that subsequent binding decisions are always retrospective and should be considered for rectification. He referenced multiple High Court decisions supporting rectification based on subsequent judgments and argued that the Tribunal's order should be rectified to align with the jurisdictional High Court's ruling. Third Member's Decision: The Third Member agreed with the Accountant Member, emphasizing that the jurisdictional High Court's decision, even if subsequent, constitutes a mistake apparent from the record. The Third Member held that the Tribunal's order should be rectified under section 254(2) to reflect the High Court's judgment that "off period" salary is taxable. Conclusion: The Tribunal's final decision, influenced by the Third Member's agreement with the Accountant Member, was that the Tribunal's order did indeed suffer from a mistake apparent from the record based on the subsequent jurisdictional High Court judgment. The Tribunal's order was thus subject to rectification under section 254(2) of the Income-tax Act, 1961.
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