THE COMMISSIONER OF INCOME TAX vs. M/S. FLEX ART GOA

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TXA/29/2009HC BombayHCBM05002859200930 June 2010Author: F. M. REIS,A. S. OKA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the law regarding rectification under Section 254(2) is well-settled by the Apex Court's decision in Assistant Commissioner of Income Tax V/s Saurashtra Kutch Stock Exchange Ltd. This decision states that the non-consideration of a binding decision of the jurisdictional High Court or the Apex Court can be considered a mistake apparent from the record, which is rectifiable under Section 254(2). Therefore, in view of this precedent, the High Court found that no substantial question of law arose in the present appeal. The appeal was accordingly dismissed. The operative direction was the dismissal of the appeal.

What were the facts?

The appeal by the Commissioner of Income Tax challenges a High Court judgment upholding an ITAT order. The ITAT had allowed a rectification application filed by the assessee, M/s. Flex Art Goa. The original ITAT order dated December 26, 2008, had denied the assessee relief under Section 80IB of the Income Tax Act, 1961, on the grounds that it was not engaged in manufacturing or production. The assessee's process involved slitting aluminum foils and printing on them. The rectification was sought based on the Supreme Court's decision in India Cine Agencies Vs. CIT & Computer Graphics Ltd. The ITAT, in its rectification order dated April 9, 2009, allowed the relief under Section 80IB. The High Court noted that the issue of manufacture or production was settled by its own prior decision in Tax Appeal No. 5/2010.

What were the issues?

1. Whether the Income Tax Appellate Tribunal (ITAT) exceeded its jurisdiction under Section 254(2) of the Income Tax Act, 1961, by enlarging the scope of rectification proceedings when it allowed the assessee's application to rectify its earlier order? Assessee's contention: The assessee argued that the ITAT's original order was contrary to the binding decision of the Apex Court in India Cine Agencies Vs. CIT & Computer Graphics Ltd., and therefore, rectification was permissible. Revenue's contention: The Revenue contended that the ITAT, while deciding the miscellaneous application under Section 254(2), exceeded its jurisdiction and enlarged the scope of rectification proceedings, as the alleged error could not be rectified under Section 254(2).

Which sections of the Income-tax Act were involved?

Section 260A,Section 80IB,Section 254(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 29 OF 2009 THE COMMISSIONER OF INCOME TAX ... Appellant Versus M/S. FLEX ART GOA ... Respondent Mrs. Asha Dessai, Advocate for the Appellants. Mr. Farrokh V. Irani with Mr. Hari S. Raheja and Mr. Sudin M. S. Usgoankar, Advocates for the Respondent. Coram:- A. S. OKA & F. M. REIS, JJ. Date:- 30th June, 2010 P.C.:- We have heard the learned Counsel appearing for the Appellant and the learned Counsel appearing for the Respondent.

2.

The challenge in this Appeal under Section 260A of the Income Tax Act, 1961 is to the judgment and order dated 9th April, 2009 passed by the Income Tax Appellate Tribunal, Panaji. The judgment and order has been passed in rectification application seeking rectification of the order of the Tribunal dated 26th December, 2008. By the judgment and order dated 26th December, 2008, the Tribunal had held that the assessee was not carrying on any business of manufacture or production and was therefore not entitled to relief under Section 80IB of the said Act, 1961. The process adopted by the Respondent - assessee involved slitting of aluminium foils into customized width, mounting the same on printing machine and printing necessary text on it.

3.

The rectification was sought on the basis of the contention that the view taken by the Tribunal is completely contrary to the decision of the Apex Court in the case of India Cine Agencies Vs. CIT & Computer Graphics Ltd. {308 ITR 98 (SC)}. The Tribunal allowed the rectification application and held that the Respondent - assessee was entitled to relief under Section 80IB of the said Act in accordance with law.

4.

It is not in dispute that the issue whether the assessee was carrying on any business of manufacture or production is settled by the decision of this Court in Tax Appeal No. 5/2010 decided by the Division Bench of this Court on 12th April, 2010. The learned Counsel appearing for the Appellant submitted that while deciding a Misc. Application made by the Respondent - assessee under Section 254(2), the Tribunal exceeded juri iction vested in it and enlarged the scope of the rectification proceedings. Her submission is that the alleged error could not have been rectified under Section 254(2) of the said Act.

5.

We find that the law on this aspect is well settled. In the case of Assistant Commissioner of Income Tax V/s Saurashtra Kutch Stock Exchange Ltd.{(2008)305 ITR 227 (SC)}, the Apex Court held that non-consideration of a binding decision of juri ictional High Court or of Apex Court can be said to be a mistake apparent from record which can be rectified under Section 254(2) of the said Act. In view of the said decision, we find that no substantial question of law arises in this Appeal. Appeal is accordingly dismissed with no order as to costs. A. S. OKA, J. F. M. REIS, J. at*

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