ORDER

Per Pramod Kumar, Accountant Member - By way of this miscellaneous application filed under section 254(2) of the Income-tax Act, 1961, the assessee applicant points out certain mistakes apparent from record alleged to have crept in the order of the Tribunal as pronounced on 22-8-2007.

2. The order so called into question was delivered by a three Member Special Bench of this Tribunal and it had inputs from all the three Members constituting the Special Bench. Dr. O.K. Naryanan, Accountant Member, proposed an order, dismissing the appeal, on behalf of the Special Bench on 9-4-2007 (hereinafter referred to as 'the first part'). When this draft was placed before Shri K.C. Singhal, judicial Member, Shri Singhal agreed that the appeal is to be dismissed, but his reasoning of coming to this conclusion was different from the reasoning adopted in Dr. Naraynan's proposed order. Shri Singhal thus proceeded to pass, what he termed as, 'a separate order' on 10-7-2007 (hereinafter referred to as 'the second part'). These two orders were then placed before the other Accountant Member on the bench (i.e., the author of this order) who signed the draft order proposed by Dr. Naraynan on 17-8-2007 by appending the words "My concurring note attached" on the said draft, and also added a small concurring note (hereinafter referred to as 'the third part') specifically dissociating himself with the separate order proposed by Shri Singhal. The order was finally pronounced on 22-8-2007. In the copies of order issued by the Registry of the Tribunal, however, the fact that the other Accountant Member had signed the draft order proposed by Dr. O.K. Naraynan and appended the words "my concurring note attached" appears to have been omitted. It is in this backdrop that the order pronounced by the Tribunal on 22-8-2007 was passed in the three parts. So far as 'first part' is concerned, the mistakes are alleged to have crept in the reasoning adopted in the said order. So far as 'second part' is concerned, that has not been called into question at all. Finally, as regards 'third part', the mistake is said to be that the specific and detailed reasons of dismissing the appeal ought to have been set out in the said part as well. One common grievance against all these parts is that the decision-making process of the Special Bench should have been collective and that these separate parts of the order have been passed without due discussions and joint conference. The mistakes pointed out in the order passed by the Tribunal are thus on the procedural aspect as also on the merits of the reasoning adopted in the lead order. Considering wider implications of the procedural aspects regarding functioning of the Special Benches constituted in the Tribunal from time to time, we will deal with these procedural aspects first.

3. On the procedural aspects, the mistakes are said to be two fold first that the third part of the order, i.e., concurring note by the second accountant Member Pramod Kumar, ought to have contained detailed and specific reasons of his conclusions; and second, that the order ought to have been passed jointly after discussions and joint conference.

4. The first procedural mistake, as alleged by the assessee applicant, is stated in the miscellaneous application as follows :—

"4. Merits of the case not dealt with in the Third order :

'... it is further prayed that the entire order of the Hon'ble Special Bench is required to be recalled and this is because, upon true interpretation of the three separate orders passed by the respective Members, it is not possible to find out as to what is the majority view on merits. The First order has on merits rejected all the submissions made on behalf of the Applicant. In the second order, the contention of the Applicant that the earth stations constituted "undertaking" has been accepted; but a view has been taken that through such undertakings, it cannot be said that telecommunication services, whether basic or cellular, were provided. More importantly, in this order, the effect of the later amendment has been dealt with'.

4.2 The Third order requires to be analysed in the context of the aforesaid two separate orders. In the Third order, it is observed as follows :—

'97. ...The common thread in these two orders is that the appeal filed by the assessee is to be dismissed, even though the reasoning adopted by my learned colleagues, is so radically different that there is hardly any other meeting ground. Be that as it way, the majority view of this Special Bench already is that the appeal filed by the assessee is to be dismissed. I also respectfully endorse the same. I have, however, a few observations to make. Since both the orders have reached as signed orders, after my transfer from Mumbai Benches. I have to add my own little note for this purpose'.

4.3 Thereafter, in the Third order, the observations are confined only to paragraph Nos. 92 and 93 of the Second order, which deal with the effect of the later amendment and the legal position for later years. The Third order deals only with the above issue in paragraph Nos. 98 and 99 and with these observations, the Hon'ble Member dis-associates himself with the Second order. Thereafter, the Third order simply agrees on the dismissal of the appeal, but does not at all express any opinion with regard to the merits of the matter. Stated in other words, the highlights of the Third order are as follows :—

(i) The reasoning adopted in the first two orders is "so radically different that there is hardly any other meeting ground".
(ii) The majority view is that the appeal be dismissed and the Third order endorses this view without expressing its agreement with either of the reasoning which is so radically different.
(iii) The Third order is passed only after the transfer of the learned Accountant Member from Mumbai Benches and after the first two orders have reached him as signed orders.

4.4 From the above analysis, it is clear that apart from holding that the appeal is dismissed and apart from the dissociation with paragraph Nos. 92 and 93 of the Second order, the Third order does not deal with any of the issues on merits or adjudicate anything further. The whole of the Special Bench has thus not spoken. The purpose for which it was constituted is thus frustrated.

4.5 In view of the above, it is submitted that the order of the Hon'ble Special Bench in its totality is non est and not at all capable of being implemented. Having regard to the inherent power of the Tribunal, it is for this reason, the entire order of the Hon'ble Special Bench is required to be recalled with a direction for a fresh hearing. Reliance is placed on the decision of Supreme Court in the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 ."

5. The mistake so pointed out by the assessee proceeds on the assumption that the second Accountant Member did not sign and agree with the original order proposed by Dr. O.K. Naraynan. This assumption is, however, factually incorrect. During the course of hearing of this miscellanoues application, we offered inspection of original records which clearly showed that the second Accountant Member, i.e., Prarmod Kumar, not only signed the order as proposed by Dr. O.K. Naraynan but also added the words, in his own handwriting, "my concurring note attached" above his full signatures which are dated 17-8-2007. As against this, Shri Singhal, who had authored a separate order, had crossed the place for his signatures and, below that place, had written "see next page" in his own hand. The next page incidentally is beginning of Shri Singhal's separate order. Contrasted with Shri Singhal's observations thus, it is clear and unambiguous that the second Accountant Member entirely agreed with the draft order as originally proposed for the Special Bench, and, in addition to what was stated in the original draft order proposed by Dr. Naraynan, he made some observations on matters not covered by the said order. The concurring note attached by him only dealt with the reasons as to why he was dissociating himself with the second part of the order which was authored by Shri Singhal. It was thus not at all necessary for the second Accountant Member to record his separate reasons for dismissing the appeal. It cannot be, and is not, the assessee's case that the second Accountant Member must give his separate reasons for agreeing with the proposed draft order. When the above position was put to the learned counsel for the assessee, he fairly admitted that in case two Members agree on a draft, it is not at all necessary for the second Member to give his separate reasons, but he submitted that the copy of order, as issued to the assessee, did not show that the second Accountant Member has signed the draft order. Learned counsel however, was shown the original records in the course of hearing and he was satisfied that the second Accountant Member had signed the original draft proposed by Dr. O.K. Narayanan and also added the words "my concurring note attached". The majority view is evident from the fact that the draft order proposed by Dr. Naraynan is signed and approved by two of the Members on the Bench, i.e., Dr. O.K. Naraynan and Pramod Kumar. The fact that one of the Members, i.e., Pramod Kumar, decided to make some observations on the separate order proposed by Shri Singhal cannot, and does not, obliterate the fact that he had signed and 'concurred' with the order proposed by Dr. Narayanan. The confusion has arisen because of omission of words 'my concurring note attached', as also by omission of the fact that Pramod Kumar signed the original order proposed for the Bench by Dr. Narayanan, in the copy of the order sighted before us. The original records is now inspected by the assessee, and the assessee does not dispute that these words as also the signatures of Pramod Kumar are placed on the original order proposed by Dr. Narayanan. Even otherwise, the second Accountant Member is dissociation with the order proposed by Shri K.C. Singhal and that he has signed the original order proposed by Dr. O.K. Naryanan is clear from record. There is thus a clear majority view with reasoning on all issues. In this view of the matter, the mistake, as alleged to have crept in the third part of the order, did not exist at all.

6. The other procedural mistake is on account of not holding the joint conference and discussions before the order is passed. This mistake is stated to be as follows :—

"5. Orders passed without a joint conference and discussion.

5.1 The Third order categorically records that "Since both the orders have reached as signed orders, after my transfer from Mumhai Benches, I have to add my own little note for this purpose". It is submitted with respect that it is very safe to assume that after the conclusion of the hearing of this appeal on 16-3-2007, Hon'ble Mr. Pramod Kumar, Accountant Member, was transferred from Mumbai Benches. Further, it is apparent that the first two orders were passed before 10-7-2007 (much after a period of 116 days). From the tenor of the Third order, it is safe to assume that these orders have reached Hon'ble Mr. Pramod Kumar only as signed orders and, therefore, it is further safe to assume that at this crucial stage, he did not have the benefit of a joint conference and discussion with his two other colleagues before his writing the Third order. As observed in Chthurvedi & Pithisaria's - Income-tax Law - Fifth Edition - Vol. 5 - Year 2000 pg. 7872, "What is necessary for a Bench consisting of more than one Judge or Member is that they should collaborate amongst themselves and bring their minds together in order to judge the matter before them. If they differ, they should not pronounce separate judgments until by conference and discussion they have endeavoured to arrive at an unanimous judgment". It is safe to assume in view of the above facts and circumstances that there was no conference and discussion and any scope to bring the minds together in order to judge the present matter before the Hon'ble Special Bench. It seems that the basic ingredient of the adjudication process is missing in the present case, rendering the order of the Hon'ble Special Bench non est and non-sustainable. The Third order, it is submitted with respect, leads one to the conclusion that the three separate orders passed separately have been passed without a joint conference and discussion in an endeavour to arrive at a unanimous judgment and also without a collaboration amongst the Members constituting the Special Bench.

5.2 In view of the above, it is submitted that the order of the Hon'ble Special Bench in its totality is non est and not a all capable of being implemented. Having regard to the inherent powers of the Tribunal, it is for this reason, the entire order of the Hon'ble Special Bench is required to be recalled with a direction for a fresh hearing. Reliance is placed on the decision of Supreme Court in the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 ."

7. Once again, the applicant proceeds on the inference that joint conference and discussions never took place at all. This is also factually incorrect. While it is not proper for us to deal with or disclose, in a judicial order, as to what precisely were the deli-berations in the joint conference which took place immediately after the hearing concluded, suffice to say that there was detailed discussion, after the hearing was over, and a broad consensus was reached on the outcome of the appeal. Of course, fine points of reasoning in a decision is not something which can be immediately finalized upon conclusion of hearing and there can always be genuine differences, no matter how serious and how detailed conferences take place, on the reasoning involved. Even learned Judicial Member, who wrote a separate order, did disagree only so far as reasoning is concerned but not on the conclusions arrived at by the Bench. The hearing was concluded on 16-3-2007 and the conference also took place on that day, while the second Accountant Member Pramod Kumar was transferred with effect from 30-3-2007. As a matter of fact, as evident from the records of the case, the order was dictated on 26-3-2007, and, therefore, the fact of transfer did not affect, the deliberations and joint conference at all. The differences were in the process of reasoning as one of us, i.e., learned Judicial Member Shri K.C. Singhal, did not agree with the majority view. Merely because one Member has a different reasoning, it cannot be inferred that there was no joint conference and discussion at all. A lot of emphasis has been placed by the assessee on tone and tenor of third part of the order, which is concurring note of the second Accountant Member. Even by assessee's admission thus, it is no more than an inference drawn by the assessee from the wordings of the concurring note authored by the second Accountant Member. This inference is a matter of perception and the perceptions can always vary. The matter being capable of two views being taken, it is, for this short reason alone, outside the ambit of limited scope of 'mistake apparent from record' under section 254(2) of the Act. Therefore, on merits as also on limited scope of rectification proceedings that we are currently in seisin of the grievance of the assessee is devoid of any legally sustainable basis.

8. We may, however, add that, as learned counsel very appropri-ately points out, the joint conference and discussions are an integral and significant part of the decision-making process in the multiple member benches - whether division benches or special benches. The importance and utility of such conferences can never be overemphasized and it is a standard practice in our Tribunal to have such discussions. Wherever Members on special benches are at different locations and it has been considered it expedient and necessary to have further joint conferences before the order can be finalized, tours have been granted to the Members for such purposes. In the case of Sumit Bhattacharya v. Asstt. CIT [2008] 112 ITD 1 (Mum.) (SB) , and as evident from paragraph 61 of the Special Bench order in the said case, President of the Tribunal granted tour to one of the Members only for attending the joint conference and it was only after such conference that the Special Bench order was finalized. The relevant observation is as follows :—

".....shortly after the appeal was heard, one of us (i.e., the author) was transferred out of Mumbai Benches, and the meeting of the Members constituting this Special Bench, to discuss and finalise the draft order, was inordinately delayed. There were certain aspects of the matter on which we could not immediately reach a consensus in the course of our discussions immediately after the hearing was over, and, therefore, need of further discussions on those issues was felt. However, due to certain reasons beyond our control, we could not meet to discuss these issues. It was only pursuant to Hon'ble President being kind enough to facilitate a meeting of all the three of us at Mumbai to finalize this draft order, and grant of tour to one of us for the said purpose, that the Members constituting this Special Bench could finally meet on 10-12-2007 to discuss those issues as also deliberate on the proposed draft order."

9. However, it is essentially a decision of the Members constituting the Special Bench as to whether or not joint conference is necessary before draft can be finalized. In the present case, order was finalized after the joint conference but, after the draft order was proposed, reservations, though only in reasoning aspect, of one of the Members cropped up. These peculiar facts of the case should not, therefore, be construed to mean that the Special Bench order was passed without the benefit of joint conference and discussions.

10. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the order passed by the Tribunal did not suffer from neither of the two procedural mistakes, which are alleged to be apparent from records, as pointed out by the assessee. We see no such mistakes in the impugned order, leave aside mistakes apparent from record which can be rectified under section 254(2) of the Act.

11. That takes us to the alleged mistakes, perceived by the assessee to be mistakes apparent on record liable to be rectified under section 254(2) of the Act, in the merits of the orders passed by the Tribunal. These mistakes are said to be three fold which are as follows :—

I. The Tribunal did not adjudicate specific jurisdictional objection ( i.e., the Income-tax department cannot take a different stand before the Tribunal than the stand taken at the assessment stage, and, therefore, it cannot be contended that the assessee was not rendering basic telecommunication services) raised by the assessee.
II. A wrong finding was given to the effect that "the assessing authority held that the services rendered by the assessee- company could not be construed as basic telecommunication services".
III. Certain CBDT circulars and judicial precedents, which were relied upon by the assessee, have not been considered by the Tribunal.

12. As regards the grievance against non-adjudication on the judicial precedents and the board circular, we are unable to see much merits in the same. The order passed by the Tribunal has adequately and comprehensively dealt with all the relevant aspects of the matter and merely because there is no specific mention of each argument, the order cannot be said to vitiated by mistake apparent from record and particularly as all the relevant aspect have been dealt with anyway. As far as first two issues are concerned, the alleged mistakes pointed out by the assessee are as follows :—

"1.1 Applicant's specific objection not adjudicated

1.1.1 It may be kindly noted that the Special Bench was constituted to decide the following question :

'Whether, on the facts and in the circumstances of the case, the telecommunication earth station, as is commissioned by the assessee in the relevant previous year, is entitled to be treated as eligible undertaking for the purpose of section 80-IA of the Income-tax Act, 1961?'

1.1.2 With regard to the above issue, the lower authorities had denied the deduction under section 80-IA of the Act on the alleged ground that the Earth Station was not an undertaking and that the undertaking in this case was the whole company, viz., the Applicant itself and since the Applicant company had been providing telecommunication services since 1986 and it did not begin its operations after 1-4-1995, it was not eligible for deduction claimed. However, the fact that the Applicant rendered eligible telecommunication services was not disputed by the lower authorities.

1.1.3 In the above background, in the course of the hearing before the Hon'ble Special Bench, when the Departmental Representative argued, for the first time, that the Applicant did not render basic or cellular telecommunication services, the Applicant was taken completely by surprise. It was submitted during the hearing that the Departmental i.e., the Respondent cannot at this stage be permitted to take a contrary/different stand before the Hon'ble Special Bench. The Applicant expressly put down the aforesaid submission in its written submission dated 25-3-2007, which was filed in pursuance of the direction of the Hon'ble Bench. The objection of the Applicant in this regard was specifically taken at Page 7 of the above written submission dated 25-3- 2007 and reads as follows :—

'Further, it is submitted that in the assessment order, for the year under consideration, at para 17.5(a), the Assessing Officer himself has accepted that VSNL renders telecommunication services. The Assessing Officer or the CIT(A) has nowhere alleged that the Appellant is not entitled to deduction under section 80-IA on the ground that it is not providing basis or cellular telecommunication service, as alleged by the Learned DR. The only objection of the lower authorities is that as the Appellant has been providing telecommunication service since 1986 and the Earth stations are not undertakings, which have started providing telecommunication service after the prescribed date. Thus, it is not a disputed fact that VSNL does render telecommunication services, which are otherwise eligible for deduction under section 80-IA(4C). Accordingly, the Department cannot now be permitted to take a contrary/different stand before the Hon'ble Tribunal'.

1.1.4 The Applicant submits that the above specific objection raised by the Applicant has not been adjudicated upon in any of the above three separate orders passed by the Hon'ble Members constituting the Special Bench. In this connection, if further requires to be noted that the Applicant, having raised the basic and fundamental objection, had, in the course of the hearing, provided material and explanation only with a view to comply with the directions of the Hon'ble Special Bench and only in the alternative and without prejudice to an without conceding the basic stand that the department cannot now be permitted to take a contrary/different stand before the Hon'ble Tribunal.

1.1.5 It is submitted that it was required of the Hon'ble Special Bench to adjudicate upon this fundamental objection raised on behalf of the Applicant that the above point cannot be permitted to be taken before the Hon'ble Special Bench for the first time.

1.1.6 In law, the Hon'ble Special Bench ought to have adjudicated the above objection raised by the Applicant and further, in any event, ought to have held that the Department cannot now be permitted to take a contrary/different stand before the Hon'ble Special Bench. The non-adjudication of the above issues has resulted in total miscarriage of justice and has put the Appellant in an adverse position for no fault of its own. The non-adjudication of this issue in the above manner goes to the root of the matter and vitiates the entire proceedings. It is most respectfully submitted that non-consideration/adjudication of the aforesaid argument/objection by the Hon'ble Special Bench constitutes a mistake apparent from record which the Hon'ble Special Bench may be pleased to rectify in the interest of justice. In view of the above, the entire order of the Hon'ble Special Bench is required to be recalled and a fresh hearing is required to be directed. In support for the above proposition reliance is placed on the following decisions :—

Assistant Commissioner Of Income-Tax v. Saurashtra Kutch Stock Exchange Ltd. [2003] 262 ITR 146 (Guj.) ;

Laxmi Electronic Corporation Ltd. v. Commissioner Of Income-Tax. [1991] 188 ITR 398 (All.) ;

CIT v. Subhodhchandra S. Patel [2004] 265 ITR 445 (Guj.) ;

Rahul Kumar Bajaj v. ITO [1999] 69 ITD 1 (Nagpur) (SB) ;

Modhu Timblo v. WTO [1995] 53 ITR 53 (Pune) (TM) .

1.2 Apparent mistake in findings in the First order.

1.2.1 Further, it requires to be noted in the above background that observations made by the Hon'ble Member in the First order in connection with this aspect of the matter are not borne out from the records. It was contrary to the records to observe that 'The Assessing authority held that the services rendered by the assessee could not be construed as basic telecommunication services'.

The Assessing Officer had never disputed that the Applicant renders basic services and nowhere had he held that the Applicant does not render basic services. Therefore, it is self evident and apparent from the records that the above observations are factually incorrect and contrary to the records and hence constitute a mistake apparent from the records having a pivotal effect.

1.2.2 Further, on behalf of the Applicant, it was never explained that '....One of the objections raised by the lower authorities is that the assessee-company being engaged in Telecommunication services relating to international telephone is not providing any basic services and therefore not entitled for the deduction'.

The First order, it is submitted with respect, creates an impression as if on behalf of the Applicant, a principal argument was made that the Applicant provides basic or cellular telecommunication services. As stated above, the lower authorities had never denied that the Applicant does render eligible telecommunication services and, therefore, there was no need to advance such an argument, since this proposition was not disputed by lower authorities.

1.2.3 It is humbly submitted that the Hon'ble Tribunal may be pleased to rectify the above mistake under section 254(2) of the Act, in the interest of justice by recalling its order and hearing the matter afresh.

1.2.4 In support of the above proposition, reliance is placed on the following decisions :—

Commissioner Of Income-Tax, Delhi Viii v. Shakuntala Rajeshwar [1986] 160 ITR 840 (Delhi) ;

Vesta Investment & Trading Co. (P.) Ltd. v. Asstt. CIT [2006] 104 TTJ 284 (Chd.) ;

B.D. Patnaik v. Dy. CIT [2001] 71 TTJ 340 (Cuttack).

1.3 Respondent, in the absence of cross-objection cannot take the plea for the first time which was not taken before the lower authorities.

1.3.1 The Tribunal for the first time, by going into the issue as to whether the Applicant renders basic telecommunication services put the Applicant in an adverse position. It is submitted that the Hon'ble Special Bench ought to have held that the Department i.e., the Respondent now cannot take up a new point which was not disputed at all by the lower authorities with a view to put the Applicant in an adverse position [as compared to its position after passing of the assessment order/CIT(A)'s order].

1.3.2 In this regard, the observations of the Jurisdictional High Court in Motor Union Insurance Co., Ltd.…Assessee; v. Commissioner Of Income-Tax, Bombay [1945] 13 ITR 272 are very relevant wherein it is observed that "But, in our opinion, it is not open to the Tribunal itself to raise a ground or permit the party, who has not appealed, to raise a ground, which will work adversely to the appellant". Similar opinion of the Jurisdictional High Court finds an echo in Pokhraj Hirachand v. CIT [1963] 49 ITR 293 .

1.3.3 In view of the above legal position, it is humbly submitted that the Hon'ble Special Bench ought to have held that Respondent cannot take up a new point which was not disputed by the lower authorities so as to put the Applicant in an adverse position. On the contrary, the Hon'ble Special Bench has adjudicated on an issue (whether or not the services rendered by the Applicant is basic telecommunication services), which was an uncontested position before the lower authorities. It is respectfully submitted that adjudication of an issue which was uncontested before the lower authorities which puts the assessee in an adverse position amounts to a mistake apparent from record. In support of the above, reliance is placed on the decision of jurisdictional Tribunal in the case of Integrated Container Feeder Services v. Jt. CIT [2005] 98 TTJ 327 (Mum.) . Accordingly, it is prayed that the Hon'ble Special Bench be pleased to recall its order and a fresh hearing be directed."

13. The contentions so advanced on behalf of the assessee are devoid of any merit. The assessee is seeking relief under section 80-IA which is reproduced below for ready reference :—

"80-IA. Deduction in respect of profits and gains from industrial undertakings, etc., in certain cases—

(1) Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or a hotel or operation of a ship or developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services whether basic or cellular including radio paging, domestic satellite service or network of trunking and electronic data interchange services or construction and development of housing projects or operating an industrial park or commercial production or refining of mineral oil in the North Eastern Region or in any part of India on or after 1-4-1997 (such business being hereinafter referred to as the eligible business), to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6).
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :—

(i) it is not formed by splitting up, or the reconstruction, of a business already in existence :

Provided that this condition shall not apply in respect of an industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section;

(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
(iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India :

Provided that the condition in this clause shall, in relation to a small scale industrial undertaking or an industrial undertaking referred to in sub-clause (b) of clause (iv) which begins to manufacture or produce an article or thing during the period beginning on 1-4-1993 and ending on 31-3-2000, apply as if the words "not being any article or thing specified in the list in the Eleventh Schedule" had been omitted;

(iv)(a) in the case of an industrial undertaking not specified in sub-clause ( b) or sub-clause ( c), it begins to manufacture or produce articles or things or to operate such plant or plants, at any time during the period beginning on 1-4-1991 and ending on 31-3-1995, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;
(b) in the case of an industrial undertaking located in an industrially backward State specified in the Eighth Schedule or set up in any part of India for the generation, or generation and distribution, of power, it begins to manufacture or produce articles or things or to operate its cold storage plant or plants or to generate power at any time during the period beginning on 1-4-1993 and ending on 31-3-2000 :

Provided that in the case of an industrial undertaking set up in any part of India for the generation, or generation and distribution, of power, the period ending shall have effect as if for the figures "1998", the figures '2003' had been substituted;

(c) in the case of an industrial undertaking located in such industrially backward district as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify in this behalf, as an industrially backward district of Category A or an industrially backward district of Category B, and, it begins to manufacture or produce articles or things or to operate its cold storage plant or plants at any time during the period beginning on 1-10-1994, and ending on 31-3-2000;
(d) ( a) in the case of an industrial undertaking being a small scale industrial undertaking, not specified in sub-clause ( b) or in sub-clause ( c), it begins to manufacture or produce articles or things or to operate its cold storage plant at any time during the period beginning on 1-4-1995 and ending on 31-3-2000."

14. It is obvious from above that all the conditions mentioned above are to be satisfied to claim relief under the above provision. The assessee has claimed that the condition that assessee is providing basic or cellular telecommunication service, was not disputed by the Assessing Officer. It is the assessee's case that in fact it was accepted that above condition is satisfied by the assessee. This contention is based on the erroneous reading of the assessment order, the material portion of which is as under :—

"17.4 After going through the above facts, I would note as follows :—

An earth station is one link in a long chain which starts from the telephone instrument from where a subscriber makes a call. This call is carried through various land lines, earth station and satellite till it reaches the party at the other end. An earth station is thus only a part of the transmitting (or receiving) chain. This is like a sub-station in an electric supply network.

17.5 I am of the firm opinion that deduction under section 80-IA is not allowable on the following grounds :—

(a) The assessee did not start providing telecommunication services on or after 1-4-1995. It has been carrying out this function right from 1986.
(b) The earth station by itself is not an undertaking. The assessee's present claim is the equivalent of an electric supply company replacing the electric poled or a sub-station by a new one and claiming that the electric pole or the sub-station is a new undertaking eligible for deduction under section 80-IA. An undertaking in its normal meaning is a full business unit. One talks of the 'public sector undertaking'. Judicially the word 'undertaking' has been defined in S.Y.C.W.S. Mills (AIR 1969 Mysore at p. 291) as follows :—

'It is not in its real meaning anything which may be described as a tangible piece of property like land, machinery or equipment; it is in actual effect an activity of man which in commercial or business parlance means an activity engaged in with a view to earn profit. Property, movable or immovable, used in the course of or for the purpose of such business can more accurately be described as the tools of business or undertaking, i.e., things or articles which are necessarily to be used to keep the undertaking going or to assist the carrying on of the activities leading to the earning of profits'.

In terms of the above definition the sub-station most certainly doe's not qualify as an undertaking. The undertaking in this case is the whole company namely, VSNL, itself. Since VSNL did not begin operations in the prescribed period, it is not eligible for the deduction claimed.

(c) The assessee's method of calculating the deduction under section 80-IA is totally unacceptable. The assessee's basic presumption is that all the profit is attributable to the earth stations and by reducing various costs the total profit attributable to the earth stations can be arrived at. In my opinion, this approach is totally baseless and unacceptable. By the same analogy it can be said that the entire profit is because of the telephone instrument. The assessee can then deduct all other expenses and come to the conclusion that the entire profits arise from the telephone instrument. In reality the profits are attributable to the whole claim of inter connection, equipment and manpower which collectively represents the undertaking viz., VSNL. The assessee's attempt to split up this is unacceptable. The deduction under section 80-IA is, therefore, not granted."

15. It is evident from above that Assessing Officer rejected the assessee's claim on the ground that earth station by itself is not an undertaking. He did not go into other requirements of section 80-IA. The matter ultimately travelled to the Tribunal which was required to record a finding that all the requirements/conditions of above provisions are satisfied to allow relief to the assessee. The issue before the Tribunal was whether the assessee was entitled to relief under the above provision. It was bounden duty of the Tribunal to consider and decide the above issue and to examine that each of the condition specified by the section is satisfied. The question relating to satisfiction of the conditions could even be raised by the respondent (Department) in appeal before the Tribunal and it was so raised. The position on this question, relating to power and jurisdiction of the Tribunal is more than clear as per decision of Allahabad High Court in the case of Phool Chand Gajanand v. CIT [1966] 62 ITR 232 which has been applied by Full Bench of jurisdictional High Court in the case of Ahmedabad Electricity Co. Ltd. v. Commissioner Of Income-Tax. [1993] 199 ITR 351 (Bom.) . Their Lordships have discussed in detail, as to how powers of the Tribunal are to be exercised.

In the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC) , which has been followed by the Hon'ble Bombay High Court's Full Bench judgment in the case of Ahmedabad Electricity Co. Ltd. (supra). Their Lordships of Hon'ble Supreme Court were in seisin of a situation in which it was argued before Their Lordships that "the Tribunal was not competent to go into the question whether the provisions of paragraph 2 of Taxation Laws Order were applicable to the present case and the respondent (i.e., the revenue) should be allowed to raise this contention for the first time before the Tribunal". In essence, therefore, one of the qualifying condition, which was not considered by the Assessing Officer or Appellate Commissioner, was disputed for the first time before the Tribunal. It was in this background, and dealing with the powers of the Tribunal under section 33(4) of the 1922 Act, which are exactly the same as under section 254(1) of the present Income-tax Act, 1961, Hon'ble Supreme Court, inter alia, observed as follows :—

"8. ...Tribunal had jurisdiction to permit the question to be raised before it for the first time in appeal. The power of the Tribunal, in dealing with the appeals are expressed in section 33(4) in the widest possible manner....

9. The word 'thereon' in section 33(4) of the 1922 Act, of course, restricts the jurisdiction of the Tribunal to the subject-matter of appeal. The words 'pass such orders as the Tribunal think fit' include all the powers (except possibly enhancement) which are conferred on AAC under section 31. ...

10. In the present case, the subject-matter of appeal before the Tribunal was the question as to what should be the proper written down value of the building, machinery etc. of the assessee for calculating depreciation under section 10(2)(vi) of the Act. It was certainly open to the Department, in the appeal filed by the assessee before the Tribunal, to support the findings of the AAC with regard to written down value on any of the grounds decided against it.... We are accordingly of the view that the Tribunal had jurisdiction to entertain the argument of the Department in this case and direct the ITO to find out whether any depreciation was actually allowed.... and whether such depreciation should be taken into account for computing the written down value."

16. The facts of the case before us are materially similar to the above case before the Hon'ble Supreme Court. In the present case also, the condition regarding providing eligible telecom-munication services was not discussed by the Assessing Officer and the Commissioner (Appeals) and yet this issue was taken up by the Departmental Representative before us. The same was the situation in Hukumch and Mills Ltd.'s case (supra) wherein, as noted by the Hon'ble Supreme Court in paragraph 4 of their judgment, "it was urged before the Tribunal by the department that although the ITO had not considered the provisions of paragraph 2 of section 2 of Taxation Laws Order, the said provisions were applicable in the present case and certain amounts of depreciation, which are allowed under the Industrial Tax Rules, which had the force of law in Indore State, were required to be deducted in arriving at written down value of the assets of the assessee". This plea was accepted by the Tribunal and the Hon'ble Supreme Court confirmed the action of the Tribunal in doing so. In this view of the matter, not only that admitting the plea regarding the assessee not rendering eligible telecommunication services does not suffer from any mistake apparent on record, but it does not suffer from any mistake at all. The stand so taken by the Tribunal is clearly in conformity with the law laid down by the Hon'ble Supreme Court. Once the Tribunal is called upon to examine as to whether or not the assessee is entitled to a claim of deduction, there is no escape from its duty to ensure that the requirements of section are fully complied with and the Tribunal cannot shun away from its duty to examine all the eligible conditions merely on the ground that some of these conditions are not specifically rejected by the authorities below. As is clearly evident from the observations made by the Assessing Officer, which have been extracted hereinbefore, the claim is rejected on one ground but such a rejection cannot be construed to mean that all other conditions are taken as complied with. As for the observations made by the Assessing Officers in the course of assessments for the other assessment years, it is not open to us to deal with those assessment years at this stage.

17. It is also contended that the appellant cannot be worse off as a result of being in appeal but that argument proceeds on a factual misconception inasmuch as the assessee was never allowed the deduction, even partly, under section 80-IA by any of the authorities below and, therefore, no disadvantage is caused to the assessee by being in appeal. So far as the issue in appeal was concerned, the position was exactly the same before and after the appeal was disposed of by the Tribunal i.e., the assessee was disallowed deduction under section 80-IA.

18. In the light of above, assessee's contention that it was not required to satisfy the condition regarding rendering "eligible telecommunication services" because no such objection was raised by the D.R. and as it was not raised by the Assessing Officer in the assessment order, is devoid of any merit. Once a legal claim was before the Tribunal, it was duty bound to consider and examine that all the conditions are satisfied before relief is allowed. This is precisely what the Tribunal has done and assessee is not justified in contending that question of basic or cellular services could not have been examined by the Tribunal. In the above background, we do not see any error in the order of the Tribunal which could be said to have materially affected the decision of the Tribunal. Therefore, a stray observation in the first order of the Accountant Member cannot be made basis for claiming relief under section 254(2) of the Income-tax Act. The contention has to be rejected.

19. It may further be pointed out that legal question relating to entitlement of the assessee to deduction under section 80-IA of the Income-tax Act has already been admitted by the Hon'ble Bombay High Court, as per order dated 24-11-2008 in Income-tax Appeal No. 73/2008. The substantial question framed by Their Lordships is as under :—

"Whether on the facts and in the circumstances of the case, the appellant is entitled to a deduction under section 80-IA of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') in respect of the two Earth Stations set up at Halisahar (Calcutta) and Korattur (Madras) during the relevant assessment year."

20. We are of the opinion that when question is pending before the Hon'ble Bombay High Court, it is not right for the assessee to agitate same or part of the question before the Tribunal. The assessee has now to show the Hon'ble High Court that the conditions of section 80-IA are satisfied on the facts and in the circumstances of the case and that he is entitled to relief under the above section. As far as Tribunal is concerned, question has already been decided and the Tribunal is now functus officio, so far as deduction of eligibility of section 80-IA is concerned. It is for Their Lordships of Hon'ble Bombay High Court to adjudicate on the correctness or otherwise of the decision of the Tribunal. In this view of the matter, as also bearing in mind the entirety of the case and the preceding discussions, we are of the considered view that the rectification petition filed by the assessee under section 254(2) of the Act must fail. No interference is thus called for.

21. In the result, the miscellaneous application is dismissed.

235/535