PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S H.P. AGRO INDUSTRIAL CORPORATION LTD THROUGH ITS MANAGING DIRECTOR

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA ITA No.6 of 2020 Decided on: 17.11.2022 ______________________________________________________ Pr. Commissioner of Income Tax …..Appellant

Versus

M/s H.P. Agro Industrial Corporation Ltd.

…..Respondent _______________________________________________________ Coram Hon'ble Ms. Justice Sabina, Judge Hon’ble Mr. Justice Sushil Kukreja, Judge 1 Whether approved for reporting? ______________________________________________________ For the Appellant: Ms. Vandana Kuthiala, Advocate. For the Respondent: Mr. Vishal Mohan, Advocate.

Sabina, Judge (Oral)

Appellant-Revenue has filed the appeal, challenging the order dated 17th October, 2019, passed by Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh. 2.

We have heard learned counsel for the parties and have gone through the record available on the file carefully. 3.

The respondent-assessee is a Government Corporation

1 Whether reporters of Local Papers may be allowed to see the judgment?

- 2 - of the Himachal Pradesh Government and is engaged in trading of items like Tractor, Power tiller, Iron and Steel, Tyres and Tubes, Insecticides and Pesticides, Agricultural implements, Batteries, Cement, Veterinary Medicines, Computer, Bitumen etc. The respondent is also carrying on manufacturing activities such as formulation of animal feed, insecticides and pesticides, processing honey and fabrication agricultural implements road and forest tolls etc. The Assistant Commissioner of Income Tax, vide order dated 26th March, 2018, rectified the order passed by the Deputy Commissioner of Income Tax, Circle Shimla, dated 13th March, 2015 and revised the income of the assessee as Rs.1,69,17,241/- for the assessment year 2012-13. Aggrieved by the said order, the assessee approached the Commissioner of Income Tax (Appeals), Shimla, by way of an appeal. The appeal filed by the assessee was allowed by the Appellate Authority, vide order dated 29th March, 2019. The Appellate Authority, while allowing the appeal, has held as under:- “5.1.7. A perusal of the above decisions with regard to set off of unabsorbed depreciation show that there being varying perspectives on both facts and law, the case of the assessee is not covered u/s 154 of the Act. Even otherwise, on facts, the Sch BFLA in the return, copy of which has been placed on record

- 3 - during the appeal proceedings, clearly shows that the Long Term Capital Gains of Rs.12710334 has been set off against the b/f depreciation. The appellant has however wrongly computed the c/f of unabsorbed losses and unabsorbed depreciation in Sch CFL and UD by reducing this amount in Sch CFL from the brought forward losses as against the correct sch UD pertaining to carry forward of unabsorbed depreciation. Copy is annexed with this order. Thus while the claim for set off against b/f depreciation is correct, it is only the c/f figures which are erroneous. Section 154 of the Act facilitates the rectification of any mistake apparent from record. (emphasis added). A mistake apparent on the record is a mistake which must be obvious and a patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. A decision on a debatable point of law is not a mistake apparent from record. What needs to be rectified should be glaring and obvious. It has been held in the case of Oil India Ltd. Vs. CIT [1990] 183 ITR 412 (Calcutta) that fresh determination of facts should not be involved while considering a rectification order u/s 154. This is a case where the AO has applied his mind on the facts of the case, confronted the assessee and then passed the order u/s 143(3). As brought out in the order under consideration, the appellant had not filed any appeal against the order

- 4 - passed u/s 143(3) by the AO. Even otherwise, on merits too, the rectification carried out by the A.O. is not sustainable in view of the observations made supra and in view of the fact that the order passed u/s 154 is not a speaking order.”

Aggrieved against order dated 29th March, 2019, the appellant-revenue approached the Tribunal and the learned Tribunal, vide the impugned order dated 17th October, 2019, dismissed the appeal filed by the appellant-revenue. Operative part of the impugned order reads as under:- “12. The above factual findings of the Ld. CIT(A) have not been controverted before us. Therefore, undoubtedly the AO’s finding of mistake was based on total misappreciation of the basis facts relating to the issue. 13. In view of the same alone, we do not find any infirmity in the order of the Ld. CIT(A) holding that there was no mistake apparent from record. The order of the Ld. CIT(A) therefore calls for no interference. 14. In the result, the appeal filed by the Revenue is dismissed.”

Thus, the Commissioner of Income Tax (Appeals) as well as the learned Tribunal, after going through the material on record, have given a finding of fact that the assessee had not set off

- 5 - brought forward business losses against its income, but had in fact set off brought forward depreciation against the long term capital gains. 6.

The finding of fact arrived at by the Courts below does not require any interference by this Court as no substantial question of law arises in this case requiring interference. Accordingly, the appeal is dismissed.

( Sabina )

Judge

( Sushil Kukreja )

Judge November 17, 2022 ( VH )