CIT v. Haritha Seating Systems Ltd.

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The Tax Publishers2012 TaxPub(DT) 0355 (Mad-HC) : (2011) 202 TAXMAN 0402 INCOME TAX ACT, 1961 --Rectification --Debatable issue Restriction in allowing deduction under section 80HHon same income--An appeal was filed before CIt(A) against original an assessment order whereby AO was directed to exclude income on certain heads under section 80HH AO complied the same and revised the order. Subsequently, when the objection was raised by revenue audit the Deputy Commissioner took up matter stating that a mistake had occurred and accordingly issued notice under section 154 of the Act for rectifying the order. The appeal to Tribunal, held that restriction in deduction under section 80HH proposed by AO under section 154 of the Act was not at all mistake apparent from record and rather it was quite debatable. Held: Income Tax Act, 1961 Section 154 INCOME TAX ACT, 1961 --Rectification --Debatable issue Restriction in allowing deduction under section 80HH on some other incomes--An appeal was filed before CIT(A) against the original assessment order, whereby AO was directed to exclude income on certain heads under section 80HH. AO complied the same and revised the order. Subsequently, when an objection was raised by revenue audit, CIT took up matter stating that a mistake had occurred and accordingly issued notice under section 154 for rectifying the order. In appeal before Tribunal, it was held that restriction in deduction under section 80HH proposed by AO under section 154 was not at all mistake apparent from record and rather it was quite debatable. *Held:* A decision on a debatable point of law cannot be regarded as a mistake apparent on the face of the record amenable for rectification under section 154. Merely because an objection was taken out by the revenue audit, the officer, who succeeded the previous officer should not have undertaken during exercise of revising the order, issuing notice under section 154. Therefore, the revised order passed by assessing officer was in violation of the order passed by CIT. Income Tax Act, 1961 Section 154 IN THE MADRAS HIGH COURT ELIPE DHARMA RAO & M. VENUGOPAL, JJ. CIT v. Haritha Seating Systems Ltd. Tax Case Appeal No. 106 of 2008 A.Y. 1997-98 9 April, 2011 Appellant by : K. Subramanian Respondent by : R. Venkatanarayan JUDGMENT *Elipe Dharma Rao, J.* This appeal is filed by the revenue in respect of the assessment year 1997-98 against the order dated 29-11-2006 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai in I.T.A. No. 1663/Mad./05 and was admitted on the following substantial question of law: 'Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the issue as to whether the labour charges, miscellaneous income and sale of materials are part of business income or not for the purpose of deduction under section 80HH is a debatable issue and the same cannot be decided in the rectification proceedings under section 154.' SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0355 (Mad-HC) : (2011) 202 TAXMAN 0402

INCOME TAX ACT, 1961

--Rectification --Debatable issue Restriction in allowing deduction under section 80HHon same income--An appeal was filed before CIt(A) against original an assessment order whereby AO was directed to exclude income on certain heads under section 80HH AO complied the same and revised the order. Subsequently, when the objection was raised by revenue audit the Deputy Commissioner took up matter stating that a mistake had occurred and accordingly issued notice under section 154 of the Act for rectifying the order. The appeal to Tribunal, held that restriction in deduction under section 80HH proposed by AO under section 154 of the Act was not at all mistake apparent from record and rather it was quite debatable. Held:

Income Tax Act, 1961 Section 154

INCOME TAX ACT, 1961

--Rectification --Debatable issue Restriction in allowing deduction under section 80HH on some other incomes--An appeal was filed before CIT(A) against the original assessment order, whereby AO was directed to exclude income on certain heads under section 80HH. AO complied the same and revised the order. Subsequently, when an objection was raised by revenue audit, CIT took up matter stating that a mistake had occurred and accordingly issued notice under section 154 for rectifying the order. In appeal before Tribunal, it was held that restriction in deduction under section 80HH proposed by AO under section 154 was not at all mistake apparent from record and rather it was quite debatable. Held: A decision on a debatable point of law cannot be regarded as a mistake apparent on the face of the record amenable for rectification under section 154. Merely because an objection was taken out by the revenue audit, the officer, who succeeded the previous officer should not have undertaken during exercise of revising the order, issuing notice under section 154. Therefore, the revised order passed by assessing officer was in violation of the order passed by CIT.

Income Tax Act, 1961 Section 154

IN THE MADRAS HIGH COURT

ELIPE DHARMA RAO & M. VENUGOPAL, JJ.

CIT v. Haritha Seating Systems Ltd.

Tax Case Appeal No. 106 of 2008

A.Y. 1997-98

9 April, 2011

Appellant by : K. Subramanian

Respondent by : R. Venkatanarayan

JUDGMENT

Elipe Dharma Rao, J.

This appeal is filed by the revenue in respect of the assessment year 1997-98 against the order dated 29-11-2006 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai in I.T.A. No. 1663/Mad./05 and was admitted on the following substantial question of law:

'Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the issue as to whether the labour charges, miscellaneous income and sale of materials are part of business income or not for the purpose of deduction under section 80HH is a debatable issue and the same cannot be decided in the rectification proceedings under section 154.'