DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4) , MUMBAI vs. M/S ESSEL MINNING & INDUSTRIES LTD, MUMBAI

PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 12.10.2022 passed by the Ld. Commissioner of Income-tax (Appeals)-47, Mumbai for assessment year 2010-11 in relation to rectification order passed by the Assessing Officer. The grounds raised by the Revenue are reproduced as under: i. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting

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the disallowances u/s 10B without going into merit of the disallowances u/s 10B without going into merit of the disallowances u/s 10B without going into merit of the case discussed in the rectification order?" the case discussed in the rectification order?" the case discussed in the rectification order?" ii. "Whether on the facts and in the circumstances of the "Whether on the facts and in the circumstances of the "Whether on the facts and in the circumstances of the case a case and in law, the Ld. CIT (A) is justified on relying nd in law, the Ld. CIT (A) is justified on relying upon the decision of the Hon'ble Supreme Court's upon the decision of the Hon'ble Supreme Court's upon the decision of the Hon'ble Supreme Court's decision in T S Balaram Vs Volkart Bros(1971) 82 ITR decision in T S Balaram Vs Volkart Bros(1971) 82 ITR decision in T S Balaram Vs Volkart Bros(1971) 82 ITR 50 (SC) while the issue is not related as to whether it 50 (SC) while the issue is not related as to whether it 50 (SC) while the issue is not related as to whether it is is is apparent apparent apparent mistake mistake mistake or or or not not not but but but it it it is is is relatedtot relatedtotheallowability/ heallowability/ disallowability disallowability of of the the assessee's claim u/s 10B of the Income Tax Act, assessee's claim u/s 10B of the Income Tax Act, assessee's claim u/s 10B of the Income Tax Act, 1961?" 1961?" iii. "Whether on the facts and in the circumstances of the "Whether on the facts and in the circumstances of the "Whether on the facts and in the circumstances of the case and in law, the Id. CIT (A) is justified in allowing case and in law, the Id. CIT (A) is justified in case and in law, the Id. CIT (A) is justified in the appeal of the assessee without going into the the appeal of the assessee without going into the the appeal of the assessee without going into the provisions of section 10B deduction and the eligibility provisions of section 10B deduction and the eligibility provisions of section 10B deduction and the eligibility to claim the same. to claim the same. 2. Briefly stated, facts of the case are that in the assessment Briefly stated, facts of the case are that in the assessment Briefly stated, facts of the case are that in the assessment order dated 28/3/2013 dated 28/3/2013 passed u/s 143(3) of the Income passed u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) 1961 (in short ‘the Act’), the Assessing Officer i.e. he Assessing Officer i.e. DCIT Circle-5, Kolkata,allocated common common business/office expense to the Unit expense to the Unit eligible for deduction u/s 10B of the Act eligible for deduction u/s 10B of the Act i.e. Unit at Kasia, Distt i.e. Unit at Kasia, Distt Keonjhar (Orrisa)and corresponding deduction u/s 10B of the Act and corresponding deduction u/s 10B of the Act and corresponding deduction u/s 10B of the Act claimed by the assessee claimed by the assessee was reduced accordingly. Further, in the . Further, in the assessment order dated 29.03.2016 dated 29.03.2016 passed u/s 153C r.w.s. 143(3) passed u/s 153C r.w.s. 143(3) of the Act, the Assessing Officer i.e. DCIT Central Circle the Assessing Officer i.e. DCIT Central Circle-1(4), the Assessing Officer i.e. DCIT Central Circle Mumbai maintained maintained the deduction u/s 10B of the Act, of the Act, which was allowed by the Assessing Officer in assessment Assessing Officer in assessment order 143(3) of the order 143(3) of the Act. The assessment order passed . The assessment order passed u/s 153C of the Act u/s 153C of the Act by the Assessing Officer was as challenged by the assessee before the Ld. challenged by the assessee before the Ld. First Appellate Authority. Further, the Tribunal in ITA No. 1004 and First Appellate Authority. Further, the Tribunal in ITA No. 1004 and First Appellate Authority. Further, the Tribunal in ITA No. 1004 and 1294/Kol/2014 partially deleted the additio 1294/Kol/2014 partially deleted the addition made by the n made by the

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Assessing Officer in the original assessment order u/s 143(3) of the Assessing Officer in the original assessment order u/s 143(3) of the Assessing Officer in the original assessment order u/s 143(3) of the Act. Thereafter, the Assessing Officer in March 2021 issued a show Act. Thereafter, the Assessing Officer in March 2021 issued a show Act. Thereafter, the Assessing Officer in March 2021 issued a show cause for carrying out rectification in the order cause for carrying out rectification in the orders passed u/s 153C passed u/s 153C r.w.s. 143(3) of the Act in the case of r.w.s. 143(3) of the Act in the case of the assessee for assessment the assessee for assessment year 2009-10 and 2010 and 2010-11 to 2011-12 stating that there was a 12 stating that there was a mistake apparent from record and deduction u/s 10B was allowed mistake apparent from record and deduction u/s 10B was allowed mistake apparent from record and deduction u/s 10B was allowed wrongly. It was stated by the Assessing Officer that the ‘Unit Kasia’, wrongly. It was stated by the Assessing Officer that the wrongly. It was stated by the Assessing Officer that the in respect of which deduction deduction u/s 10B was claimed u/s 10B was claimed, was not a new establishment and in fact it was established by way of transfer of establishment and in fact it was established by way of transfer of establishment and in fact it was established by way of transfer of already existing unit. The Assessing Officer accordingly in order existing unit. The Assessing Officer accordingly in order existing unit. The Assessing Officer accordingly in order dated 31.03.2021 withdrawn the claim of deduction u/s 10B of the dated 31.03.2021 withdrawn the claim of deduction u/s 10B of the dated 31.03.2021 withdrawn the claim of deduction u/s 10B of the Act for the year under for the year under consideration,observing as under: observing as under:

“7. The submissions filed by the assessee have been 7. The submissions filed by the assessee have been 7. The submissions filed by the assessee have been perused carfully, however, the same are found to be perused carfully, however, the same are found to be perused carfully, however, the same are found to be unacceptable. The first contention of the assessce is that unacceptable. The first contention of the assessce is that unacceptable. The first contention of the assessce is that order wis. 143/3) of the Income Tax Act, 1961 has been order wis. 143/3) of the Income Tax Act, 1961 has been order wis. 143/3) of the Income Tax Act, 1961 has been passed on 28.03.2013 and there is no scope of rectification ed on 28.03.2013 and there is no scope of rectification ed on 28.03.2013 and there is no scope of rectification of the said order. In this regard, it is clarified that order of the said order. In this regard, it is clarified that order of the said order. In this regard, it is clarified that order passed u/s. 143(3) of the Income Tax Act, 1961 on passed u/s. 143(3) of the Income Tax Act, 1961 on passed u/s. 143(3) of the Income Tax Act, 1961 on 28.03.2013 has merged with order passed u/s. 143(3) r.w.s. 28.03.2013 has merged with order passed u/s. 143(3) r.w.s. 28.03.2013 has merged with order passed u/s. 143(3) r.w.s. 1531C) of the Income Tax Act, 1531C) of the Income Tax Act, 1961 dated 29.03.2016. 1961 dated 29.03.2016. Further, rectification of mistakes apparent from records has Further, rectification of mistakes apparent from records has Further, rectification of mistakes apparent from records has been proposed in respect of order passed u/s. 143(3) rawiss been proposed in respect of order passed u/s. 143(3) rawiss been proposed in respect of order passed u/s. 143(3) rawiss 153(C) of the Income Tax Act, 1961 dated 29.03.2016. 153(C) of the Income Tax Act, 1961 dated 29.03.2016. 153(C) of the Income Tax Act, 1961 dated 29.03.2016. Hence, as per the time limit provided in Income Tax Act, 1 Hence, as per the time limit provided in Income Tax Act, 1 Hence, as per the time limit provided in Income Tax Act, 1961 in respect of rectification u/$. 154 and its further extension in respect of rectification u/$. 154 and its further extension in respect of rectification u/$. 154 and its further extension of time limit due to COVID 19 Pandemic, order passed u/s. of time limit due to COVID 19 Pandemic, order passed u/s. of time limit due to COVID 19 Pandemic, order passed u/s. 143(3) r.w.s. 153(C) of the Income Tax Act, 1961 dated 143(3) r.w.s. 153(C) of the Income Tax Act, 1961 dated 143(3) r.w.s. 153(C) of the Income Tax Act, 1961 dated 29.03.2016 is not time barred for the purpose of passing of 29.03.2016 is not time barred for the purpose of passing of 29.03.2016 is not time barred for the purpose of passing of rectification Or rectification Order u/s. 154 of the Income Tax Act, 1961. der u/s. 154 of the Income Tax Act, 1961. The second contention of the assessce is that each and every The second contention of the assessce is that each and every The second contention of the assessce is that each and every claim referred in the SON were allowed after detailed claim referred in the SON were allowed after detailed claim referred in the SON were allowed after detailed

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verification which is evident from the assessment records. It verification which is evident from the assessment records. It verification which is evident from the assessment records. It is pertinent to mention here that any is pertinent to mention here that any claim of the assessee claim of the assessee allowed by the Assessing Officer in earlier orders after allowed by the Assessing Officer in earlier orders after allowed by the Assessing Officer in earlier orders after detailed Induification does not bar the Assessing Officer to detailed Induification does not bar the Assessing Officer to detailed Induification does not bar the Assessing Officer to rectify the said order u/s. 154of the Income Tax Act, 1961 if rectify the said order u/s. 154of the Income Tax Act, 1961 if rectify the said order u/s. 154of the Income Tax Act, 1961 if subsequently any mistake apparent from records is not subsequently any mistake apparent from records is not subsequently any mistake apparent from records is noticed. Therefore, the contentions raised by the assessee are not Therefore, the contentions raised by the assessee are not Therefore, the contentions raised by the assessee are not acceptable and accordingly, rejected. acceptable and accordingly, rejected. 8. In view of the above discussion, order passed u/s. 143(3) 8. In view of the above discussion, order passed u/s. 143(3) 8. In view of the above discussion, order passed u/s. 143(3) r.w.s. 153(C) of the Income Tax Act, 1961 dated 29.03.2016 r.w.s. 153(C) of the Income Tax Act, 1961 dated 29.03.2016 r.w.s. 153(C) of the Income Tax Act, 1961 dated 29.03.2016 is hereby rectihed in the followin is hereby rectihed in the followingmanner 8.1The assessee had claimed deduction u/s 10B of Income 8.1The assessee had claimed deduction u/s 10B of Income 8.1The assessee had claimed deduction u/s 10B of Income Tax Act, 1961 of Rs. 54,78,34,905/ Tax Act, 1961 of Rs. 54,78,34,905/- in respect of unit at in respect of unit at Kasia, Dist Keonjhar (Orissa) and the same was allowed. Kasia, Dist Keonjhar (Orissa) and the same was allowed. Kasia, Dist Keonjhar (Orissa) and the same was allowed. Unit at Kasia in respect of which 10B deduction claimed was Unit at Kasia in respect of which 10B deduction claimed was Unit at Kasia in respect of which 10B deduction claimed was not a new establis not a new establishment It was established by way of hment It was established by way of transier of an already existing unit. In view of the provisions transier of an already existing unit. In view of the provisions transier of an already existing unit. In view of the provisions of Income Tax Act, 1961, the Kaisa unit is not eligible for of Income Tax Act, 1961, the Kaisa unit is not eligible for of Income Tax Act, 1961, the Kaisa unit is not eligible for deduction u/S 10B of Income Tax Act, 1961 and entire deduction u/S 10B of Income Tax Act, 1961 and entire deduction u/S 10B of Income Tax Act, 1961 and entire deduction claimed u/s'10B of Income Tax Act, deduction claimed u/s'10B of Income Tax Act, 1961 of Rs. 1961 of Rs. 54,78,34,905/ 54,78,34,905/- in respect of unit at Kasia, Dist Keonjhar in respect of unit at Kasia, Dist Keonjhar (Orissa) is hereby disallowed and added back to the total (Orissa) is hereby disallowed and added back to the total (Orissa) is hereby disallowed and added back to the total income of the assessee for AY 2010 income of the assessee for AY 2010-11. The mistake 11. The mistake apparent from the records is rectified u/s. 154 of the Income apparent from the records is rectified u/s. 154 of the Income apparent from the records is rectified u/s. 154 of the Income Tax Act, 1961. Tax Act, 1961. 9. in view of the above discussion, the total income of the 9. in view of the above discussion, the total income of the 9. in view of the above discussion, the total income of the assessce for Assessment Year 2010 assessce for Assessment Year 2010-11 is recomputed as 11 is recomputed as under Particulars Particulars Amount in Rs. Amount in Rs. Amount in Rs. Total income as per order Total income as per order 687,07,15,667/ 87,07,15,667/- u/s 153C r.w.s. 250 of the u/s 153C r.w.s. 250 of the Income-tax tax Act, Act, 1961 1961 dated 12.04.2018 dated 12.04.2018 Add: 54,78,34,905/- 54,78,34,905/ 54,78,34,905/- Disallowance of deduction Disallowance of deduction u/s 10B of the Income Tax u/s 10B of the Income Tax Act, 1961 Total income Total income 741,85,50,572/ 741,85,50,572/-

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“5. I have carefully perused the facts of the case and the I have carefully perused the facts of the case and the I have carefully perused the facts of the case and the order of rectification passed by the Assessing Officer u/s order of rectification passed by the Assessing Officer u/s order of rectification passed by the Assessing Officer u/s 154 of the Act. In this regard, it would be the record 154 of the Act. In this regard, it would be the record 154 of the Act. In this regard, it would be the record must be an obvious and patent mistake and not something which can an obvious and patent mistake and not something which can an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on be established by a long drawn process of reasoning on be established by a long drawn process of reasoning on points on which there may be conceivably two opinions; a points on which there may be conceivably two opinions; a points on which there may be conceivably two opinions; a decision on a debatable point of law is not a mistake decision on a debatable point of law is not a mistake decision on a debatable point of law is not a mistake apparent from record. apparent from record. 5.7In the instant case, the mistake as pointed out by the 7In the instant case, the mistake as pointed out by the 7In the instant case, the mistake as pointed out by the Assessing Officer is not apparent on the record; not obvious Assessing Officer is not apparent on the record; not obvious Assessing Officer is not apparent on the record; not obvious and patent mistake. Thus the ratio laid'down by the Hon'ble and patent mistake. Thus the ratio laid'down by the Hon'ble and patent mistake. Thus the ratio laid'down by the Hon'ble Supreme Court in Volkart Bros (supra) is squarely applicable Supreme Court in Volkart Bros (supra) is squarely applicable Supreme Court in Volkart Bros (supra) is squarely applicable here. 5.8In view of the above facts I am of the considered view that f the above facts I am of the considered view that f the above facts I am of the considered view that the order passed by the Assessing Officer us. 154 of the ITA the order passed by the Assessing Officer us. 154 of the ITA the order passed by the Assessing Officer us. 154 of the ITA is not a mistake which is apparent from record and hence the is not a mistake which is apparent from record and hence the is not a mistake which is apparent from record and hence the order passed by the Assessing Officer us. 154 of the ITA order passed by the Assessing Officer us. 154 of the ITA order passed by the Assessing Officer us. 154 of the ITA does not hold ground. This does not hold ground. This ground of appeal No. 3 to 5 of the ground of appeal No. 3 to 5 of the appellant are allowed. appellant are allowed.” 4. Before Before Before us, us, us, the the the Ld. Ld. Ld. Departmental Departmental Departmental Representative Representative Representative (DR) (DR) (DR) submitted that assessee was not entitled for deduction u/s 10B of submitted that assessee was not entitled for deduction u/s 10B of submitted that assessee was not entitled for deduction u/s 10B of the Act as the unit for for which deduction u/s 10B of the Act u/s 10B of the Act has been claimed, was already in existence. He further submitted the Ld. was already in existence. He further submitted the Ld. was already in existence. He further submitted the Ld. CIT(A) has not decided the issue on merit and examined the claim CIT(A) has not decided the issue on merit and examined the claim CIT(A) has not decided the issue on merit and examined the claim of deduction u/s 10B of the Act. The Ld. Counsel of the assessee on of deduction u/s 10B of the Act. The Ld. Counsel of the assessee on of deduction u/s 10B of the Act. The Ld. Counsel of the assessee on the other hand relied on the order of the Ld. CIT(A) and submitted the other hand relied on the order of the Ld. CIT(A) and submitted the other hand relied on the order of the Ld. CIT(A) and submitted that during assessment proceedings, during assessment proceedings, the certificate in Form No. the certificate in Form No. 56G of the Act ( PB-4) was filed , 4) was filed , the clause 7 of which shows that clause 7 of which shows that

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the Unit commenced manufacturing on 14.06.200 the Unit commenced manufacturing on 14.06.2003 3 as a domestic Tarriff area Unit . The ld Counsel submitted that undertaking setup Tarriff area Unit . The ld Counsel submitted that undertaki Tarriff area Unit . The ld Counsel submitted that undertaki in domestic tariff are eligible for deduction u/s 10B benefit on in domestic tariff are eligible for deduction u/s 10B benefit on in domestic tariff are eligible for deduction u/s 10B benefit on conversion into Export oriented unit, as conversion into Export oriented unit, as mentioned mentioned by CBDT in Circular No. 1/05 dated 06.01.2005 Circular No. 1/05 dated 06.01.2005. The Ld Assessing officer has . The Ld Assessing officer has reproduced said circular in impugned order. reproduced said circular in impugned order. The Ld. Co The Ld. Counsel of the assessee filed copy of the submission of the submission which was filed before the was filed before the Assessing Officer during the assessment proceedings. Assessing Officer during the assessment proceedings. Assessing Officer during the assessment proceedings.

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provision of Act or erroneous application of same or applying an provision of Act or erroneous application of same or applying an provision of Act or erroneous application of same or applying an inapplicable provision oroverloo inapplicable provision oroverlooking a mandatory provision or non king a mandatory provision or non- following of decision of Jurisdictional High Court/ supreme court following of decision of Jurisdictional High Court/ supreme court following of decision of Jurisdictional High Court/ supreme court etc. The Assessing Officer cannot invoke provision of section 154 of he Assessing Officer cannot invoke provision of section 154 of he Assessing Officer cannot invoke provision of section 154 of the Act, whenissue involved is debatable , whenissue involved is debatable or where investigation of or where investigation of the fresh facts is required the fresh facts is required. The assessing officer can’t review its . The assessing officer can’t review its decision in the garb of rectification. In the case, nowhere in the decision in the garb of rectification. In the case, nowhere in the decision in the garb of rectification. In the case, nowhere in the impugned rectification order has mentioned that how allowing impugned rectification order has mentioned that how allowing impugned rectification order has mentioned that how allowing deduction u/s 10B in respect of t deduction u/s 10B in respect of the unit was a mistake apparent he unit was a mistake apparent from record. In the circumstances, we do not find any error in the In the circumstances, we do not find any error in the In the circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue order of the Ld. CIT(A) on the issue-in-dispute. Further, oncethe ld dispute. Further, oncethe ld CIT(A) has rejected the rectification order of the Assessing Officer has rejected the rectification order of the Assessing Officer has rejected the rectification order of the Assessing Officer at threshold , being not under scope of rectification not under scope of rectification, he he is not required to adjudicate the issue on merit. The grounds of the Revenue are to adjudicate the issue on merit. The grounds of the Revenue are to adjudicate the issue on merit. The grounds of the Revenue are accordingly dismissed. accordingly dismissed.

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BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai