ORDER
G. SANTHANAM, A.M. :
This is a Miscellaneous Petition preferred by the Revenue in relation to the order of the Tribunal dt. 21st May, 1993 in ITA Nos. 589 & 590/Coch/1988. The assesses is an engineering construction company with previous year ending on 31st March of every year. The concerned assessment years are 1982-83 and 1983-84.
2. For the asst. yr. 1982-83, the assessee had purchased machinery and equipments of the tune of Rs. 11,95,18,733 in connection with its major contract for execution of Mussayeb-Kerbala – Najaf-Samawa Railway Project at Iraq in association with Indian Railway Construction Company. In addition, it also purchased machinery worth Rs. 1,85,42,528 in connection with work in India. It claimed investment allowance to the extent of Rs. 3,22,79,957 after creating the necessary reserve.
3. For the asst. yr. 1983-84, the assessee had purchased machinery and equipments to the tune of Rs. 3,18,38,260 for the execution of its work in Iraq. It had also purchased machinery worth Rs. 1,22,44,037 for its work in India. It claimed investment allowance to the extent of Rs. 1,09,99,748. The conditions regarding the creation of reserves stood complied with for both the years.
4. The Assessing Officer negatived the claim of the assessee on the strength of the decision of the Calcutta High Court in Addl. CIT vs. Mukherjee & Co. (1978) 113 ITR 718 (Call) and the decision of the Bombay High Court in CIT vs. Shah Construction Co. (1983) 142 ITR 696 (Bom) and also the decision of the Pune Bench of the Tribunal in the case of WTO vs. Lalchand Manekchand Mehta Bhosawal (WTA Nos. 82 & 83/PN/77-78) which held that the construction company cannot be treated as an industrial company.
5. On appeal, the assessee relied on the decision of the Orissa High Court in the case of CIT vs. N. C. Budharaja & Co. (1980) 121 ITR 212 (Ori). It also relied on the decision of the Cochin bench of the Tribunal dt. 30th Jan., 1987, in its own case, which was in its favour. As a result, the CIT(A) held that the assessee-company is an industrial undertaking and is entitled to investment allowance subject to the fulfilment of the statutory conditions like creation of reserve, etc. Against these orders of the CIT(A), the Revenue came in appeal before the Tribunal and the common ground of appeal for both the years was as follows :
“The learned CIT (A) erred in directing the ITO to grant investment allowance subject to other conditions being fulfilled by the assessee in view of the decision taken by the Tribunal in the assessees case for the earlier years. Since the assessee is only a contractor engaged in the execution of construction of tunnel, earth work etc. It cannot be treated as an industrial undertaking. Further, the decision relied on by the learned CIT (A) has not become final and is still pending before the Honble High Court”.
The Tribunal by its order dt. 21st May, 1993 held as follows :
“We have heard the parties to the dispute. We see that this issue stands covered in favour of the assessee by the decision of the jurisdictional High Court (1992) 193 ITR 674 (Ker) (supra), in the case of the very assessee wherein it is held that –
“the Tribunals finding that the assessee was an industrial undertaking had not been challenged. Even on merits, the assessee carried on the business of construction in a systematic manner. While engaged in the business of construction, it manufactured and processed various materials. It used the plant or machinery in such ancillary activities to carry on the business of construction more efficiently and economically. Hence, the assessee used the new machinery of plant in an industrial undertaking for the purpose of construction, manufacture or production of an article or thing and such article or thing was not one specified in the list of the Eleventh Schedule and so the assessee was entitled to the relief under s. 32A” .
In view of the above, we hold that the assessee is entitled to get investment allowance under s. 32 A of the IT Act, 1961″. Thus, the Tribunal has followed the decision of the jurisdictional High Court in the assessees own case for the earlier years. Subsequent to the passing of the order of the Tribunal, the Special Leave Petition filed by the Revenue against the judgment of the Kerala High Court was dismissed by the Supreme Court, as reported in (1992) 195 ITR (St) 139. Still, later the Supreme Court had an occasion to consider the issue whether the construction company would be eligible for grant of investment allowance on plant and machinery used by it for the manufacture or fabrication of articles or things utilised in the course of construction of roads, bridges, etc. and held ultimately that dam or road or a bridge cannot be construed as articles or things which always refer to movable properties and therefore, a construction company would not be eligible for investment allowance on the plant and machinery used by it in the course of its construction activities [CIT vs. Shankar Construction Co. (1993) 204 ITR 412 (SC)]. On the question whether a construction company can be considered as an industrial company as was held by the High Court, no arguments were advanced by the Revenue before the Supreme Court and the issue was left open by the Supreme Court.
6. It is against this background in the assessees own case vis-a-vis the latter decisions in allied cases that we are called upon to decide the issue whether there is a mistake apparent on record in the order of the Tribunal cited supra when it decided the issue in favour of the assessee, following the High Court judgment in its own case.
7. Shri Sarangan, the learned counsel for the assessee, submitted that at the time when the Tribunal decided the issue on 21st May, 1993, the law was as laid down by the Kerala High Court in the assessees own case. Later decision of the Supreme Court in the case of a different assessee interpreting the provision of s. 32A , cannot have the effect of creating a mistake apparent from record in the impugned order of the Tribunal. He relied on the following decisions :
(a) CIT vs. Pushpavati Kantilal (1981) 129 ITR 582 (Guj);
(b) Jiyajeerao Cotton Mills Ltd. vs. ITO (1981) 130 ITR 710 (Cal); and
(c) Export Enterprises Pvt. Ltd. vs. ITO (1983) 142 ITR 641 (Cal).
Shri Sarangan further submitted that the only issue before the Tribunal was whether the assessee was an industrial undertaking and as such entitled to investment allowance or not and the Supreme Court in Shanker Construction Co.s case (supra) had left the issue open. Therefore, even assuming that the Supreme Court decision was in favour of the Revenue inasmuch as the Revenue has not agitated any issue other than the question whether the assessee is an industrial company or not in its grounds of appeal, it cannot now be contended that merely because the decision of the Supreme Court in Shanker Construction Co.s case (supra) on other aspects of the issue are in favour of the Revenue a mistake had crept in the impugned order of the Tribunal which is capable of being rectified under s. 154 of the IT Act.
8. Shri Abraham, the learned Senior Departmental Representative, on the other hand, contended that the Revenue had appealed against the order of the CIT(A) in granting investment allowance to the assessee holding it to be an industrial undertaking. There fore, the appeal of the Revenue was against the allowance granted and the Revenue cannot be pinned down to one aspect of the entire question to the exclusion of other aspects of the question. Even otherwise, it is the duty of the Tribunal to comprehend the issue in the appropriate manner and pass its judgment considering the subject-matter of appeal in its entirety. This has not been done and therefore, in the light of the subsequent decision of the Supreme Court a patent mistake had occurred in the decision of the Tribunal cited supra. Further, he relied on the decision of the Kerala High Court in Kil Kothagiri Tea and Coffee Estates Co. Ltd. vs. ITAT (1988) 174 ITR 579 (Ker).
9. We have thus heard rival submissions and perused the records. We have narrated the facts of the case in paras 1 to 4 above. From the grounds of appeal extracted in para 5 above, it will be evident that the main thrust of the Revenues grievance was that the assessee is only a contractor and cannot be treated as an industrial undertaking. This issue, whether a construction company is an industrial undertaking or not has been left open even in the decision of the Supreme Court in Shankar Construction Co.s case (supra). In CIT vs. N. C. Budharaja & Co. (1994) 204 ITR 412 (SC) at page 431, the Supreme Court noticed that –
“Even here, learned counsel for the Revenue, Shri Murthy, concentrated only upon the second requirement. He did not address any arguments with respect to the first, for which reason we do not propose to express any opinion thereon.”
In this context we may point out that the first requirement is whether the assessee is an industrial undertaking. Thus, on this aspect of the matter, there is no pronouncement by the Supreme Court. The assessee in the case before us continues to do similar or identical work, as in the earlier years, as engineering contractors. Even in respect of the asst. yrs. 1980-81 and 1981-82 for which the previous years ended on 31st March, 1980 and 31st March, 1981 respectively, the Department had not challenged the conclusion of the Tribunal that the assessee is an industrial undertaking and this is made very clear in the judgment of the Kerala High Court in the assessees own case reported in CIT vs. Bhagiratha Engg. Ltd. (1992) 193 ITR 674 (Ker). At page 675 (as per head notes) wherein their Lordships held “that the Tribunals finding that the assessee was an industrial undertaking had not been challenged. “The Special Leave Petition filed by the Revenue against the judgment of the Kerala High Court was dismissed by the Supreme Court as reported in (1992) 195 ITR (St) 139 on the ground that the question as ultimately referred to the High Court did not specifically raise the issue whether the assessees activity amounted to manufacture or processing and therefore, the High Court did not permit the question to be raised before it. A perusal of the ground of appeal raised before the Tribunal and extracted above would show that the issue before the Tribunal was whether the assessee was an industrial undertaking so as to entitle to investment allowance and not whether the assessee was engaged in manufacturing activities, etc.
10. Shri Abraham vehemently contended that the Revenue has a general ground namely that the order of the CIT(A) “is erroneous in law, facts and circumstances of the case” and therefore, this general ground would comprehend all the aspects of the issue. No specific arguments were addressed before us on the general ground but it was brought to our notice that the issue of investment allowance was governed in favour of the assessee in the decision of the Kerala High Court even though the Department has accepted such decision. In the light of these submissions, it cannot now be argued that the Tribunal erred in not addressing itself to the first general ground of appeal. At any rate, the issue cannot be reopened through the medium of miscellaneous petition.
11. Shri Abraham further contended that in the main ground of appeal itself the Department was aggrieved against the direction of the CIT(A) to grant investment allowance “subject to other conditions being fulfilled by the assessee ……” and contended before us that the expression subject to other conditions being fulfilled had the effect of drawing the attention of the Tribunal to the question whether the assessee was engaged in the manufacture or production of articles or things not listed in the 11th Schedule and on this aspect of the matter, the Tribunal has not rendered its decision. We do not accept such a contention though very persuasively put forward before us. The CIT(A) had followed the decision of the Cochin Bench of the Tribunal in the assessees own case for the earlier assessment years holding that the assessee was an industrial company engaged in the manufacture of articles or things not listed in the 11th Schedule. After following the order of the Tribunal, the CIT(A) held as follows : For asst. yr. 1982-83.
“The ITO is directed to grant investment allowance subject to the appellant having fulfilled the various statutory conditions like creation of necessary reserve and also the ITO can satisfy himself that the plant and machinery is the one which is not prohibited for the grant of investment allowance.” For asst. yr. 1983-84.
“As the facts of the case are similar, I would direct the ITO to allow investment allowance subject to the appellant having fulfilled the various statutory conditions like creation of necessary reserve and also the ITO can satisfy himself that the particular plant and machinery is entitled for investment allowance.”
Thus the CIT had in his mind the creation of Reserve and items prohibited in the 11th Schedule and no more.
The Tribunal in its order has followed the decision of the Kerala High Court which was upheld by the apex Court, in the assessees own case for the earlier years. Therefore, the charge now made before us that the Tribunal has not considered the issue whether the assessee was engaged in the manufacture of articles or things not listed in the 11th Schedule as strenuously contended by Shri Abraham, would not lie.
12. Shri Abraham further contended that in the light of the decision of the Supreme Court in Shankar Construction Co. (supra) the entire order of the Tribunal is vitiated by mistake apparent from record and therefore, the order dt. 21st May, 1993 should be recalled, and in this connection he relies on the decision of the Kerala High Court in Kil Kotagiri Tea and Coffee Estates Co. Ltd. vs. ITAT (supra). We have gone through this decision. In that case the assessee had paid advance taxes well beyond the due dates but within the financial year relevant to the assessment year. The Tribunal following the decision of a single judge held that the interest on belated payments of such advance taxes are not admissible. Subsequently, the Division Bench reversed the decision of the Single Judge holding that the payments made with in the financial year though not within the specified dates are to be treated as advance tax and the assessee was entitled to interest. Pursuant to the decision of the Division Bench, the assessee filed an application for rectification of the order of the Tribunal and the Tribunal rejected the application holding that the rectification must be of a mistake which was a mistake in the light of law in force at the time when order sought to be rectified was passed. The Tribunal also held that subsequent decision of the Division Bench overruling the Single Judge decision had no retrospective operation. On a petition by the applicant, the High Court held that the order passed by the Tribunal relying on the decision of the Single Judge disclosed a mistake apparent from record in the light of the subsequent overruling of the very decision relied on by the Tribunal by a Division Bench. When the Bench of the High Court overruled the decision of the single judge, the earlier decision was never the law. The law on the point at all times was as stated by the Bench in the decision reported by the Division Bench. Therefore, the High Court directed the Tribunal to rectify the mistake in the light of s. 254(2) r/w s. 154 of the IT Act, 1961.
13. From the facts narrated above, it will be abundantly clear that the Tribunal in the case of Kil Kotagiri Tea & Coffee Estates Co. Ltd. (supra) has followed the decision of single judge in A. Sethumadhavan vs. CIT (1980) 122 ITR 587 (Ker). That decision of the single judge was overruled by the Division Bench in the appeal proceedings, in another case A. Sethumadhavan vs. Union of India (1982) 135 ITR 39 (Ker) in this context that the Kerala High Court held that the Tribunal having followed the single judge decision in Sethumadhavans case which was subsequently reversed by the Division Bench, a mistake had crept in the order of the Tribunal when it followed the decision of the single judge and therefore the Tribunal was duty-bound to rectify its order.
14. In the case before us the Tribunal has followed the decision of the Kerala High Court in the assessees own case for the earlier years [ (1992) 193 ITR 674 (Ker) (supra)]. The Special Leave Petition filed by the Revenue against that decision was dismissed by the Supreme Court as reported in (1992) 195 ITR (St) 139 and thus facts are different. Hence, the ratio laid down by the Kerala High Court in Kil Kotagiri Tea & Coffee Estate. Co. Ltd.s case (supra) should be understood in the facts and circumstances of that case and cannot be applied straightway to the facts and circumstances of the assessees case which are totally distinguishable. Further it should be borne in mind that in none of the cases considered by the Supreme Court [ (1993) 204 ITR 412 (SC)], the judgment of the Kerala High Court in assessees own case (and dismissal of Special Leave Petition) were ever referred to or canvassed before the Supreme Court. Moreover a debatable point of law cannot constitute patent mistake from record [T. S. Balaram, ITO vs. Volkart Bros. & Ors. (1971) 82 ITR 50 (SC)].
15. The Calcutta High Court in Jiyajeerao Cotton Mills Ltd. vs. ITO (supra) has held as under :
“The principle of retrospective legislation is not applicable to the decision of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring interpretation by the Supreme Court or when there is a conflict of judicial opinion on the provision of a statute among the different High Courts of India which is required to be resolved and settled by the Supreme Court. The law laid down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate, doubt or conflict of judicial opinion is resolved and settled by the Supreme Court it does not obliterate the existence of such debate, doubt or conflict prior to such decision.”
The other cases relied on by Shri Sarangan do support his stand.
16. For all these reasons we hold that there is no mistake apparent from record in our order dt. 21st May, 1993 which is amenable to rectification under s. 254(2) r/w s. 154 of the IT Act, 1961.
17. The Miscellaneous Petition is dismissed.