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TMI Blog2014 (9) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... tified by the A.O. was neither raised nor decided by way of appeal or revision and accordingly the A.O. had jurisdiction as per provisions of Sec.154 of the Act to amend the same. 4. For that the ld. CIT(A) ought to have accepted the contention of the appellant that there was no mistake in the order of assessment made by the A.O. on 22.03.2005 u/s 143(3) and as such proceedings u/s 154 of the Act did not lie. 5. For that the ld. CIT(A) erred in observing that since decision of the Hon'ble Supreme Court in Liberty India vs CIT 317 ITR 218 (SC) decided on 31.08.2009 was in existence at the time of initiation of proceedings u/s 154 by the A.O., the A.O. derived jurisdiction u/s 154 to amend the order of assessment. 6. For that the Ld. CIT(A) did not properly consider the issue contended by the appellant that there was no mistake in the order u/s 254/251/143(3) that could be rectified u/s 154 of the Act by the A.O. 7. For that the ld. CIT(A) ought to have held that the order of assessment made u/s 143(3) having merged with the order of Ld. CIT(A) and then with the order of the Hon'ble Tribunal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DEPB benefits do not form part of the net profits of eligible industrial undertakings for the purpose of the deduction under section 80-I/80-IA/80-IB of the Income Tax Act, 1961. 3.1. Thereafter the AO referred to the decision of the Hon'ble Apex Court and held that the ratio of the above judgement squarely applies to the case of the assessee. In these circumstances the AO held that there is a mistake apparent from the record in as much as DEPB export benefits have been included in the net profit for the purpose of computation of deduction u/s 80IB of the Act Hence the AO made disallowances. 4. Against the above order the assessee is in appeal before the ld. CIT(A). The assessee raised various grounds before the ld. CIT(A). As regards ground that rectification of the order passed by the AO was barred by limitation. The ld. CIT(A) dismissed the said ground by holding as under :- "I have carefully considered the submission of the Ld.A.r. The first ground of appeal taken by the appellant is that the order in question is barred by limitation. It has been submitted that since assessment which is sought to be rectified was made on 22.03.2005 for which financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d nor decided. Hence the matter under rectification has not been considered and decided in any proceeding by way of appeal or revision, the rectification order passed by the A.O was well within jurisdiction as per provision of section 154 of the Act." 4.2. As regards the ground that rectification passed u/s 154 of the Act was not feasible with reference to the decision of the Hon'ble Apex Court in the case of Liberty India Liberty India vs CIT (supra), the ld CIT(A) dismissed this ground by holding as under:- "4.2. Ground no.3,4 and 5 taken by the appellant is that the proceeding u/s 154 of the Income Tax Act, 1961 for the AY could not have been proceeded with reference to the decision of Liberty India vs. Commissioner of Income Tax (SC) (317 ITR 218) since at the time of completion of the assessment u/s 143(3) of the Income Tax Act, 1961 the same not being in existence it cannot be said to be an apparent mistake from records so as to give jurisdiction to the A.O invoke proceedings u/s 154 of the Income Tax Act, 1961. Further the factual matrix of the case of Liberty India vs Commissioner of Income Tax reported in 317 ITR 218 has distinguishing features/fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits do not form part of the net profits of the eligible industries undertaking for the purpose of deduction under section 80I/80IA/80IB of the Act is squarely applicable in the case of the appellant Company. Accordingly the ground no. 2 to 5 taken by the appellant is rejected." Against the above order the assessee is in appeal before us. 5. We have heard both the counsel and perused the records. The ld. Counsel of the assessee reiterated the submissions made before the ld. CIT(A). He pleaded that rectification order passed by the AO was barred by limitation. He further submitted that the matter involved in the order had already traveled to the ld. CIT(A) and thereafter to the Tribunal. In these circumstances the ld. Counsel of the assessee submitted that the provision of section 154(1)A of the Act was applicable and the AO's order has merged with the appellate orders. These were not amenable for rectification. The ld. Counsel further submitted that the case laws of the Hon'ble Apex Court in the case of Liberty India vs CIT came much after filing of the return and completion of assessment proceedings. Hence he submitted that the same cannot be based for rectification of order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case we note that the matter in appeal before the authorities below related to allowability of deduction u/s 80IB in respect of income arising from foreign exchange fluctuation, discount on purchase, interest received on FDR with bank, interest received from Super stockist for late payment, rent received from staff and job charges received. As against the above the matter which has been rectified pertains to allowances of 80IB deduction with respect to DEPB/duty draw back/export benefit. Thus it is clear that this aspect of the matter which has been rectified was not at all the subject matter of the appeal before the authorities below. In this view of the matter section 154(1)(A) of the Act cannot come to the rescue of the assessee and in this view of the matter we do not find any infirmity in the order of the ld. CIT(A) on this issue. 7.3. Another aspect of assessee's plea is that order of the Hon'ble Apex Court in the case of Liberty India Ltd. (supra) was decided on 31.08.2009 and it came up subsequently much after filing of the return of the assessee and hence it cannot be made the basis for rectification of an apparent mistake u/s 154 of the Act. In this regard it is an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well-known work states : "...(T)he theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res jdicata or accounts that have been settled in the meantime"[Emphasis supplied] 44. It is no doubt true that after a historic decision in Golak Nath v. State of Punjab AIR 1967 SC 1643, this Court has accepted the doctrine of 'prospective overruling'. It is based on the philosophy.: "The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that we have a decision from Hon'ble Apex Court in the case of ACIT vs Saurashtra Kutch Stock Exchange Ltd. (supra) vide order September 15, 2008. This decision supports the view taken by the ld. CIT(A). The exposition is that Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 7.7. As against the above, we have a later decision of the Hon'ble Apex Court in the case of Mepco Industries Ltd. (supra) vide order dated 19th November, 2009. In this decision the Hon'ble Apex Court has referred with approval of the Hon'ble Calcutta High Court decision that subsequent decision of the Hon'ble Supreme Court did not obliterate the conflict of opinion prior to it. It was held that u/s section 154 of the Act rect ..... 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