2013 (3) TMI 170 - AT - Income Tax

Rectification application - Revenue or Capital Expenditure - held that - in the appeals filed by the Revenue, the issue raised was whether the expenditure incurred for replacement of Membrane and Cell Elements were deductible or not in computing the taxable income of the assessee-company. - the assessee has nowhere raised the question of deducting its expenditure as current repairs . - In fact, the assessee had claimed expenditure as revenue expenditure under sec.37. The question of revenue expenditure deductible under sec.37 has been considered by the Hon ble Supreme Court in the case of CIT vs. Ramaraju Surgical Cotton Mills 2007 (8) TMI 39 - SUPREME COURT OF INDIA . - That is the decision which is directly relevant to the appeals considered by the Tribunal through its common order. - That decision has not been considered by the Tribunal. The Hon ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008 (9) TMI 11 - SUPREME COURT) has held that a patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. Non-consideration of the Hon ble Supreme Court judgment rendered in the case of CIT vs. Ramaraju Surgical Cotton Mills 2007 (8) TMI 39 - SUPREME COURT OF INDIA is a mistake apparent in the common order passed by the Tribunal, which, in fact, really goes to the root of the Tribunal order. All these rectification petitions filed by the assessee are accordingly allowed. - the appeals filed by the Revenue and the appeals and cross objections filed by the assessee, all are treated as partly allowed for statistical purposes.

Summary

Issues:
Rectification petitions filed by the assessee regarding the Tribunal's order on the deduction of replacement expenditure under sec.37 of the Income-tax Act, 1961.

Analysis:
The assessee filed eleven Miscellaneous Petitions as rectification petitions, claiming the Tribunal overlooked a binding decision of the Hon'ble Supreme Court. The Tribunal's common order dated 25th August, 2011, addressed appeals and cross objections related to the deduction of replacement expenditure for Membrane and Cell Elements and Stiffener Plates and Nickel Materials for Cathode. The Tribunal upheld the lower authorities' decision that the expenditure was capital in nature, dismissing the appeals and cross objections filed by the assessee.

The assessee contended that the Tribunal erred in relying on the judgment of the Hon'ble Supreme Court in a case related to "current repairs" under sec.31, whereas the assessee claimed the deduction under sec.37 as revenue expenditure. The assessee highlighted the relevance of another Supreme Court decision concerning sec.37 in determining revenue expenditure. The Tribunal's failure to consider this decision was deemed a mistake apparent from the records.

The Tribunal acknowledged the mistake in its order and rectified it, emphasizing that sec.31 and sec.37 operate in different spheres. The assessing authority erred in applying the judgment related to sec.31 instead of considering the claim under sec.37. Consequently, the issues were remitted back to the Assessing Officer for reexamination in light of the relevant Supreme Court judgment and sec.37 provisions.

In conclusion, the Tribunal rectified its common order, setting aside the lower authorities' decisions and remitting the issues to the Assessing Officer for reconsideration. The appeals filed by both the Revenue and the assessee were treated as partly allowed for statistical purposes, replacing the original order where necessary.