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TMI Blog1962 (4) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... esident, incurred losses for the most part in the Native State of Indore to the extent of ₹ 78,123 and ₹ 3,762 respectively in the life insurance business carried on by it. From December 1, 1949, the petitioner started the business of insurance against fire also. In the proceedings for the assessment year 1950-51, the petitioner claimed, inter alia, ₹ 20,385 as a revenue deduction, being the amount of reserve provided to meet the fall in the value of securities which were initially held in the life insurance business but which were, as from December 1, 1949, bifurcated to the fire branch of the business. The petitioner further claimed that the losses sustained by it in the assessment years 1948-49 and 1949-50 be carried forward and set off in the assessment year 1950-51. By an order dated March 7, 1955, the Income-tax Officer, Indore, disallowed the two claims and determined ₹ 8,840 to be the total income of the petitioner. In its appeal to the Appellant Assistant Commissioner, the petitioner attacked the disallowance of ₹ 20,385 and of the losses amounting to ₹ 78,123 and ₹ 3,762. By an order dated May 29, 1957, the Appellate Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Commissioner had no power to rectify the order of his predecessor after it had merged in the order passed by the Tribunal in the further appeal preferred by the petitioner. Having heard the counsel, we are of opinion that the first ground is clearly untenable. Prior to its amendment by the Act, 25 of 1953, the relevant provisions of section 24(2) of the Act read as follows: (2) Whether any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head 'profits and gains of business, profession or vocation', and the loss cannot be wholly set off under sub-section (1), the portion not so set off shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year; and if it cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year, and so on; but no loss shall be so carried forward for more than six years, and a loss arising in the previous years for the assessment for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of section 14. In Anglo-French Textile Co. Ltd. v. Commissioner of Income-tax [1953] 23 I.T.R. 82,86; [1953] S.C.R. 448, the Supreme Court stated: ...a set-off under section 24(1) can only be claimed when the loss arises under one head and the profit against which it is sought to be set off arises under a different head. When the two arise under the same head, of course the loss can be deducted but that is done under section 10 and not under section 24(1).....In the present case, the loss is computed by striking a balance in the profit and loss account of just the one business and consequently no question of different heads arises. On both these grounds, therefore, the assessee's contention must fail because, unless the loss can be set off under sub-section (1) of section 24, it cannot be carried forward under sub-section (2).... As shown, this decision was superseded by the Indian Income-tax (Amendment) Act, 1953 (25 of 1953), with effect from April 1, 1952. The amended sub-section (2) in terms provided that the whole loss could be carried forward even where the assessee had no other head of income. The precise question is whether the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of section 24 retrospectively from April 1, 1952. The amended section 24(2), which gave a right to carry forward losses where the assessee had only one head of income, could not be availed of by the petitioner for the obvious reason that it was not in force in the accounting years 1948-49 and 1949-50. This conclusion is reinforced by another consideration. Clause 3 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, reads: Where in any previous year prior to the previous year for the assessment for the year ending on the 31st day of March, 1950, an assessee has sustained a loss of profits or gains in any business, profession or vocation carried on by him, and such loss would, had the State law continued to be in force, have been set off against the profits and gains, if any, from the same business chargeable to tax in the said year of assessment or in any year subsequent thereto, such loss would be so set off in the same manner, to the same extent, and up to the same year of assessment, as it would have been set off had the State law continued to be in force . This restrictive clause would be wholly unnecessary if, as urged before us, section 24( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the true position then the order which he made giving credit to the respondent for ₹ 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act. If, as a result of the said fiction, we must read the subsequently inserted proviso as forming part of section 18A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record. That is why we think that the Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laws (Part B States) (Removal of difficulties) Order, 1950. In our opinion, this was a mistake apparent from the record which could be corrected under section 35 of the Act. The last ground raises the question whether, having regard to the fact that there was an appeal to the Tribunal, the Appellate Assistant Commissioner had jurisdiction to rectify an error in his own order after the Tribunal had passed an order in appeal. It is well established that, when an appeal or revision has been preferred against a decree, the power of the court of first instance to amend the decree depends on the question whether the decree has been superseded by the appellate decree or is left intact. It is also well settle that, where the decree of the lower court is confirmed, reversed or varied in appeal, it is superseded by the decree of the appellate court and the only court that can amend the decree thereafter is the appellate court; Lala Brij Narain v. Tejbal Bikram Bahadur [1910] 37 I.A. 70; I.L.R. 32 All. 295. In Commissioner of Income-tax v. Amritlal Bhogilal Co. [1958] 34 I.T.R. 130, 136, 138-9; [1959] S.C.R. 713, the Supreme Court held that these principles applied to the proceedings und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Assistant Commissioner dated May 29, 1957, allowing carry forward and set off of the losses of the earlier years had merged in the order of the Tribunal. Admittedly, the revenue had not taken that matter to the Tribunal and it was, therefore, not the subjectmatter of appeal before it. In our opinion, the jurisdiction of the Tribunal is confined to dealing with the subject-matter of the appeal and the subject-matter of the appeal is constituted by the grounds of appeal preferred by the appellant. So in Puranmal Radhakishan Co. v. Commissioner of Income-tax [1957] 31 I.T.R. 294, 304, the Bombay High Court observed: Now, the jurisdiction of the Tribunal is to be found in section 33(4), which is in very wide terms: 'The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it things fit, and shall communicate any such orders to the assessee and to the Commissioner.' Wide as the language seems to be, this court has construed this section and has particularly emphasised the language used by the legislature, viz., 'thereon', and the view taken by the court, as we will presentl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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