VISVESVARAYA INDUSTRIAL RESEARCH & DEVELOPMENT CENTRE, MUMBAI V. JCIT RTG 12(2), MUMBAI

ITA 2615/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2379 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-04-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 23-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Rectification of order; TDS
• Section: 143(3); 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVAN , JM ITA NO.2615/MUM/2009 : ASST.YEARS 2002-2003 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEVELOPMENT CENTRE CENTRE-1, 31 ST FLOOR, CUFFE PARADE MUMBAI 400 005 PA NO.AABCM0996K. VS. THE JOINT COMMISSIONER OF INCOME-TAX RANGE 12(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI FIROZE B. ANDHYARUJINA RESPONDENT BY : SHRI O.P. SHARMA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON 23.02.2009 PURSUANT TO THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF TH E ACT IN, RELATION TO THE ASSESSMENT YEARS 2002-2003. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ORIGINAL ASSESSMENT ORDER IN THIS CASE WAS PASSED U/S.143(3) R.W.S. 147 ON 26.12 .2007 DETERMINING TOTAL INCOME AT RS.12,28,20,630. IN PARA 7 OF THIS ORDER A TABLE WAS DRAWN BY THE ASSESSING OFFICER INDICATING THE PARTIES FROM WHOM INTEREST W AS RECEIVED DURING THE YEAR, THE TOTAL PERIOD TO WHICH SUCH INTEREST RELATED, THE TO TAL AMOUNT OF TAX DEDUCTED AT SOURCE AND TDS PROPORTIONATE TO INCOME PERTAINING T O PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. AS PER THE PEN ULTIMATE COLUMN OF THIS TABLE THE TOTAL AMOUNT OF TAX DEDUCTED AT SOURCE FOR WHIC H CERTIFICATES WERE RECEIVED BY THE ASSESSEE WAS INDICATED AS RS.51,38,198. THE LA ST COLUMN DRAWN BY THE A.O. SHOWING TDS PROPORTIONATE TO INCOME PERTAINING TO T HE ASSESSMENT YEAR UNDER ITA NO.2615/MUM/2009 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEV. CENT RE. 2 CONSIDERATION SPECIFIED THE SUM OF RS.24,19,394. T HEREAFTER THE ASSESSING OFFICER RECORDED IN THE SAME PARA THAT THE ASSESSEE WAS ACC OUNTING FOR INCOME ON ACCRUAL BASIS AND HENCE THE ENTIRE INCOME SHOWN IN COLUMN N O.1 WAS NOT OFFERED FOR TAXATION IN THE PREVIOUS YEAR RELEVANT TO THE ASSES SMENT YEAR UNDER CONSIDERATION. HE TOOK NOTE OF THE PROVISIONS OF SECTION 199 PROVI DING FOR THE CREDIT OF TDS TO BE GIVEN IN THE ASSESSMENT YEAR IN WHICH THE INCOME IS ASSESSABLE AND FINALLY HELD THAT THE CREDIT FOR TDS OF RS.27,18,804 (RS.51,38,198 MI NUS RS.24,19,394) WAS NOT ALLOWABLE IN THIS YEAR AS THE INCOME CORRESPONDING TO SUCH TDS WAS NOT OFFERED FOR TAXATION IN THIS YEAR. HOWEVER WHILE COMPUTING THE TOTAL INCOME AND DETERMINING THE AMOUNT OF TAX DUE AND INTEREST CHARGEABLE AS P ER LAW, THE ASSESSING OFFICER GRANTED BENEFIT OF TDS TOTALING TO RS.51.38 LAKHS A S AGAINST HIS FINDING GIVEN IN PARA 7 FOR ALLOWING BENEFIT OF TDS TO THE TUNE OF R S.24.19 LAKHS. THE PROCEEDINGS U/S.154 WERE TAKEN UP AND NECESSARY RECTIFICATION WAS DONE BY WITHDRAWING THE BENEFIT OF EXCESS TDS CREDIT AMOUNTING TO RS.27.18 LAKHS. IN THE FIRST APPEAL THE ASSESSEE CONTENDED THAT THE ISSUE OF ALLOWING BENEF IT OF TDS IN RELATION TO THE INCOME WHICH WAS NOT ASSESSABLE FOR THE CURRENT YEA R WAS NOT BEYOND DOUBT AS THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF TOYO ENGG. INDIA LTD. VS. JT.CIT [100 TTJ (MUM.) 373] HAS ALLOWED THE BENEFIT IN THE YEAR EVEN IF THE IN COME WAS NOT ASSESSABLE TO THAT YEAR. THE LEARNED CIT(A) DID NOT CONCUR WITH SUCH SUBMISSION ADVANCED ON BEHALF OF THE ASSESSEE AND UPHELD THE O RDER U/S.154. THE ASSESSEE IS IN APPEAL AGAINST THIS ORDER. 3. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY CONTENDED THAT THE AMOUNT OF RS.27.18 LAKHS WAS ALSO LIABLE TO BE CONSIDERED FOR ALLOWING THE BENEFIT OF TDS IN THE ASSESSMENT YEAR IN QUESTION AS SIMILAR VIEW HAS BEEN CANVASSED IN THE CASE OF TOYO ENGG. INDIA LTD. HE RELIED ON CERTAIN JUDGM ENTS, LED BY THAT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. [(2008) 305 ITR 227 (SC)] TO PUT FORTH THAT NO RECTIFICATION WAS POSSIBLE IN ITA NO.2615/MUM/2009 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEV. CENT RE. 3 CASE OF A DEBATABLE ISSUE. TAKING ASSISTANCE FROM SUCH JUDGMENTS, THE LEARNED A.R. ARGUED THAT THE ISSUE OF GRANTING BENEFIT OF T DS IN RESPECT OF THE INCOME WHICH WAS ASSESSABLE IN THE SUBSEQUENT YEARS WAS NO T BEYOND THE SHADOW OF DOUBT IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN TOY O ENGINEERING (SUPRA) AND HENCE THE RECTIFICATION, AS DONE BY THE A.O., WAS NOT PE RMISSIBLE. IN THE OPPOSITION THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE I MPUGNED ORDER AND CONTENDED THAT THE PROVISIONS OF SECTION 199 WERE VERY CLEAR AS PER WHICH THE ACTION OF THE AO IN NOT GRANTING THE BENEFIT OF PROPORTIONATE TDS IN THE CURRENT YEAR WAS PERFECTLY AS PER LAW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD IN THE LIGHT OF PRECEDENTS CITED BEFORE US. THERE IS NO DISPUTE ABOUT THE FACT THAT THE AMBIT OF SECTION 154, DEALING WITH RECTIFI CATION OF MISTAKE, IS LIMITED TO RECTIFYING ANY MISTAKE WHICH IS APPARENT FROM RECOR D. IT TRANSPIRES THAT IF DELIBERATIONS ARE REQUIRED ON A POINT THAT BRINGS THE CASE WITHIN THE SCOPE OF DEBATABLE ISSUE AND HENCE SUCH POINT GOES OUTSIDE T HE PURVIEW OF SECTION 154. IF HOWEVER THE MISTAKE IN THE ORDER, SOUGHT TO BE RECT IFIED IS APPARENT AND GLARING, THE SAME CAN BE RECTIFIED. ADVERTING TO THE FACTS OF T HE PRESENT CASE, WHICH ARE SIMPLE AND PLAIN, WE NOTICE THAT THE ASSESSING OFFICER IN PARA 7 CATEGORICALLY HELD THAT ONLY THE TDS PROPORTIONATE TO INCOME PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION COULD BE ALLOWED. NOT ONLY THAT, HE A LSO NOTICED THE TOTAL INTEREST INCOME IN RESPECT OF WHICH THESE TDS CERTIFICATES W ERE GRANTED AND THEN WORKED OUT THE AMOUNT OF TDS WHICH COULD BE ALLOWED AGAINS T THE INCOME OFFERED BY THE ASSESSEE FOR TAXATION IN THE YEAR IN QUESTION. THER EAFTER HE TOOK NOTE OF THE PROVISIONS OF SECTION 199 BY MAKING A SPECIFIC MENT ION IN THAT REGARD IN THE ASSESSMENT ORDER AND THEN CONCLUDED THAT THE CREDIT FOR TDS AMOUNTING TO RS.27.18 LAKHS WAS NOT ALLOWABLE. HOWEVER WHILE COM PUTING THE TOTAL INCOME AND CALCULATING THE AMOUNT OF TAX DUE, HE INADVERTENTLY ALLOWED THE BENEFIT OF TDS AT ITA NO.2615/MUM/2009 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEV. CENT RE. 4 RS.51.38 LAKHS INSTEAD OF RS.24.19 LAKHS FOR WHICH HE HAD MADE RELEVANT DISCUSSION IN THE BODY OF THE ASSESSMENT ORDER. THU S IT IS CLEAR THAT THE A.O. INTERPRETED THE PROVISIONS OF SECTION 199 IN THE OR IGINAL ASSESSMENT ORDER AND CAME TO THE POSITIVE CONCLUSION THAT THE BENEFIT OF TDS TO THE TUNE OF RS.27.18 LAKHS WAS NOT ALLOWABLE TO THE ASSESSEE. BY NOT GIVING EFFECT TO HIS FINDING IN THE COMPUTATION OF TOTAL INCOME HE COMMITTED A MISTAKE WHICH IS APP ARENT FROM RECORD. 5. A LINE OF DISTINCTION NEEDS TO BE DRAWN BETWEEN THE CASES RELIED ON BY THE LEARNED A.R. IN WHICH IT HAS BEEN HELD THAT THE BEN EFIT OF TDS MAY BE GRANTED IN THE YEAR EVEN IF THE INCOME IS ASSESSABLE IN THE SU BSEQUENT YEAR AND IN WHICH THE PROCEEDINGS ARE BEFORE US U/S.154. IF THE ASSESSING OFFICER, WITHOUT MAKING ANY DISCUSSION IN THE BODY OF THE ASSESSMENT ORDER ALLO WED THE BENEFIT OF TDS TO THE TUNE OF RS.51.38 LAKHS AND THEN VENTURED TO PASS OR DER U/S.154 WITHDRAWING THE CREDIT FOR TDS TO THE TUNE OF RS.27.18 LAKHS, HIS A CTION WOULD HAVE BEEN BROUGHT WITHIN THE SCOPE OF DEBATABLE ISSUE IN THE LIGHT OF SUCH DECISIONS VIS--VIS THE PROVISIONS OF SECTION 199. BUT IT IS NOT THE CASE H ERE. THE ASSESSING OFFICER, IN THE RECTIFICATION PROCEEDINGS DID NOT PROCEED TO GIV E A FRESH FINDING FOR THE FIRST TIME THAT THE BENEFIT OF RS.27.18 LAKHS CANNOT BE GRANTE D IN THIS YEAR BECAUSE OF THE OPERATION OF SECTION 199. RATHER SUCH FINDING WAS G IVEN IN THE ORIGINAL ORDER PASSED BY HIM U/S.143(3) R.W.S. 147. SINCE THE ORDER U/S.1 54 WAS PASSED TO CURE AN ERROR APPARENT ON THE FACE OF THE RECORD BY WAY OF NOT GI VING THE EFFECT TO THE DISCUSSION MADE IN PARA 7 OF THE ASSESSMENT ORDER, IN OUR CONS IDERED OPINION, NO FAULT CAN BE FOUND IN THE PASSING OF ORDER U/S.154 ON THIS ISSUE . WE FIND THAT THE JUDGMENTS RELIED ON BY THE LEARNED A.R. ARE NOT RELEVANT TO T HE ISSUE IN QUESTION. ON THE CONTRARY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) RATHER SUPPORTS THE VIEW POINT OF THE ASSESSING OFFICER IN WHICH IT HAS BEEN HELD THAT A PATENT, M ANIFEST AND SELF-EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISCUSSION OF EVID ENCE OR ARGUMENT TO ESTABLISH IT, ITA NO.2615/MUM/2009 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEV. CENT RE. 5 CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED WHILE EXERCISING CERTIORARI JURISDICTION. IT IS OB VIOUS THAT THE MISTAKE COMMITTED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER BY COMPUTING THE TOTAL INCOME AND DETERMINING THE AMOUNT OF TAX DUE BY ALS O ALLOWING CREDIT FOR THAT PART OF THE AMOUNT OF TDS, WHICH WAS NOT ALLOWABLE AS P ER HIS OPINION, IS SELF-EVIDENT. NO INFIRMITY CAN BE FOUND IN RECTIFYING SUCH MISTAK E BY PASSING THE ORDER U/S.154 IN THIS REGARD. 6. HERE IT NEEDS TO BE EMPHASIZED THAT THE ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE THAT THE ISSUE WAS DEBATABLE AND HENC E SHOULD NOT HAVE BEEN ENTERTAINED BY THE AO, IS SANS MERITS FOR THE REASO N THAT THERE IS NO DEBATE IN THE ACTION OF THE AO IN THE PROCEEDINGS U/S 154. IN TH E INSTANT APPEAL WE ARE CONFRONTED WITH THE SITUATION IN WHICH THE AO MADE A SPECIFIC DISCUSSION IN THE BODY OF THE ASSESSMENT ORDER THAT THE PROVISIONS OF SECTION 199 DID NOT PERMIT THE ASSESSEE TO CLAIM THE BENEFIT OF THAT PART OF TDS W HICH RELATED TO THE INCOME NOT OFFERED FOR TAXATION IN THE CURRENT YEAR. HOWEVER W HILE COMPUTING THE TOTAL INCOME, HE OMITTED TO GIVE EFFECT TO HIS FINDING AND INADVE RTENTLY ALLOWED THE CREDIT FOR SUCH PART OF THE TDS, WHICH IN HIS OPINION WAS NOT DUE I N THIS YEAR. IT IS JUST AKIN TO A SITUATION IN WHICH THE AO HOLDS IN THE BODY OF THE ASSESSMENT ORDER THAT A PARTICULAR AMOUNT IS NOT DEDUCTIBLE BUT WHILE CALCU LATING THE TOTAL INCOME HE OMITS TO ADD THAT. IF SUBSEQUENTLY IN RECTIFICATION PROCE EDINGS SUCH ADDITION IS MADE, IT CANNOT BE SAID THAT THERE IS A SOMETHING WRONG IN T HE RECTIFICATION ORDER BECAUSE THE SCOPE OF SUCH ORDER IS NOT TO DECIDE THE MERITS OF THE ADDITION ALREADY REFERRED TO IN THE ASSESSMENT ORDER, BUT TO SET RIGHT THE MISTAKE COMMITTED IN NOT ADDING IT TO THE TOTAL INCOME. THE OBJECTION OF THE ASSESSEE, IF ANY , TO THE MERITS OF THE ADDITION CAN BE CHALLENGED ONLY IN THE APPEAL AGAINST THE ORIGIN AL ORDER AND NOT IN SUCH RECTIFICATION PROCEEDINGS. COMING BACK TO THE FACTS OF OUR CASE, WE FIND THAT THE SCOPE OF THE PROCEEDINGS U/S 154 WAS CONFINED ONLY TO SETTING RIGHT THE MISTAKE ITA NO.2615/MUM/2009 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEV. CENT RE. 6 COMMITTED IN THE ORIGINAL ORDER BY NOT GIVING EFFEC T TO THE FINDING GIVEN IN THE BODY OF THE ASSESSMENT ORDER. IT DID NOT DEAL WITH THE QUESTION AS TO WHETHER IN LAW THE BENEFIT OF TDS OUGHT TO HAVE BEEN GRANTED IN THE IN STANT YEAR, AS THAT ISSUE ALREADY STOOD DECIDED BY THE AO IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147. THE ASSESSEE, IF AGGRIEVED WITH SUCH FINDING, WAS WITHIN HIS RIGHT TO TAKE UP SUCH MATTER IN THE FIRST APPEAL AGAINST THE ORIGINA L ORDER. SUCH A GRIEVANCE AS TO THE LEGALITY OF ACTION TAKEN IN THE ORIGINAL ORDER CANN OT BE ADDRESSED TO IN THIS ROUND OF PROCEEDINGS, THE SCOPE OF WHICH IS RESTRICTED ONLY TO EXAMINING WHETHER THERE WAS A MISTAKE APPARENT FROM THE ORIGINAL ORDER CAPABLE OF RECTIFICATION. 7. THE LD. AR SUBMITTED, IN THE ALTERNATIV E, THAT IF HIS VIEW WAS NOT ACCEPTABLE IN ANY CASE ABOUT THE ILLEGALITY IN THE ACTION OF THE AO IN PASSING ORDER U/S 154, THEN THE MATTER MAY BE RESTORED TO THE FI LE OF AO FOR FRESH DECISION. WE ARE NOT INCLINED TO ACCEPT THIS ARGUMENT AS WELL F OR THE OBVIOUS REASON THAT THE QUESTION BEFORE US IS TO DECIDE WHETHER OR NOT THE ACTION OF THE AO IN CARRYING OUT RECTIFICATION OF THE ORIGINAL ASSESSMENT ORDER WAS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 154. SINCE THE MISTAKE COMMITTED BY THE AO IN THE ORIGINAL ORDER PASSED BY HIM U/S 143(3), BY NOT GIVING EFFECT TO HIS CO NCLUSION AS ARRIVED AT IN PARA 7 IN THE COMPUTATION OF THE TOTAL INCOME AT THE END OF THE ORDER, IS GLARING AND VERY MUCH APPARENT FROM RECORD, OUR ANSWER TO THE QUEST ION POSED IS IN AFFIRMATIVE THAT THE ORIGINAL ORDER SUFFERED FROM A PATENT MISTAKE , WHICH WAS SET RIGHT IN THE RECTIFICATION PROCEEDINGS. THERE IS NO QUESTION OF NEEDLESSLY ENLARGING THE CONTROVERSY AND GIVING SUCH DIRECTIONS WHICH ARE N OT GERMANE TO THE SCOPE OF THE INSTANT APPEAL. IN OUR CONSIDERED OPINION THE GIVIN G OF SUCH A DIRECTION, AS DESIRED BY THE LD. AR, WOULD BE ULTRA VIRES OUR POWERS AS SUCH CONTROVERSY IS BEYOND THE SUBJECT MATTER OF PRESENT APPEAL. EX CONSEQUENTI , WE UPHOLD THE IMPUGNED ORDER. ITA NO.2615/MUM/2009 M/S.M.VISVESVARAYA INDUSTRIAL RESEARCH & DEV. CENT RE. 7 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 7 TH DAY OF APRIL 2010. SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 7 TH APRIL, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A) - XII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.