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TMI Blog1994 (1) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... e of hearing the appeal. Since the Tribunal has passed its order on the basis of arguments advanced by both the sides during the course of hearing the appeal as well as on the basis of the records available before it, the alleged mistakes stated to have been committed by the Tribunal cannot be said to be apparent from the records. In fact, the assessee merely made an attempt to persuade the Tribunal to review its order which is not permissible in law as held in a number of judicial decisions. 4. In view of the facts stated above, the misc. application filed by the assessee is hereby rejected. 5. Per Shri T.A. Bukte, J.M.-I have carefully gone through the proposed order of the learned Accountant Member in this Miscellaneous Application. As we could not agree on the point of rectification of the order dated 30th April, 1991, in ITA No. 118 (Cal.) of 1989 for the assessment year 1985-86 in this misc. application on the mistake of fact, therefore, I had to differ on the point of rectification of the Tribunal's order on the basis of apparent mistake on the face of the order. The reasons to differ are as follows: 6. The basic fact is that the assessee-company is a manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and crates so the claim of depreciation by considering the above articles as 'plant' is not found as warranted. The a/r also submitted for considering the claim of depreciation in terms of section 32(i)(iii) as the value of unit of the items in respect of which the claim is made is below ₹ 5,000. But as the articles could not be established as 'Plant' the decision of the Gujarat High Court contents of which is discussed above, the submission of the A/R for such is knocked off in respect thereof. Accordingly, the claim of depreciation returnable package as claimed in the statement of computation of loss for the year to the tune of ₹ 41,60,554 is disallowed. 8. The assessee's mistake of claiming breakage does not come in the way of claiming depreciation on the bottles, crates and wooden shelves. It is well settled principle that the correct position under the law should be explained to the assessee instead of denying the lawful entitlement under the law. The Income-tax Officer held that the depreciation was allowable on the plant and machinery but the same could not be allowed because of the decision of the Gujarat High Court in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal expenses. He has made disallowances on estimate out of various items of revenue expenses alleging that the same are attributable to personal use of the directors. The expenses claimed are all related to business supported by bills, vouchers, evidences and are fully vouched and verifiable. 11. These are the narrations of the assessee-company contained in paragraphs 3 and 4 of the statement of facts. The relevant documents were very much produced before the Income-tax Officer for his examination. The Income-tax Officer has disallowed the depreciation and investment allowance for different reasons without expressly mentioning that the assessee is not a manufacturing company. 12. When the CIT(A)'s order was agitated before the Tribunal, the Tribunal proceeded on the ground that the evidence in respect of the manufacturing part of the assessee's factory was not produced. It is true that the copies of the documents were not produced but even without the said documents it was very much on record consisting the books of account, balance-sheet, profit and loss account and other relevant vouchers coupled with the explanation regarding the claim. It was not the case that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is supplied by M/s. Parle (Exports) Limited, Bombay, and other materials are procured by the assessee-company from the established sources. The assessee was sanctioned electrical power from the State Electricity Board to the tune of 245 K.V.A. The assessee paid power charges of ₹ 1,09,419 during the relevant accounting period under consideration. The assessee has also license under the Central Excise and Salt Act, 1944. The assessee was paying the prescribed duty of excise to the appropriate authority. 15. The process employed by the assessee comprises of purification and softing of water, preparation of raw and ready sugar syrup with the help of steam jacketed steel tanks and oil fired boiler, carbonation and flavouring of syrup, filling into the bottles with automatic fillers, processing the bottles for removal of dirt and bacteria with the help of automatic crower. These facts suggest that the assessee-company is engaged in manufacturing activity holding licences under the Factories Act, 1948, the India Boilers Act and the Employees State Insurance Act, 1948, required for manufacturing process carried on by the assessee. The assessee also employed the same process for B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-company is a manufacturing company and it is entitled to 100% depreciation on bottles, crates and wooden shelves. Even without looking into the documents filed at the time of hearing this misc. application, this meaning can be easily construed from the facts considered by the Assessing Officer in the assessment order and the documents produced before him at that time. The statement of facts of the assessee produced before us at the time of hearing of the appeal also cannot be discarded without giving a finding that the statement of facts is either false or incorrect. As the Tribunal has not considered the facts properly, therefore, a mistake of fact is apparent on the face of the order of the Tribunal. If this mistake of fact is rectified, the assessee is entitled to get relief of 100% depreciation on bottles, crates and wooden shelves and not the depreciation at the prescribed rate on the plant and machinery. The assessee is entitled to capitalise the correct preoperative expenses. 19. It is correctly argued by the learned departmental representative Shri S.C. Sen that if the assessee's application is allowed then it would amount the revival of the order. It is well sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the following point of difference of opinion for consideration of the Third Member to decide it according to the opinion of the majority under section 255(4) of the Income-tax Act, 1961: Whether, on the facts and in the circumstances of the case, there was mistake rectifiable under section 254(2) of the Income-tax Act, 1961, in the order dated 30th April, 1991, of the Income-tax Appellate Tribunal? THIRD MEMBER ORDER 1. This matter came before me as a Third Member under section 255(4) of the Income-tax Act to express my opinion on the following point of difference of opinion that arose between the Members, who heard this matter in Calcutta: Whether, on the facts and in the circumstances of the case, there was mistake rectifiable under section 254(2) of the Income-tax Act, 1961, in the order dated 30th April, 1991, of the Income-tax Appellate Tribunal? 2. In the normal course it would have been easier for me to say that in a case of this type where long arguments were needed explaining and interpreting the orders passed by the revenue authorities, there could be no mistake apparent from the record rectifiable under section 254(2) for the very simple reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in issue are not too complicated to comprehend. The assessee is a company engaged in bottling of soft drinks, which are marketed in the trade names of Gold Spot, Limca, Thums Up, Bisleri Soda etc. There was another company called Parle Exports (P.) Ltd. having its registered office in Bombay. By a franchise agreement dated 23-3-1984 the said Parle Exports (P.) Ltd. had permitted and authorised the assessee-company to bottle, to sell and to distribute the beverages known and sold under the trade marks as mentioned above. The former company agreed to supply to the assessee, the bottler company, the essence for the beverages at the prevailing prices. In other words the Parle Exports (P.) Ltd. will supply the concentrate only to the bottler company for a price and the bottler company, i.e., the assessee will convert the concentrate into a drink by adding some more chemicals, water and sugar and sell them in the market. Clause 6 of the agreement provided that the said Beverages will be manufactured in a plant approved by the Parle (Exports) Private Limited and located within the assigned territory by it to the assessee-company. The beverages will be manufactured only according to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer allowed 10% of the empty bottles and 25% of the wooden crates as breakages and allowed only ₹ 2,58,000 out of the claim of ₹ 7,12,311. 7. As regards the claim for 100% depreciation on the bottles and crates, the Income-tax Officer distinguished the cases relied upon by the assessee and held that the assessee was not entitled to this claim. In the opinion of the Income-tax Officer these bottles and crates formed part of the plant in relation to the manufacturing operations and therefore entitled to the claim of the assessee but he would not allow the claim on the ground that the same could not be held to be plant for the purpose of allowing 100% depreciation in view of the decision of the Gujarat High Court in Elecon Engg. Co. Ltd.'s case (supra). The Gujarat High Court held in this case that an article to qualify as plant must have some degree of durability and should not be the stock-in-trade of the assessee or quickly consumable or worn out in the course of few operations. According to the Income-tax Officer though the bottles and crates formed part of the plant, they were still the stock-in-trade of the assessee and therefore fell out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) has also pointed out that the bottles, crates and shelves are of non-enduring nature and the assessee also had written off a huge amount on account of breakage etc. of the above items. We, therefore, find that the various judicial decisions relied on by the learned counsel for the assessee in support of his arguments rightly rejected by the CIT(A) in view of the above facts and also having regard to the fact that the facts and circumstances considered by the various High Courts can be distinguished from the facts of the instant case as there was no manufacturing activity carried out by the assessee. In view of the above, the appeal by the assessee on this point is rejected. While dealing with the allowance of Investment allowance, the Bench again reiterated its findings in paragraph 10 as follows: 10. After hearing the arguments advanced by both sides and in view of our findings at ground No. 1 (supra) relating to the claim of depreciation in respect of crates, shelves and bottles we do not find any merit in the assessee's claim for identical reasons. It may be stated at the cost of repetition that the business of the assessee was only bottling of soft drink ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. But at the same time, he observed that they did not constitute plant. This was a mistake which needed to be rectified. The Income-tax Officer held that the bottles and crates were held by the assessee as stock-in-trade which was not a fact at all. The Tribunal also without discussing anything about this matter affirmed and upheld this view. It was also pointed out that in all the sale transactions with the customers, it was clearly pointed out that the bottles were returnable and were not meant for sale. (c) The Tribunal held that the assessee was bottling the concentrate chilled soft drinks supplied by Parle (Exports) (P.) Ltd. and also produced and sold Bisleri Soda, which was not a fact at all. This is not a fact at all. The assessee was purchasing as shown to the Tribunal various raw materials like sugar, acid, carbon dioxide etc. along with essence from the Parle (Exports) P. Ltd. With the help of these raw materials it was preparing the drinks by using the essence, which was only one of the raw materials. It is not purchasing chilled soft drinks from Parle (Exports) P. Ltd. This fact had weighed very heavily with the Bench in coming to the conclusion that the assessee-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch to say that the assessee was not engaged in the manufacture and therefore not entitled to the 100% deduction in respect of bottles and wooden crates, whose value of each of the assets independently was less than the prescribed limit of ₹ 5,000. The legislative injunction is that in case the value of the asset is less than ₹ 5,000, the entire cost would be allowed as depreciation. It was this claim that the assessee had made by withdrawing the claim earlier made for the deduction of breakages though on estimate basis. 11. When this petition came up for hearing before the Bench, the learned Accountant Member held that there was no merit in the miscellaneous application. In support of the mistakes pointed out in the miscellaneous petition, the assessee filed certain documents before the Bench by way of a paper book enclosing therein those papers which were already before the Bench. But the learned Accountant Member observed that this paper book was not filed before the Tribunal during the course of hearing of the original appeal. He held: Since the Tribunal has passed its order on the basis of arguments advanced by both the sides during the course of hearing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of considering the order of the Tribunal. The order of the Tribunal is the culmination of assessment proceedings. Without the assessment proceedings, assessment order, appellate order being in existence, the order of the Tribunal cannot stand by itself. Bearing this position in view, I will now set out to ascertain whether there is a mistake in the order of the Tribunal seen in the light of the facts that emerge taking into account the orders of the Assessing Officer, the Commissioner (A) and the record placed before them and me. 14. Now as I have pointed out there are four kinds of mistakes pointed out in the miscellaneous petition. The first and foremost was about the claim made on account of breakages of bottles and wooden crates of ₹ 7,12,311. Though this claim was made in the profit and loss account, in the final computation sheet that was filed before the Income-tax Officer, this claim was withdrawn and in its place a new claim for the deduction of 100% deduction was made. The Income-tax Officer though proceeded to compute the income on the basis of this fresh computation of income, had still not considered the point that the assessee had withdrawn the claim made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawn by itself. These facts show that the assessee had not made the claim for breakages at all. It withdrew the claim and in its place made a claim for a larger sum for deduction and therefore the Bench should have verified this fact when it was brought to its notice. That the Bench was influenced by this fact was very apparent from the order passed by it, particularly the observations in paragraph 10, which was extracted above, where the Bench had said that they also find that the assessee had duly claimed the value of breakages of bottles, shelves and crates, which was partly allowed by the Assessing Officer as per his order . This was a mistake committed by the Bench, which was brought to its notice but which the Bench had not properly appreciated. 15. The second mistake crept into the order of the Bench was to hold that the business of the assessee was only bottling of soft drinks supplied by the principals, Parle (Exports) P. Ltd. and that the assessee was not manufacturing any soft drinks. This is again a wrong fact. The assessee was only purchasing the essence from Parle (Exports) P. Ltd. under the franchise agreement as seen earlier and was later on manufacturing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recalling of the order. If a Bench is called upon to decide an issue, let us say 'A' but instead it decides the issue 'B', what should the parties do. If it is brought to the notice of the Bench that issue 'A' remained undecided and that issue 'B' was never before the Bench, should not the Bench decide issue 'A' and recall its observation on issue 'B'. Should it confine to the technicalities of saying that it would not look into the matter. The purpose of the Tribunal is to render justice and not to negate it. Recently the Supreme Court had held in the case of All India Judicial Officers Association that the Courts and Tribunals perform the sovereign judicial functions of the State. How can they achieve the performance of the sovereign judicial function unless they do justice if necessary by recalling its erroneous order passed by it committing a mistake. To hold on to this view will be perpetuating injustice even though it was brought to the notice of the Bench, which committed the mistake. I am therefore unable to agree with the view that if a mistake was committed by the Bench, that should not be rectified all because the rectifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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