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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य राजे�� राजे�� केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 25.09.2014 of CIT(A)-8,Mumbai the assessee has filed the present appeal. The effective ground of appeal is about dismissing the application filed by the assessee under section 154 of the Act. 2.Assessee-company,engaged in the business of stock broking is a member of the Stock Exchange, Mumbai and filed its return of income on 15.10.2006,declaring total income at Rs.6,42,513/-.The Assessing Officer (A.O) completed the assessment u/s. 143(3) on 22.12.2009 determining the income of the assessee at Rs.78.91 lakhs . The assessee preferred an appeal before the First Appellate Authoruty (FAA) raising two Grounds of appeal.One of the grounds, raised by the assessee, pertained to depreciation on Bombay Stock Exchange(BSE)Card.The FAA dismissed the appeal filed by the assessee with regard to depreciation on the card.Vide its letter dated 04/06/2012, the assessee filed an application for rectification of the order under section 154 of the Act on the ground that the then FAA had dismissed the appeal filed by the assessee on 07/09/2009, relying upon the decision of the Hon’ble Bombay High Court in ITA No.s. 971 of 2006 and 2018 of 2007 in the case of Techno Shares and Stores Ltd, that the said judgment of the Hon’ble Bombay High Court was later on reversed by the Hon’ble Supreme Court (327 ITR 323), that the identical issue arose in the case of the assessee for the subsequent assessment year and that the Tribunal allowed the appeal filed by the assessee. 3.After considering the rectification-application of the assessee, the FAA held that the assessee was a member of BSE and NSE to provide electronic transfer of securities, that it had raised the issue of disallowance of depreciation on BSE card in the original appeal, that 7130/M/14 –Grishma Securities his predecessor had discussed the issue in detail and had concluded that the actual cost of trading rights was neither nil or not ascertainable, that he had not allowed depreciation on the BSE card, that the assessee had accepted the decision of his predecessor, that it did not file any appeal before the tribunal, there was no mistake apron from the record, that the mistake should be obvious and Peyton, that the decision not debatable point of law was not a mistake apron from the record. He referred to the cases of Sidhappa Andappa Manvi(21ITR 333)and Satyanarayan Lakshminarayanan(AIR 1960 SC 137) and held that the assessee had filed a rectification application that was capable of to interpretation, that rectification proceedings could not be restored to make a revision in a matter on which there could be two possible petitions, that there was no mistake apron from the record at the time of passing the appellate order. Finally he rejected the certification application filed by the assessee. 4.During the course of hearing before us, the Authorised Representative(AR) argued that the Hon’ble Supreme Court had reversed the judgment of the Hon’ble Bombay High Court delivered in the case of Techno Shares and Stores Ltd.,that after the judgment of the Hon’ble apex court the position had become final, that it was a case of mistaken apparent from record, that the FAA was not justified in rejecting the appeal of the assessee. The Departmental Representative(DR) left the issue to the discretion of the bench. 5.We have heard the rival submissions and perused the material before us. We find that while deciding the appeal the FAA had adjudicated the issue of BSE card against the assessee following the judgment of the Hon’ble jurisdictional High Court, that the Hon’ble Supreme Court had reversed the order of the Hon’ble Bombay High Court. In our opinion, after the judgment of Saurashtra Kutch Stock Exchange(305ITR227),the legal position is clear.We would like to reproduce the relevant portion of the said judgment and it reads as under: “38. Though learned counsel for the assessee submitted that the phrase "to rectify any mistake apparent from the record" used in section 254(2) (as also in section 154) is wider in its content than the expression "mistake or error apparent on the face of the record" occurring in rule 1 of Order 47 of the Code of Civil Procedure, 1908 (vide Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 (Ker)), it is not necessary for us to enter into the said question in the present case.
As stated earlier, the decision was rendered in appeal by the Income-tax Appellate Tribunal, Rajkot. A miscellaneous application came to be filed by the assessee under sub- section (2) of section 254 of the Act stating therein that a decision of the "jurisdictional court", i.e., the High Court of Gujarat in Hiralal Bhagwati[13]was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification.
The core issue, therefore, is whether non-consideration of a decision of jurisdictional court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record" ? In our opinion, both the Tribunal and the High Court—were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under section 254(2).
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A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd. v. Commissioner of Surtax [1999] 237 ITR 834. It was held by the Division Bench of the High Court that if the point is covered by a decision of the jurisdictional court rendered prior or even subsequent to the order of rectification, it could be said to be a "mistake apparent from the record" under section 254(2) of the Act and could be corrected by the Tribunal.
In our judgment, it is also well-settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the court to pronounce a "new rule" but to maintain and expound the "old one". In other words, judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well-known work states ; " . . . the theory of case law is that a judge does not make law ; he merely declares it ; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any inter mediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The over ruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime". (emphasis[14] supplied) 44. It is no doubt true that after the historic decision in L. C. Golak Nath v. Union of India [1967] 2 SCR 762, this court has accepted the doctrine of "prospective overruling". It is based on the philosophy : "The past cannot [2000] 246 ITR 188 (Guj) always be erased by a new judicial declaration." It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. 45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality. 46. In S. Nagaraj v. State of Karnataka [1993] Supp 4 SCC 595, 618, Sahai J. stated : "Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire con cept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid rea son to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the court. In Administrative Law, the scope is still wider. Tech nicalities apart if the court is satisfied of the injustice then it is its con stitutional and legal obligation to set it right by recalling its order." 47. In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati[15]was decided a few months prior to that decision, but it was not brought to the attention of the Tribunal. In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying the "mistake apparent from the record". Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order. Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for.
7130/M/14 –Grishma Securities