The main legal point established in the judgment is the purpose of rectification under section 254(2) to prevent prejudice caused by the tribunal's mistake and the importance of the rule of precedent in legal certainty.

KAPADIA, J.

( 1 ) LEAVE granted in this special leave petition.

( 2 ) A short question which arises for determination in this civil appeal filed by the assessee concerns application of Section 154 of the Income Tax act, 1961 ("1961 Act") which provides for rectification of any mistake apparent from the record by any income tax authority. It may be mentioned at this stage that the words "rectification of any mistake apparent from the record" find place in section 254 (2) of the said 1961 Act. Facts

( 3 ) ASSESSEE company is engaged in the manufacture of portable generator sets in technical collaboration with Honda Motor Company, Japan. In this civil appeal, we are concerned with assessment year 1991-92. On 30. 12. 1991 return of income was filed by the assessee declaring nil income. During the relevant year, the assessee had taken a term loan in foreign exchange for the import of machinery. On account of fluctuation in foreign exchange rate, the liability of the assessee to repay the loan in terms of rupees went up by Rs. 7,10,910. By referring to the provisions of section 43a, the assessee enhanced the figure of W. D. V. (written down value) of the block of assets and claimed depreciation accordingly. The A. O. came to the conclusion that such revision in the actual cost was not admissible as section 43a refers to adjustment qua the actual cost of the machinery on account of increase or decrease in the liability of unpaid loans utilized for the purchase of machinery.

( 4 ) AGGRIEVED by the said decision, the matter was carried in appeal by the assessee before CIT (A) who took the view that the claim of the assessee was admissible in view of the fact that in the year preceding assessment year 1991-92 increased depreciation was given to the assessee.

( 5 ) ON this aspect, therefore, the Department carried the matter in appeal to the I. T. A. T. ("the Tribunal") for both the assessment years 1990-91 and 1991-92. By judgment and order dated 2. 4. 2002 the Tribunal held that cit (A) had erred in allowing the enhanced depreciation as under section 43a actual payment was a condition precedent for availing the benefit under that section. According to the Tribunal, if actual payment was not made after fluctuation then the value of the asset cannot be increased by adding the increase on account of fluctuation. On facts, the Tribunal found that, in the present case, there was no actual payment after the fluctuation and, therefore, the assessee was not entitled to claim the benefit under section 43a.

( 6 ) ON 9. 12. 2002, the assessee moved the Tribunal for rectification of mistake apparent from Order dated 2. 4. 2002. That application was made under section 254 (2) which reads as under:

"before THE INCOME TAX APPELLATE TRIBUNAL: delhi BENCHES hon'ble "a" BENCH (HON'ble VICE PRESIDENT R. M. MEHTA and SH. HON'ble sh. Y. K. KAPOR)IN THE MATTER OF : M/s SHRIRAM HONDA POWER equipments LTD. ITA NOS. : 5413 and 5414/d/96 (A)5544 and 5545/d/96 (D)ASSESSMENT YEARS: 1990-91 and 1991-92 sub: APPLICATION U/s 254 (2) FOR RECTIFICATION of MISTAKES IN THE ORDER DATED 2. 4. 2002 may IT PLEASE YOUR HONOURS 1. By the captioned order, cross appeals for assessment years 1990-91 and 1991-92 were disposed of. The aforesaid appeals were heard on 4. 2. 2002. After the hearing, the Hon'ble Bench on the request made, permitted the assessee to file written submissions in respect of cross appeals for assessment year 1991-92. The submissions were duly filed on 7. 2. 2002. The order was passed by the Hon'ble Tribunal on 2. 4. 2002. 2. That ground No. 2 of departmental appeal for assessment year 1990-91 (ITA No. 5544/d/96) and ground No. 3 of departmental appeal for assessment year 1991-92 (ITA No. 5545/d/96) were against allowance of depreciation on exchange rate fluctuation which had not been paid by the assessee. This issue was decided by the CIT (A) in favour of the assessee by relying upon his order in the case of Samtel Color ltd. It was submitted during th