9911796707
TMI Blog1985 (4) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the mercantile method of accounting and the accounting period ended on 31-10-1978. The assessment order was made under section 143(3) of the Act on 30-8-1982. In this order, the ITO disallowed 50 per cent of the claim of the assessee relating to guest-house expenditure under section 37(4) for Rs. 10,798. The assessee took up the matter before the Commissioner, who deleted the addition following the ratio of the decision of the Hon'ble Madras High Court in the case of CIT v. Aruna Sugars Ltd. [1980] 123 ITR 619. The departmental appeal was that the Commissioner (Appeals) erred in law and on the facts in making the above deletion on account of guest-house expenses. The Tribunal heard both the sides noting that before the Commissioner (Appeals), it was pointed out that the accommodation was only for the directors and the employees of the assessee. He gave a finding that the mill of the assessee is located in the remote rural area and the rest house was maintained, if not exclusively, for the use of the directors or the head office staff of the assessee. The findings of the Commissioner (Appeals) have not been controverted by the revenue. The Tribunal on the facts available, was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, provided the orders of rectification were passed within the prescribed period as held by the Hon'ble Supreme Court in the case of IAC v. V.M. Ravi Namboodiripad [1974] 96 ITR 73. 5. If there is any error in the order, the authorities concerned would be obliged to take rectificatory steps to correct the order as per the provisions concerned and no one would get a vested right in an erroneous order. In a slightly different situation, the Hon'ble Gauhati High Court in the case of CIT v. Smt. Eva Raha [1980] 121 ITR 293 held on the facts of that case that the Tribunal had the power to rectify its final order. This decision was also valid by the Hon'ble Calcutta High Court in the case of CIT v. Kelvin Jute Co. Ltd. [1980] 126 ITR 679. Similar view was expressed by the Hon'ble Madras High Court in the case of Mrs. K.T.M.S. Umma Salma v. CIT [1983] 144 ITR 890 and by the Hon'ble Andhra Pradesh High Court in the case of CIT v. R.M. Co. [1984] 148 ITR 353. 6. But we have to take into account the contentions made on behalf of the assessee to the effect that the accounting year of the assessee ended on 31-10-1978, that is, well before 1-4-1979, on which date the above sub-section w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and shall be deemed to have been inserted with effect from the 1st day of April, 1979, namely :-- '(5) For the removal of doubts, it is hereby declared that any accommodation, by whatever name called, maintained, hired, reserved or otherwise arranged by the assessee for the purpose of providing lodging or boarding and lodging to any person (including any employee or, where the assessee is a company, also any director of, or the holder of any other office in the company), on tour or visit to the place at which such accommodation is situated, is accommodation in the nature of a guest-house within the meaning of sub-section (4)'." 2. A perusal of the same would show that the intention of the Legislature was that sub-section (5) as quoted above was to be deemed to have been inserted with effect from 1-4-1979. In other words, the position would be the same as if this amendment had been made by the Finance Act, 1979, which would have received the President's assent sometime in March 1979. Clause (c) of section 17 of the relevant Finance Bill is also to the same effect. 3. Now if this amendment had been made by the Finance Act, 1979, obviously, the amended law would have been app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11-10-1984 on the ground that the order of the Tribunal suffered from an apparent mistake from the record inasmuch as the Tribunal has not considered the provisions of sub-section (5) of section 37, which were relied upon at the time of the hearing. The miscellaneous application thereafter came to be heard by the same Bench consisting of Shri H.S. Ahluwalia and Egbert Singh. Both the learned Members have agreed that in view of the retrospective insertion of sub-section (5) in section 37 by the Finance Act with retrospective effect from 1-4-1979, the sub-section will have to be treated as included in the Act, with effect from 1-4-1979, as held by the Supreme Court in the case of M.K. Venkatachalam. However, while according to the learned Accountant Member, the assessee's previous year having ended on 31-10-1978 and sub-section (5) having been inserted with effect from 1-4-1979, sub-section (5) was not applicable in the case of the assessee, the learned Judicial Member is of the view that the insertion with effect from 1-4-1979 means that it is effective for the assessment year 1979-80 irrespective of the previous year. It is in these circumstances that the learned Members have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1979-80 is debatable and, therefore, as held by the Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50, the order cannot be rectified in proceedings taken by way of miscellaneous application under section 254(2) of the Act. 5. I have heard the parties and have gone through the Finance Act carefully. It is true that sub-section (2) of section 1 of the Finance Act provides that "save as otherwise provided in this Act, sections 2 to 43 and section 59 shall be deemed to have come into force on the 1st day of April, 1983". The section by which sub-section (5) has been inserted in section 37 of the 1961 Act is section 17 of the Finance Act and the particular provision thereunder reads as : "(c) after sub-section (4), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1979, namely :-- '(5) For the removal of doubts, it is hereby declared that any accommodation, by whatever name called, maintained, hired, reserved or otherwise arranged by the assessee for the purpose of providing lodging or boarding and lodging to any person (including any employee or, where the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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