Commissioner of Income Tax vs Hotel Jagsons

V.A. Mohta, J.—This is an application u/s 256(2) of the Income Tax Act, 1961, for stating the case and referring the following two questions for the opinion of this court :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in rejecting the miscellaneous petition filed by the Department holding that there is no mistake apparent from the face of the record ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the investment allowance is allowable in this case ?"

Against the order of the Tribunal holding that the assessee was entitled to investment allowance u/s 32A of the Income Tax Act, dated December 28, 1988, an application for rectification u/s 254 was filed. The ground was that a Madras High Court decision in the case of CIT v. Buhari Sons Pvt. Ltd. [1983] 144 ITR 12 holding that the activity similar to the one carried on by the assessee was essentially trading and not manufacturing activity, has not been considered in the order of the Tribunal. The Tribunal has rejected the application for rectification holding that the other Tribunal''s decision (in which the Madras High Court''s decision has been taken note of) was noticed by the Tribunal and hence the matter did not fall within the limited rectification jurisdiction.

Having heard the parties, it seems clear to us that the rectification jurisdiction has been properly exercised by the Tribunal. The ground urged could not lie within the compass of section 254. Under the circumstances, we do not notice any mistake apparent on the face of the record in the order of rectification dated July 2, 1990.

Once that question is answered in the affirmative, the second question does not arisen even thorough it may be a question of law because no application was field in the matter of earlier order dated December 28, 1988, which now has achieved finality. The above view we are taking is supported by the decisions of at least three High Courts, (i) Commissioner of Income Tax Vs. N.J. Dadabai, , (ii) Popular Engineering Co. Vs. Commissioner of Income Tax, , (iii) Jai Bharat Enterprises Vs. Commissioner of Income Tax, , to which our attention was drawn by Shri Dewani, learned counsel for the assessee.

Shri Chandurkar, learned counsel for the Revenue, invited our attention to the following two decisions :

(i) Chemicals and Allied Products Vs. Income Tax Appellate Tribunal, .

(ii) Shanti Vijay and Co. Vs. Commissioner of Income Tax, .

The factual backdrop of both these decisions is entirely different and their ratio does not apply to the matter at hand.

Under the circumstances, this application is rejected. No order as to costs.