| Case ID |
36fb8b99-49b6-4f68-b3b6-4f544ae12381 |
| Body |
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| Case Number |
CIVIL APPEAL Nos. 7662-7663 OF 2009 |
| Decision Date |
Nov 19, 2009 |
| Hearing Date |
|
| Decision |
The Supreme Court held that the Commissioner of Income-tax was not justified in invoking section 154 of the Income-tax Act to rectify its earlier order. The court emphasized that the nature of subsidies must be examined based on the facts of each case and that the rectification sought was based on a change of opinion rather than a mistake apparent from the record. The court reiterated that a decision on a debatable point of law does not constitute a mistake apparent from the record. Consequently, the appeal was allowed, and the order of rectification was set aside. |
| Summary |
In the landmark case of Mepco Industries Ltd. v. Commissioner of Income Tax, the Supreme Court of India clarified the application of section 154 of the Income Tax Act, 1961 regarding the rectification of mistakes apparent from the record. The case revolved around the classification of a power subsidy received by the assessee and whether it should be treated as a capital or revenue receipt. Initially, the assessee classified the subsidy as a revenue receipt but later sought to revise this to a capital receipt, which the Commissioner allowed. However, following the Supreme Court's ruling in the case of Sahney Steel & Press Works Ltd. v. CIT, the Commissioner attempted to rectify his earlier order, arguing that the subsidy was operational and not capital. The Supreme Court rejected this argument, stating that the nature of the subsidy must be assessed based on specific facts and that invoking section 154 for rectification was inappropriate in this context. This decision is vital for understanding the limitations of rectification under the Income Tax Act and sets a precedent regarding the classification of subsidies in tax law. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
S.H. Kapadia,
H.L. Dattu,
Deepak Verma
|
| Lawyers |
Not available
|
| Petitioners |
Mepco Industries Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
2009 SLD 829,
(2009) 319 ITR 208,
(2009) 185 TAXMAN 409
|
| Other Citations |
Sahney Steel & Press Works Ltd. v. CIT [1997] 228 ITR 253,
CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 830,
CIT v. Ponni Sugars & Chemicals Ltd. [2008] 306 ITR 392,
Jiyajeerao Cotton Mills Ltd. v. ITO [1981] 130 ITR 710,
Kil Kotagiri Tea & Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579,
A. Sethumadhavan v. CIT [1980] 122 ITR 587,
Santha S. Shenoy v. Union of India [1982] 135 ITR 39,
Deva Metal Powders (P.) Ltd. v. Commissioner, Trade Tax, UP [2008] 2 SCC 439,
CCE v. A.S.C.U. Ltd. 2003 (151) ELT 481
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
154
|