PRIME HEALTH CARE PRODUCTS,DAMAN vs. ACIT, VAPI CIRCLE,, VAPI

The grounds of appeal raised by the assessee are as follows: “1. The learned CIT (Appeals) has erred in dismissing the appeal holding that there is no mistake apparent from the record and the rectification application was rightly rejected. 2. The learned CIT (A) failed to appreciate that the disallowance done by the Assessing officer had already become final in favour of Assessee and was accepted by the Department in earlier years in case of Assessee itself and therefore Assessing Officer was required to follow and apply it in the current year.

However, the assessing officer has rejected the claim of the assessee holding that the issue involved did not come under the purview of mistake apparent from records which are rectifiable under section 154 of the I.T. Act. Hence, the application of the assessee under section 154 was rejected by the assessing officer.

Aggrieved by the order of the assessing officer, ( passed u/s 154), the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of Assessing Officer, observing as follows: “3.3……Considering the above facts, I agree with the AO that the issue of allowing ie claim u/s 80IB of the IT Act does not come under the purview of mistake apparent from record which is rectifiable u/s 154 of the IT Act as the disallowance u/s 80IB was made by mentioning of cogent reasons given in the assessment order u/s 143(3) of the IT Act 'by the AO. The discussion on page No. 4 of the assessment order clearly indicate that the AO had referred to the decision of Hon'ble ITAT, Ahmedabad in the case of Standard Oil and greases (ITA No. 3096/A/2007) wherein the Hon'ble bench held that scrap sale of damaged barrel, pail and cartoons in the business of manufacturing of lubricating oils and greases could not be considered as scrap generated in manufacturing process and deduction u/s 80IB was not allowed. Thus, the AO had taken reasoned view on the basis of various decisions of courts and ITAT on this issue and the said order cannot be considered for rectification merely on the ground that earlier years case of assessee was allowed in its favour. The assessment order indicates that such appellate orders were not brought to the notice of the AO in the assessment proceedings. Hence, I agree with the AO that there is no mistake apparent from the record in the current case and rectification application was rightly rejected. Facts also indicate that the assessment order passed on 29/08/2011 and first rectification application is claimed to have been filed on 26/08/2015. This shows that the assessee missed the deadline for filing regular appeal and recourse to rectification was taken to bring the issue to back to life for further legal remedy. However, by way of rectification petition, the assessee cannot-raise the issue which could have been taken up in regular appeal only. In view of the above facts and circumstances, the appeal for allowing rectification application on the issue of section 80IB deduction for scrap sale income is hereby dismissed. The case laws relied on by the assessee are not applicable for the issue of rectification. Hence, assessee’s appeal is hereby dismissed.” 6. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us.

Learned Counsel for the assessee, pleads before the Bench that disallowance u/s 80IB, on same issues, were done in A.Y.2004-05, A.Y.2005- 06, A.Y.2006-07 A.Y.2007-08 and A.Y.2008-09 by the Assessing Officer u/s 143(3) but the same was allowed by ITAT for A.Y.2004-05, 2005-06 and A.Y.2006-07 and by CIT (Appeals) in A.Y.2007-08 and A.Y.2008-09. 8. The ld Counsel relied on several case law on merit and stated that claim u/s 80IB is allowable in case of discount and scrap income. The ld Counsel also argued that as per “Principle of Consistency” such claims may be allowed. Thus, Ld. Counsel submitted that issue has settled, and assessee has been granted deduction under section 80IB of the Act, therefore it should be rectified under section 154 of the Act. 9. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that the issue relating to deduction under section 80IB/80IA is a debatable issue therefore it cannot be rectified under section 154 of the Act. Besides, ld DR also stated that assessee filed the appeal against the order of rectification under section 154 of the Act, therefore assessee`s appeal should not be allowed on merit.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on record. We note that assessee has filed an appeal against the order passed by the Assessing Officer, under section 154 of the Act before the ld.CIT(A). On appeal, ld CIT(A) held that the issue relating to deduction under section 80IB of the Act, is a debatable issue and therefore cannot be rectified under section 154 of the Act. We observed that “any mistake apparent from the record” can be rectified under section 154 of the Act. The plain meaning of the word 'apparent' is that it must be something which appears to be ex-facie and incapable of argument and debate. Therefore, we find merit in the submissions of ld DR for the Revenue that deduction under section 80IB is a debatable issue which can not be rectified under section 154 of

In the result, appeal filed by the assessee is dismissed