HARYANA STATE COOP.SUPPLY &MKTG. FED.LTD vs. COMMISSONER OF INCOME-TAX, PANCHKULA

ITA/269/2003HC Punjab & HaryanaPHHC01022193200329 March 2016Author: MR. JUSTICE R.C. KATHURIA (RETD.),MS. JUSTICE NAVITA SINGH11 pages
AI SummaryDismissed

What were the facts?

The assessee, Haryana State Coop. Supply and Marketing Federation Ltd. (HAFED), appealed to the High Court against an order of the Income Tax Appellate Tribunal (Tribunal). The appeals concerned assessment years 1990-91, 1992-93, 1993-94, and 1995-96. The dispute revolved around the deductibility of income under Section 80P(2)(a)(iii) of the Income Tax Act, 1961. Initially, the assessee's income from marketing agricultural produce of its members was held exempt. However, the Income Tax (Second Amendment) Act, 1998, amended Section 80P(2)(a)(iii) retrospectively from April 1, 1968. The revenue filed miscellaneous applications before the Tribunal seeking rectification of its earlier orders allowing the deduction, arguing that the retrospective amendment created a mistake apparent from the record. The Tribunal, by an order dated July 22, 2003, allowed these rectification applications.

What did the High Court hold?

The High Court held that the Tribunal was justified in rectifying its earlier orders. The Court reasoned that Section 80P(2)(a)(iii) was amended retrospectively from April 1, 1968, and the constitutional validity of this retrospective amendment was upheld by the Supreme Court in National Agricultural Cooperative Marketing Federation of India Ltd. (supra). When a law is made applicable retrospectively, it is deemed to have been in existence from the specified date. Consequently, any order passed contrary to this amended law, even if it was in line with the law as it stood at the time of the original order, constitutes a mistake of law apparent from the record. The Court referred to the Full Bench decision in Commissioner of Income Tax v. Smt. Aruna Luthra [2001] 252 ITR 76, which held that a mistake apparent from the record includes situations where an authority's view is ex facie contrary to a decision of a superior court, even if that decision came after the original order. The Tribunal's power under Section 254(2) to rectify mistakes apparent from the record was thus correctly invoked. The substantial questions of law were answered against the assessee and in favour of the revenue. The appeals were dismissed.

What were the issues?

1. Whether the Tribunal was justified in rectifying its order under Section 254(2) based on a retrospective amendment to Section 80P(2)(a)(iii) when the issue had become final for the assessee in its own case and in the case of Kerala State Cooperative Marketing Federation Ltd. (231 ITR 814) prior to the amendment, and whether principles of res judicata apply for subsequent years. 2. Whether the Tribunal erred in initiating rectification proceedings, considering them as rectification rather than review, and whether necessary legal requirements under Rule 34A of the Income Tax (Appellate Tribunal) Rules, 1963, were followed. 3. Whether the rectification proceedings were mechanical and constituted a review, which the Tribunal lacks the power to do. 4. Whether the rectification orders were legally valid when the basis for rectification (the retrospective amendment) was debatable before the High Court and Supreme Court at the time of initiation. 5. Whether the Tribunal could issue rectification notices when the vires of the retrospective amendment were debatable before the High Court. Assessee's Contentions: The assessee argued that the issue had become final for the assessment years in question based on earlier judicial pronouncements, including the Supreme Court's decision in Kerala State Coop. Supply and Marketing Federation Ltd. (231 ITR 814), and therefore, principles of res judicata should apply. They contended that the Tribunal lacked the power to review its orders and that the rectification proceedings were not initiated following the prescribed legal procedures. Furthermore, they argued that the debatable nature of the retrospective amendment at the time of initiation rendered the proceedings invalid. Revenue's Contentions: The revenue contended that the retrospective amendment to Section 80P(2)(a)(iii) created a mistake apparent from the record, justifying rectification under Section 254(2). They argued that once the law is amended retrospectively, it is deemed to have been in force from the specified date, and any order passed contrary to this amended law is amenable to rectification. They relied on the Supreme Court's decision in National Agricultural Cooperative Marketing Federation of India Ltd. v. Union of India (2003) 260 ITR 548 (SC) which upheld the retrospective amendment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 254(2),Section 80P(2)(a)(iii),Section 154,Section 254,Section 256(1)

AI-generated summary — verify with the full judgment below

ITA No. 269 of 2003 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 269 of 2003 (O&M) Date of Decision: 29.3.2016 Haryana State Coop. Supply and Marketing Federation Ltd., Panchkula ....Appellant. Versus Commissioner of Income Tax, Panchkula ...Respondent.

1.

Whether the Reporters of the local papers may be allowed to see the judgment?

2.

To be referred to the Reporters or not? YES

3.

Whether the judgment should be reported in the Digest? CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MRS. JUSTICE RAJ RAHUL GARG. PRESENT: Mr. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate for the appellant. Mr. Yogesh Putney, Advocate for the respondent. AJAY KUMAR MITTAL, J.

1.

This order shall dispose of a bunch of four appeals bearing ITA Nos. 269 to 272 of 2003 as according to the learned counsel for the parties, the questions of law and facts involved therein are identical. For brevity, the facts are being extracted from ITA No. 269 of 2003. 2. ITA No. 269 of 2003 has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 22.7.2003 (Annexure A-1) passed by the Income Tax

The order continues below.

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