2003 (12) TMI 287 - AT - Income Tax

Appellate Tribunal - mistake apparent from record - Provision for leave encashment of permanent employees - difference between the Learned Members - Third member order - Whether, the Income-tax Appellate Tribunal committed an apparent mistake by including the following in the directions given by the Tribunal in the order dated 31-12001 while disposing the issue u/s 43B - disallowance of raised by the assessee in Ground No. 6(b). Third Member Order - HELD THAT - After considering the rival submissions, I am of the view of the order passed by the ld. JM is the correct one both on facts and in law. As rightly argued by the ld. counsel the non-consideration of a judgment cited before the Tribunal constitutes a mistake apparent from the record within the meaning of section 254(2) and on being pointed out by any of the parties, the Tribunal is obliged to take into account the judgment so cited irrespective of the results that would follow. In the present case, the ld. JM has very aptly compared the facts of the assessee's case with those prevailing in the case of Food Specialities Ltd. 1994 (2) TMI 269 - ITAT DELHI and thereafter directed requisite relief. In conclusion, I agree with the view expressed by the ld. JM vis-a-vis point No.2 of the reference u/s 255(4). As regards the third point of difference, the matter need not detain me much since the non disposal of a ground by the Tribunal is definitely a mistake apparent from the record and all that the Tribunal is required to do is to direct the appeal to be fixed for hearing on the limited aspect of disposing of the said ground on merits. The ld. AM in his order on the M.A. has not said anything on the said ground remaining to be disposed of whereas the ld. JM vide para 11 of his order has directed the matter to be recalled for the limited purpose of adjudicating upon the said ground. I have no hesitation in straight away agreeing with the view expressed by the ld. JM since his approach is the correct one both on facts and in law. Before I part with this reference, I would like to mention that during the course of hearing, the ld. counsel for the assessee placed reliance on two judgments of the Hon'ble Delhi High Court and these being CIT v. G. Sagar Suri Sons 1990 (4) TMI 36 - DELHI HIGH COURT and Seth Madan Lal Modi v. CIT 2002 (11) TMI 57 - DELHI HIGH COURT whereas the ld. DR appearing on behalf of the Revenue placed reliance on two other judgments of the Hon'ble Delhi High Court and these being CWT v. Smt. Ilia Dalmia 1986 (12) TMI 13 - DELHI HIGH COURT and CIT v. K.L. Bhatia 1989 (8) TMI 43 - DELHI HIGH COURT . These judgments cited by the parties have been taken into account by me in disposing of the present reference and I would only like to emphasize that the order of the ld. JM on the M.A. does not tantamount to a review of the order passed by the Division Bench on the issues in question and his view is in conformity with the legal position as also the judgments of the Hon'ble Delhi High Court, which is the jurisdictional High Court in the present case. The Registry is directed to place the matter before the Division Bench for passing an order in conformity with the majority view.

Issues Involved:
1. Provision for leave encashment of permanent employees.
2. Expenditure on advertisement, publicity, running and maintenance of motor car u/s 37(3A).
3. Excess collection of sales tax.
4. Claim of excise duty.
5. Expenditure on spare parts.
6. Non-adjudication of disallowance of Rs. 17,17,965.

Summary:

1. Provision for Leave Encashment of Permanent Employees:
The Tribunal found a mistake apparent from the record regarding the provision of Rs. 4,75,458 for leave encashment. The claim was allowable as per the Supreme Court's decision in Bharat Earth Movers v. CIT [2000] 245 ITR 428. The Tribunal modified its order dated 31-1-2001 and directed the Assessing Officer to allow the provision of Rs. 4,75,458.

2. Expenditure on Advertisement, Publicity, Running and Maintenance of Motor Car u/s 37(3A):
The Tribunal held that there was no mistake apparent from the record regarding the expenditure on advertisement, publicity, and motor car maintenance. The assessee's attempt to review the order was not permissible u/s 254(2) of the Act.

3. Excess Collection of Sales Tax:
The Judicial Member disagreed with the Accountant Member's view and found that the Tribunal committed an apparent mistake by directing the Assessing Officer to verify the accounting method. The correct approach was to allow the deduction if the liability was discharged before the due date for filing the income-tax return, as per the Supreme Court judgment in Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677. The Third Member agreed with the Judicial Member's view.

4. Claim of Excise Duty:
The Judicial Member found an apparent mistake in the Tribunal's order for not considering the Special Bench decision in ITO v. Food Specialities Ltd. [1994] 49 ITD 21. The Tribunal should have allowed the deduction u/s 43B for the excise duty paid on goods cleared from the bonded warehouse but not sold. The Third Member agreed with the Judicial Member's view.

5. Expenditure on Spare Parts:
The Tribunal held that there was no mistake apparent from the record regarding the expenditure on spare parts. The assessee's attempt to review the order was not permissible u/s 254(2) of the Act.

6. Non-Adjudication of Disallowance of Rs. 17,17,965:
The Judicial Member found that the Tribunal committed a mistake by not adjudicating Ground No. 6(b) relating to the disallowance of Rs. 17,17,965. The order was recalled for adjudication on this issue. The Third Member agreed with the Judicial Member's view.

Conclusion:
The Tribunal's order was modified to allow the provision for leave encashment and to rectify the mistakes regarding the excess collection of sales tax and the claim of excise duty. The issue of disallowance of Rs. 17,17,965 was recalled for adjudication. The rest of the Tribunal's order was upheld.

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