Whether rectification/modification of the order of the Tribunal under section 254 Possible?

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Whether rectification/modification of the order of the Tribunal under section 254 Possible?

National Mineral Development … vs Dy. Commissioner Of Income Tax , … on 18 April, 2019

   IN THE INCOME TAX APPELLATE TRIBUNAL

   HYDERABAD BENCH ‘ A’, HYDERABAD

       BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER

      AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER

          M.A. No. 35/Hyd/2018

         (in ITA No. 194/Hyd/2018

          Assessment Years: 2012-13)

NMDC Ltd., Hyderabad.          vs.   Dy. Commissioner of

                                     Income-tax, Circle 16(1),

PAN – AAACN7325A                     Hyderabad.

         Appellant                           Respondent

Assessee by: Shri Laxmi Niwas Sharma Revenue by: Shri Y.V.S.T. Sai Date of hearing: 05/04/2019 Date of pronouncement: 18/04/2019 O RDE R PER S. RIFAUR RAHMAN, AM:

This Miscellaneous Application is filed by the assessee u/s 254(2) of the Income Tax Act seeking rectification/modification of the order of the Tribunal dated 07/09/2017 in ITA No. 194/Hyd/2017.

  1. The Bench came to understand that the assessee has filed appeal before the High Court and the appeal was admitted, but, the date of hearing is not known.
  2. The crux of the issue is, whether the ld. Counsel can make submissions where a case is admitted by the Hon’ble High Court and whether the Tribunal can revisit its order u/s 254(2) of the Act. In this connection, the ld. counsel filed a decision of the Hon’ble Mumbai High Court in the case of R.W. Promotions (P) Ltd. Vs. ITAT and others, [2015] 376 IT R 126 (Bom.) and the order of Mumbai ITAT, dated 08/07/2015 NMDC Ltd., Hyd.passed in MA Nos. 337 to 341/Mum/2014, in which, the said order of the Mumbai High Court was followed.

3.1 In the case of R.W. Promotions (P) ltd. (supra), the Hon’ble Mumbai High Court has held as under:

“9) After hearing both sides and perusing the two legal provisions, namely, under section 254 as reproduced above, and section 260A of the Income Tax Act, 1961 we are of the view that the Tribunal’s order and impugned in the Writ Petition cannot be sustained. This Court also has clarified the legal position in an order passed copy of which is annexed at page 146 of the petition paper book. We have noted that such a power is possessed by the Court or Tribunal and even after it disposes of the main matter and application of the nature made and to seek rectification or correction of an apparent mistake cane be entertained. The legal provision before us is plain and clear. Sub-section(2) of section 254 enables the Tribunal to entertain the application of the above nature but what orders ought to be passed on such an application depends upon the facts and circumstances of each case. No general rule can be laid down in that behalf. The Tribunal can rectify any mistake apparent from the record and amend its order passed under section (1) of section

  1. If the amendment has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, then, such an amendment shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard. We are not confronted with such a situation. What we are called upon to decide is the correctness of the view taken by the Tribunal and that the judicial propriety does not allow the petitioner-assessee to seek a full remedy similar before two authorities and in particular where the issue is pending for admission before higher forum.

10) The least that can be said about the understanding of the legal provision by the Tribunal is that it is ex facie incorrect and erroneous. Merely because the assessee has challenged the order of the Tribunal in an Appeal under section 260A of the Income Tax Act, 1961 before the High Court does not mean that the power under section (2) of section 254 cannot be invoked either by the assessee or by the revenue/Assessing Officer. Such a power enables the Tribunal to rectify any mistake apparent from the record and make amendments. That in a given case would not only save precious judicial time of the Tribunal but even of the higher Court. Only when the assessee or the Assessing Officer calls upon the Tribunal to undertake an exercise which is not permissible within the meaning of section (2) of section 254 that the Tribunal can rely on the principle of judicial propriety or its reluctance or refusal to take upon itself the powers of the higher Court of Appeal. We can understand if the Tribunal had passed an order after considering the application made by the petitioner-assessee on its merits and in accordance with law. However, the refusal of the Tribunal to go ahead and reject the application only on the ground NMDC Ltd., Hyd.

that the petitioner-assessee has invoked the appellate powers of higher Court cannot be sustained. That is contrary to the plain language of the two statutory provisions and which have been brought to our notice. Nothing contrary having been pointed out and such a view of the Tribunal may affect and prejudicially the interest of the revenue that all the more we cannot sustain the impugned order. The Writ Petition is allowed. The petitioners misc. application seeking to invoke the powers under sub- section (2) of section 254 of the Income Tax Act, 1961 being Misc. Application No.194/M/2013 shall now be heard by the Tribunal and it shall be decided in accordance with law. The Tribunal shall hear both sides and passed a reasoned order on the said application as expeditiously as possible and, in any event, within a period of six weeks from the date of receipt of the copy of this order. We clarify that beyond the issue of maintainability and jurisdiction of the Tribunal to deal with the application of the above nature, we have observed nothing on the merits or demerits of this application. All contentions of both sides on the merits of the rectification application are kept open. They can be raised before the Tribunal.”

Since the Hon’ble High Court has observed that ITAT can adjudicate the issue which is admitted by the Hon’ble High Court, when the mistake in the order is apparent on record, we proceed to hear the MA on merit.

  1. Before us, ld. AR of the assessee filed written submissions. As regards addition amounting to Rs. 17,39,00,000/- on CSR, it was, inter-alia, stated that the ITAT has ignored the decision of coordinate bench in assessee’s own case decided in assessee’s favour, where the capital expenditure on account of CSR was allowed.

4.1 As regards disallowance u/s 40(a)(ia) for non -deduction of tax on commission paid, ld. AR relying on various case laws including the orders of ITAT, stated that Hon’ble ITAT shall not pass counter judgements for the same issue which is already decided by the coordinate benches of Hon’ble ITAT of the same jurisdiction following the principle “Res Judicata” which states that if on any facts and/or law, a particular decision is made, then, subsequently if any lis (dispute) on similar facts and/or law is to be decided between the same NMDC Ltd., Hyd.

parties, it should be the same as made earlier. He submitted that in this case, the Hon’ble ITAT has passed counter judgements in relation to the same issue for different AYs though the matter, subject and issue is same and decided by the Hon’ble ITAT Benches of Hyderabad and Vizag. Further, he submitted that assessee came in appeal due to ld. CIT(A) has relied on Merilyn Shipping Decision to adjudicate this issue instead of relying on various case laws including assessee’s own case of previous AYs. He submitted that by not adjudicating the issue on the ground raised by assessee, specifically, the order itself was on wrong presumptions.

  1. Ld. DR, on the other hand, brought to our notice para 6.5 of the assessment to submit that the assessee has incurred CSR (Corporate Social Responsibility) expenditure and AO has clearly brought on record to show that these expenses are not relating to the business of the assessee and they are in the nature of donations, which are not allowable expenditure under the income-tax Act. Whereas, the CIT(A) also verified the above expenditure and whether the se are two kinds of expenditures. The CIT(A) has allowed the revenue expenditure and disallowed the capital expenditure. However, he submitted that CIT(A) has not verified the expenditure thoroughly except by relying on the earlier orders, the CIT(A) has given relief to the assessee. According to him, no tax authority has verified the above expenditure and that assessee has never submitted any detailed information before any of the authority. This fact was particularly brought out by the ITAT in its order and the ITAT has rightly discussed the facts at length. Therefore, it is not a proper case for adjudication u/s 254(2) of the Act.

NMDC Ltd., Hyd.

5.1 With regard to section 40(a)(ia), he objected the contention of the ld. AR and submitted that ld. CIT(A) has very much relied on the decision of the special bench of Vi zag ITAT in the case of Merilyn Shipping and even assessee has given other earlier order of ITAT before her. He submitted that ITAT in its order aptly appreciated the finding of AO by bringing on record the capital receipt in the nature of commission and, therefore, there is no mistake apparent on record.

  1. Considered the rival submissions and perused the material on record. We notice that ld. AR submits that ITAT in its order ignored the decision of coordinate bench in assessee’s own case decided in its favour, where the capital expenditure on CSR was allowed. He basically presses the point that ITAT should have followed the earlier orders but rather ITAT has distinguished the earlier order and discussed the issue in detail. After carefully considering the submissions of both the parties, the bench has discussed the relevant issue at length before coming to the conclusion, in our view, the argument of assessee suggest that we technically review the findings in the order passed. We do not think, we have right/power u/s 254(2) to review any of our order.

6.1 Further, in the next issue of section 40(a)(ia) also, assessee came up on appeal objecting to the CIT(A)’s order even though CIT(A) has given relief to the assessee but heavily relying on the decision of Merilyn Shipping (supra). Ld. AR argued that the basic payment itself is not commission. Therefore, ITAT cannot take a view in line with AO. But, we notice that ld. CIT(A) has given relief to assessee relying on Merilyn Shipping decision and the Bench has adjudicated considering the recent development on the subject of paid/payable issue. Further, Bench has discussed at length NMDC Ltd., Hyd.before coming to the conclusion at variance with earlier years orders. Thus, the argument of the ld. AR suggest that we sit and review our own order.

6.2 From the above, it is clear that ld. AR argues before us to review our own order. In our view, we do not have any right/power u/s 254(2) to review our order and we have not noticed any mistake apparent from record to modify anything u/s 254(2) of the Act. Therefore, the MA filed by the assessee is dismissed.

  1. In the result, MA filed by the assessee is dismissed.

Pronounced in the open court on 18 th April, 2019.

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