LexM/S. MEPCO INDUSTRIES LTD. MADURAI versus COMMISSIONER OF INCOME TAX & ANR.
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A B [2009] 15 (ADDL.) S.C.R. 1026 MtS. MEPCO INDUSTRIES LTD. MADURAI V. COMMISSIONER OF INCOME TAX &ANR. . (Civil Appeal Nos. 7662-7663 of 2009) NOVEMBER 19, 2009 [S.H. KAPADIA, H.L. DATIU AND DEEPAK VERMA, JJ.] Income Tax Act, 1961 - s. 154 - Rectification of mistake under - Assessee received power subsidy for two years - Assessee's case that subsidy amount a capital receipt, hence C not liable to be taxed - Revision petitions allowed by CIT~ Subsequently, rectification of the orcjer by CIT holding that receipt of subsidies, a revenue receipt - Order upheld by Single Judge and Division Bench of High Court - On appeal, held: Instant case involves change 9f opinion - No 'rectifiable D mistake' existed to enable the Department to invokes. 154 - Government grants different types of subsidies to entrepreneurs, thus, in eCJch case, the nature of subsidy is to be examined - This exercise cannot be undertaken uls. 154 - - Thus, order of High Court set aside. E Sahney Steel and Press Works Limited and Ors. vs. Commissioner of Income Tax 1997 (228) l.T.'R.253; Commissioner of Income Tax vs. P.J. Chemicals Limited 1994 (210) l.T.R.830; Commissioner of Income Tax vs. Ponni Sugars and Chemicals Limited 2008 (306) l.T.R.392; Jiyajeerao Cotton Mills Limited vs. Income Tax Officer, F Calcutta and Ors. 1981 (130) l.T.R.710; Kil Kotagiri Tea and Coffee Estates Company Limited vs. Income Tax Appellate Tribunal and Ors. 1988 (174) l.T.R.579; A. Sethumadhavan vs. Commissioner of Income Tax 1980 (122) l.T.R.587; Santha S. Shenoy vs. Union of India 1982 (135) l.T.R.39; Deva Metal G Powders (P) Limited vs. Commissioner, Trade Tax, Uttar Pradesh 2008 (2) S.C.C.439; Commissioner of Central Excise, Calcutta vs. A.S.C.U. Limited 2003 (151) E.L.T. 481, referred to. 1026 H MEPCO INDUSTRIES LTD. MADURAI v. COMMNR. 1027 OF INCOME TAX Case Law Reference : A 1997 (228) l.T.R.253 Referred to. Para 3 .., 1994 (210) l.T.R.830 Referred to. Para 4 2008 (306) l.T.R.392 Referred to. Para 7 1981 (130) l.T.R.710 Referred to. Para 8 1988 (174) l.T.R.579 Referred to. Para 9 B 1980 (122) l.T.R.587 Referred to. Para 9 1982 (135) l.T.R.39 Referred to. Para 9 2008 (2) S.C.C.439 Referred to . Para 10 ..., ='! 2003 (151) E.L.T. 481 Referred to. Para 11 CIVIL APPELLATE JURISDICTION : Civil Appeal No. c 7662-7663 of 2009. From the Judgment & Order dated 29.11.2007 of the High Court of Judicature at Madras in Writ Appeal Nos. 2769 and 2770 of 2004. Pritesh Kapur, Radha Rangaswamy for the Appellant. D "' 8. Bhattacharya, ASG, H. Raghavendra Rao, M. Khairati, D.K. Singh, 8.V. Balaram Das, for the Respondents. The Judgment of the Court was delivered by KAPADIA, J. 1. Heard learned counsel on both sides. E 2. Leave granted. 3. The short question which arises in the facts and -( circumstances of these appeals is: whether it was open to the Commissioner of Income Tax to rectify its own order under Section 154 of the Income Tax Act, 1961, on the basis of the F judgement of this Court [later judgement] in the case of Sahney Steel and Press Works Limited & Ors. vs. Commissioner of Income Tax, reported in [1997] 2281.T.R.253? In short, in these appeals, we are concerned with the scope of Section 154 of the Act. 4. The appellant is engaged in the business of manufacture G of Potassium Chlorates. Its factory is located in the Union Territory of Pondicherry. The appellant received power subsidy for two \, years, which it initially offered as revenue receipt in its Return of Income. In the petitions filed under Section 264 of the Income Tax Act, 1961 [for short, "the Act"], the assessee pleaded that H 1028 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R. ,. ,l A the subsidy amount was a capital receipt, hence not liable to be ... taxed, and, accordingly, it sought revision of the assessment orders for Assessment Years 1993-1994 and 1994-1995. In the revision petitions, appellant had pleaded that the subsidy amount was a capital receipt and, for that purpose, it relied upon the B judgement of this Court in the case of Commissioner of Income Tax vs. P.J. Chemicals Limited, reported in [1994] 210 l.T.R.830. The revision petitions filed by the appellant under Section 264 of the Act stood allowed by the Commissioner of ~ Income Tax by order dated April 30, 1997. Subsequent to the .•"' said order, on 19th September, 1997, this Court in the case of c Sahney Steel and P
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