ORDER
Dr. B.P. Saraf, J.
1. By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in relying upon the subsequent retrospective amendment of section 80J of the Income-tax Act, 1961, for upholding the rejection by the Income-tax Officer of the application by the assessee for rectification of the other of the Income-tax Officer?”
2. The controversy in this case pertains to the assessment year 1973, 74. The assessee-company filed its return of income on August 14, 1973. Subsequently, on December 29, 1973, it filed a revised return in which it also claimed deduction under section 80J of the Income-tax Act, 1961 (“the Act”). The assessment was completed on August 17, 1976, and in the same, relief under section 80J was not allowed by the Income-tax Officer. The assessee took up the matter in appeal. The Appellant Assistant Commissioner held that the assessee was entitled to relief under section 80J and asked the Income-tax Officer to work out the same. The appeal of the Revenue against the above order was dismissed by the Tribunal. The Income-tax Officer gave effect to the order of the Appellate Assistant Commissioner by an order dated March 30, 1977. While giving effect to the order, in working out the deduction under section 80J, the Income-tax Officer applied rule 19A of the Income-tax Rules, 1962, and deducted borrowed capital and some other liabilities for computation of capital of the assessee. He thus gave relief under section 80J only on the net capital. The relief was confined to a period of seven months in that year as production had commenced only on June 1, 1972. As the particular unit had not made any profit for the relevant year, relief under section 80J was allowed to be carried forward to the next year. The assessee did not file any appeal against this order of the Income-tax Officer.
3. On November 6, 1978, the assessee filed an application before the Income-tax Officer under sections 154 and 155 of the Act for rectification of the order dated March 30, 1977, referred to above. In the application for rectification, it was claimed by the assessee that sub-rules (2) and (3) of rule 19A had been declared ultra vires by the Calcutta High Court in the case of Century Enka Ltd. v. ITO [1977] 107 ITR 123 and the said decision of the Calcutta High Court was binding on the Income-tax Officer in Bombay in the light of the decision of the Bombay High Court in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589. It was, therefore, contended that in view of the above decision of the Calcutta High Court which was also binding on the Income-tax authorities in Bombay, relief under section 80J should be computed on the gross capita without making any deduction on account of borrowed capital and liabilities. The Income-tax Officer by his letter dated November 27, 1978, informed the assessee that the decision of the High Court in another State was not binding on the executive authorities and the Calcutta view having not been accepted by the Department, there was no mistake apparent on the face of the record. The claim of the assessee for rectification was, therefore, rejected.
4. The assessee took up the matter in appeal. The Commissioner of Income-tax (Appeals) pointed out that the Andhra Pradesh High Court in CIT v. Warner Hindustan Ltd. [1979] 177 ITR 68 had taken a view different from the one taken by the Calcutta High Court and that the issue regarding deductibility of borrowed capita was a highly debatable issue. He, therefore, held that in the light of the decision of the Supreme Court in T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50, the Income-tax Officer was fully justified in refusing to rectify his order as there was no mistake apparent from the record. Against the above order of the Commissioner of Income-tax (Appeals), the assessee appealed to the Income-tax Appellate Tribunal. The Tribunal took note of the amendment of section 80J made by the Finance (No. 2) Act, 1980, with retrospective effect from April 1, 1972, and observed that the provisions of rule 19A were incorporated in section 80J retrospectively and the original order of the Income-tax Officer which was sought to be rectified by the assessee was in consonance with the amended section 80J of the Act. The Tribunal referred to the decision of the Supreme Court in M. K. Venkatachalam, ITO v. Bombay Dyeing and Mfg. Co. Ltd. [1958] 34 ITR 143 and observed that section 80J as amended with effect from April 1, 1972, has to be deemed to be in the statute book in that form ever since April 1, 1972. The Tribunal, therefore, held that in the light of the amended section 80J of the Act, the order of the Income-tax Officer rejecting the prayer of the assessee for rectification of its original order of assessment was correct. In that view of the matter, the appeal of the Revenue was dismissed by the Tribunal. Hence, this reference.
5. We have considered the question referred to us. The controversy has to be looked at from two angles. Firstly, it may be seen in the light of section 80J as amended. Admittedly, the amendment was made with retrospective effect from April 1, 1972. The order of the assessment pertains to the year 1973-74. The dispute is regarding the effect of the retrospective amendment. The question is whether the subsequent retrospective amendment of section 80J could be relied upon by the Tribunal for upholding the order of the Income-tax Officer. We find that the law is well-settled by the decision of the Supreme Court in M. K. Venkatachalam, ITO v. Bombay Dyeing and Mfg. Co. Ltd. [1958] 34 ITR 143 that the effect of the provisions that a particular amendment shall be deemed to come into force from a particular date with retrospective effect is that the amendment must be deemed to have been included in the principal Act as from that date for all purposes. That being so, section 80J as amended must be deemed to be in existence on the date of passing of the order of assessment by the Income-tax Officer and applicable to the assessment under consideration. The order of the Income-tax Officer being consistent with section 80J as amended with retrospective effect, it cannot be said that there is any mistake therein. The Tribunal was, therefore, fully justified in relying on the subsequent retrospective amendment of section 80J of the Act for upholding the rejection of the application of the assessee for rectification of the order by the Income-tax Officer.
6. Another angle from which the controversy has to be looked at is the effect of the decision of the Calcutta High Court on the Income-tax authorities in Bombay. The case of the assessee was that the decision of the Calcutta High Court was binding on the Income-tax authorities in Bombay and following the same, the Income-tax Officer was obliged to rectify his order under section 154 of the Act. This aspect of the matter has been considered by this court elaborately in its judgment dated April 22, 1993, in Income-tax Reference No. 500 of 1978 – CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727, wherein it has been held in clear terms (at page 738) :
“The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect. By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or courts or tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that here is only one decision of any one High Court on a particular point or that a number of different High Courts have taken identical views in that regard is not at all relevant for that purpose. Whatever may be the conclusion, the decisions cannot have the force of binding precedent on other High Courts or on any subordinate courts or tribunals within their jurisdiction. That status is reserved only for the decisions of the Supreme Court which are binding on all courts in the country by virtue of article 141 of the Constitution.”
7. In view of the above decision of this court, we are of the clear opinion that the Income-tax Officer was justified in holding that the decision of the Calcutta High Court is not a binding precedent for courts, authorities or tribunals outside its territorial jurisdiction and on that basis the Income-tax Officer was right in refusing to modify its order in the light of the decision of the Calcutta High Court.
8. Having regard to the foregoing discussion, we answer the question referred to us in the affirmative, i.e., in favour of the Revenue and against the assessee.
9. Under the facts and circumstances of the case, we make no order as to costs.