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[2008] 305 ITR 360 [2009] 176 TAXMAN 42 (MP) HIGH COURT OF MADHYA PRADESH, INDORE BENCH Commissioner of Income-tax v. S. Kumar Tyres Mfg. Co.* A.M. SAPRE AND S.K. SETH, JJ. IT APPEAL NO. 111 OF 2004â-  APRIL 3, 2008 Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment year 1990-91 - Assessee was carrying on business of manufacture and sale of automobile tyre-tubes - While making assessment for relevant assessment year, Assessing Officer made certain additions, but allowed assessee to capitalize results of its tyre division as pre-operative expenses - During pendency of assessee's appeal against additions, assessment proceedings for assessment year 1991-92 were finalized and a categorical finding was recorded that commercial production of tyre division had actually started on 4-5-1988 and not on 29-2-1992 as claimed by assessee - In view of that finding, assessee raised an additional ground in appeal contending that pre-operative expenses intended to be capitalized, be treated as business loss and loss so determined be carried forward to be set off against future income - Commissioner (Appeals) accepted its contention and allowed appeal - On revenue's appeal, Tribunal, relying upon its earlier order, held that assessee could not carry forward business losses - Assessee filed an application under section 254(2) seeking rectification of mistake on ground that neither revenue nor assessee had relied upon earlier order which had been relied upon by Tribunal - Tribunal allowed application and recalled its order - Whether, on facts, Tribunal was justified in invoking its powers under section 254 - Held, yes FACTS The assessee was carrying on business of manufacture and sale of automobile tyre-tubes. For the assessment year 1990-91, it filed return showing nil income. The Assessing Officer did not accept return and made certain additions. However, he allowed the assessee to capitalize the results of the tyre division as pre-operative expenses. On assessee's appeal against additions, the Commissioner (Appeals) deleted them. However, during pendency of that appeal, the proceedings relating to the assessment year 1991-92 were…

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