HONDA SIEL POWER PRODUCTS LTD. versus COMMISSIONER OF INCOME TAX, DELHI

Citation: [2007] 12 S.C.R. 552 · Decided: 26-11-2007 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Appeal(s) allowed

Judgment (excerpt)

' -\, 
A 
HONDA SIEL POWER PRODUCTS LTD. 
V. 
COMMISSIONER OF INCOME TAX, DELHI 
NOVEMBER 26, 2007 
B 
(S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.) 
.... 
Income Tax Act, 1961-ss. 254(2) and 154-Rectification by 
c 
tribunal, of its own mistake apparent from record-Scope of-Tribunal 
overlooking judgment of coordinate bench on the issue and rejecting 
the claim of asses see-On rectification application, tribunal exercising 
its power u/s. 254(2) and rectifYing its earlier order-Held: Tribunal 
was justified-When prejudice results from an order attributable to 
D 
Tribunal's mistake, error or omission apparent from record, then it is 
the duty of Tribunal to set it right-Atonement to wronged party by 
Tribunal for wrong committed by it does not amount to review of its 
earlier order-'Rule of precedent' not obliterated by s. 254 (2)-
Precedents. 
E 
The appellant-assessee, a manufacturer of generators in technical 
collaboration with a foreign Company, claimed enhanced depreciation 
under section 43A of the Income Tax Act, 1961. In appeal by the 
Revenue, the Tribunal rejected the assessee's claim for enhanced 
depreciation without considering the judgment of the coordinate bench 
F of the Tribunal cited and relied upon by the assessee. The assessee filed 
rectification application under section 254 (2) for rectification of mistake 
apparent from the order of the Tribunal. The Tribunal allowed the 
rectification application. The High Court set aside the order ofTribunal 
holding that the Tribunal had, in fact, reviewed its earlier order which 
G fell outside the scope of s. 254(2) of the Act. Hence, the present appeal. 
Allowing the appeal, the Court 
)"-
HELD: 1.1. The expression "rectification of mistake from the 
H 
552 
J 
HONDA SIEL POWER PRODUCTS LTD. v. COMMNR. 
553 
OF INCOME TAX, DELHI 
record" occurs in section 154 of the Income Tax Act, 1961. It also finds A 
place in section 254(2) of the Act. The purpose behind enactment of 
section 254(2) giving the power of rectification is based on the 
fundamental principle that no party appearing before the Tribunal, be 
it an assessee or the Department, should suffer on account of any 
mistake committed by the Tribunal which has nothing to do with the B 
inherent powers of the Tribunal In the instant case, the Tribunal in its 
Order dated 10.9.2003 allowing the Rectification Application gave a 
finding that the case of DCIT, Sp!. Range 5, New Delhi v. Samtel Color 
Ltd was cited before it by the assessee but through oversight it missed 
out the said judgment while dismissing the appeal filed by the Revenue C 
on the question of admissibility/allowability of the claim of the assessee 
for enhanced depreciation under section 43A. [Para 12] [559-D, E, F] 
1.2. "Rule of precedent" is an important aspect oftegal certainty 
in rule oflaw. That principle is not obliterated by section 254(2) of the D 
Act. When prejudice results from an order attributable to the Tribunal's 
mistake, error or omission, then it is the duty of the Tribunal to set it 
right. Atonement to the wronged party by the court or Tribunal for the 
wrong committed by it has nothing to do with the concept of inherent 
power to review. In the instant case, the Tribunal was justified in E 
exercising its powers under section 254(2) when it was pointed out to 
the Tribunal thatthe judgment of the coordinate bench was placed before 
the Tribunal when the original order came to be passed but it committed 
a mistake in not considering the material which was already on record. 
Tribunal acknowledged its mistake, and accordingly rectified its order. F 
High Court was not justified in interfering with the said order. The 
doctrine or concept of inherent powerwas not gone into. Proceeding on 
the basis that if prejudice had resulted to the party, which prejudice is 
attributable to the Tribunal's mistake, error or omission and which error 
is a manifest error then the Tribunal would be justified in rectifying its G 
mistake. Thus, the impugned judgment of the High Court is set aside 
and the order passed by the Tribunal allowing the rectification application 
filed by the assessee is restored. 
[Paras 13and14] [559-G; 560-A, B, C, D, E) 
H 
554 
SUPREME COURT REPORTS 
(2007] 12 S.C.R. 
A 
C/Tv. Woodward Governor India(P) Ltd, (2007) 162, TAXMAN 
60, referred to. 
CML APPELLATE JURISDICTION: Civil Appeal No. 5412 of 
2007. 
B 
From the Judgment and Order dated 11.10.2006 of the High Court 
of Delhi at New Delhi in LT.A

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