RELIANCE INDUSTRIES LTD, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (LARGE TAXPAYER UNIT) - 2, MUMBAI

MA 113/MUM/2021

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 2114 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 30-04-2021
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH MISHRA
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 254(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM M. A . N o s. 1 13 & 1 1 4/ M u m/2 0 2 1 ( A r is in g ou t o f IT A N o s . 1 3 6 /M u m / 20 1 8 a nd 7 29 9/ Mu m /2 0 1 7) ( A s s e s s me nt Y ea r s : 2 0 13 -1 4) Reliance Industries Ltd. 3 rd Floor, Maker Chamber-IV 222, Nariman Point Mumbai-400 021 Vs . ACIT, LTU 29 th Floor, Centre No.1 World Trade Centre Cuffe Parade Mumbai-400 005 PA N / GI R N o . A A A C R 50 55 K (Appellant) : (Respondent) Appellant by : Shri Madhur Agarwal Respondent by : Shri Rajesh Mishra D at e o f H e a ri n g : 08.10.2021 Da t e o f P r o no un c e me nt : 03.01.2022 Per Shamim Yahya, A. M.: These are miscellaneous applications filed by the assessee with respective orders o the ITAT in ITA Nos. 136/M u m /2 01 8 a nd 7 2 9 9/ M u m /2 0 17 v id e or d e r dated 10.11.2020. M.A.No.113/Mum/2021:- 2. In this miscellaneous application, assessee has made following submissions: 1. The Applicant is in receipt of the order of the Income-tax Appellate Tribunal dated 10.11.2020, on 03.12.2020, in respect of the Assessee's appeal in ITA No. 7299/M/2019 and Department's appeal in ITA No.136/Mum/2018 (hereinafter referred as "the ITAT order"). On scrutiny of the said order, the Applicant observes that there are following apparent mistakes rectifiable u/s. 254(2) of the Act. {Copy of ITAT order is attached herewith as Annexure 'A'] 2. As regard Grounds of Appeal Nos. 35 to 38 of the Revenue's appeal: 2.1. We wish to respectfully submit that the Ground Nos. 35 to 38 of the Revenue's appeal have been adjudicated together in the Appellate order in Para 155. However, 2 R e l i a n c e I n d u s t r i e s L t d . the mention of Ground No. 38 in Para 66 on Page 38 of the order has inadvertently been omitted. Prayer 1: It is therefore, prayed that for the sake of clarity Para 66 on Page 38 of ITAT order be modified to include Ground No 38 of the Revenue's appeal. 2.2. We wish to further respectfully submit that the Ground Nos. 35 and 36 of the Revenue's appeal are in connection with comparables, i.e. exclusion of Allsec Technologies and inclusion of Axis Integrated Systems Limited, respectively. 2.3. Your Honours have dismissed all 4 grounds of appeal (i.e. ground of appeal no 35 to 38) of the revenue together vide para 155 of the order, however there are certain factual discrepancies which may kindly be rectified as under: a. As regards Ground No 35, on the comparable Allsec Technologies Ltd, it is humbly submitted that the Learned Commissioner of Income-tax (Appeals) ["the CIT(A)"] has included Allsec Technologies as valid comparable and Revenue's ground is for exclusion of the comparable and hence Your Honour's finding that ground of Revenue is misplaced is not fully correct. To this extent, there is factual inaccuracy in the finding of Hon'ble ITAT in para 155 of the order, and same needs to be rectified. b. Further, at para 66 on page 38, the Hon'ble Bench has mentioned that the Ground No. 36 of the Revenue's appeal (dealing with Axis Integrated Systems Limited) has been adjudicated. It has been mentioned in para 155 of the ITAT order that the ITAT in the assessee's own case for AY 2012-13 has held that it is not a valid comparable. Further the revenues ground on the same has also been dismissed. However the explicit mention of the comparable Axis Intergated Systems Limited is missing and hence, para 155 of the order may be rectified appropriately. c. For both the above comparables, it is submitted that during the proceedings, the Revenue has not been able to controvert the findings of the Learned CIT(A) on these comparables. Further, both these grounds are decided in favour of the assessee by the order of Hon'ble Tribunal for AY 2012-13 in the assessee' s own case, wherein it is held that Allsec Technologies is a valid comparable and Axis Integrated Systems Limited is not a valid comparable to the Assessee. Prayer 2: It is therefore, prayed that for the sake of clarity, a clear finding may be given in para 155 of the ITAT order, that the Tribunal's order for AY 2012-13 is followed and order of CIT(A) deciding Allsec Technologies as a valid comparable and Axis Integrated Systems Limited as an invalid comparable, is upheld. 2.4. We wish to further respectfully submit that the Ground No. 37 of the Revenue's appeal is in connection with exclusion of M/s. Empire Industries Limited which was held as valid comparable by the Learned CIT(A) and Ground No. 38 is in connection with inclusion of M/s. BVG India Limited which was rejected as a comparable by the Learned CIT(A). 2.5. In para 155 of the ITAT order, the Hon'ble Bench has given a specific finding that during the proceedings, the Revenue has not been able to rebut the findings of the Learned CIT(A) on these comparables. Accordingly, the Grounds of the Revenue's appeal were dismissed in the said Para 155 of the ITAT order. However, there is no specific finding given on both these comparables. 3 R e l i a n c e I n d u s t r i e s L t d . 2.6. Prayer 3: It is therefore, prayed that for the sake of clarity, a clear finding may be given in para 155 of the ITAT order that the revenues appeal in Ground Nos. 37 and Ground No. 38 has been rejected and order of the Learned CIT(A) deciding M/s. Empire Industries Limited as a valid comparable and rejecting M/s, BVG India Limited as a comparable, is upheld. 3. Further, the ld. Counsel of the assessee has made further submissions in this regard as under:- 1. The Department had challenged the first appellate order in their appeal, bearing ITA No. 136/Mum/2018. In relation to the validity of the several comparables, while benchmarking Business Support Services and Management Support Services availed and given by the Assessee. The Department had raised following grounds on validity of four comparables: i. Ground No. 35, objecting to the inclusion of comparable "Allsec Technologies Ltd." ii. Ground No. 36, objecting the exclusion of "Axis Integrated Systems Ltd.", iii. Ground No. 37, challenging inclusion of comparable "Empire Industries"; and iv. Ground No. 38,- objecting exclusion of comparable "BVG India Limited". 2. On the other hand, the Assessee had raised ground No. 9 in its appeal, bearing ITA No. 7299/Mum/2017, for exclusion of certain comparables in relation to the aforesaid transaction. 3. The Hon'bte Bench disposed off the aforesaid cross appeals in its Appellate order dated 10 th November 2020 (referred herein as "the ITAT order"). On Pg. 38, in Para 66 of the ITAT order, it was recorded that Grounds No. 35, 36 and 37 are related to Ground No. 9 of the Assessee's Appeal and hence, the same are dealt with in Assessee's appeal. 4. All these grounds of appeal are dealt with from Para 145 to 156, from Pg. 97 to 103 of the ITAT order. 5. While dealing with the comparable "Allsec Technologies Ltd.", in line no. 6 in Para 155 at Pg. 103 of the ITAT order, it has been recorded that "As regards, Allsec Technologies the revenue's ground is misplaced as TPO himself has excluded it from final comparable." The Applicant Assessee submits that the said finding is factually incorrect as the revenue sought to exclude the said comparable which was selected by the Applicant Assessee and was accepted by the first appellate authority. 6. The Applicant Assessee had submitted that the Revenue's Ground No. 35 objecting to the inclusion of comparable "Allsec Technologies Ltd." and Ground No. 36 objecting the exclusion of "Axis Integrated Systems Ltd.", both, are covered in favour of the Assessee by the ITAT's order, in Assessee's own case, for AY 2012-13. 7. Hon'ble Bench, while referring to the ITAT order for AY 2012-13 in Para 155 on Pg. 103 of the ITAT order and while recording that the validity of the comparables 4 R e l i a n c e I n d u s t r i e s L t d . has been decided by the Hon'ble ITAT in AY 2012-13, comparable "Axis Integrated Systems Ltd." was missed out to be referred. 8. In the last line of Para 155 of the ITAT order, it has been recorded that "the grounds raised by the revenue in this regard are dismissed". But, while dismissing the same, ground numbers were not referred. 9. Since in para 66 of the ITAT order, it was recorded that ground no. 35 to 37 have been dealt with ground no. 9 of the Assessee's Appeal, it is abundantly clear that in para 155 of the ITAT order, ground no. 36 regarding the comparable "Axis Integrated Systems Ltd." has also been dismissed. 10. As regard Ground No. 37 and 38 of Revenue's appeal, in Para 155, on Pg. 103 of the ITAT order, the comparables "Empire Industries Ltd" and "BVG India Limited", have been considered while adjudicating the issue of selection of correct comparables, in the first 6 lines of the Para 155 of the ITAT order. Hence, it is also clear that Ground No. 37 and 38 of the Department's appeal is also dealt with in Para 155 of the ITAT order and has also been dismissed. 11. Even so, the Department, while giving effect to the ITAT order, is reluctant to accept the same and is interpreting that the decision in relation to ground no. 35 to 38 has not been taken by the Hon'ble Bench. 12. In view of the aforesaid difficulty, the Applicant Assessee is requesting the Hon'ble Bench to: a) include Ground No. 38 in para 66 of the order to clarify that the Ground No. 38 is also dealt with the ground no. 9 of the Assessee's Appeal; and/or b) expressly mention the ground numbers 35 to 38 while dismissing the revenue's grounds on Pg. 103 in Para 155 of the ITAT order; and c) record in para 155 of the ITAT order that the inclusion of the comparable "Allsec Technologies" and exclusion of the comparable "Axis Integrated Systems Ltd." is covered by the ITAT order for AY 2012-13; and d) remove the lines "As regards, Allsec Technologies the revenue's ground is misplaced as TPO himself has excluded it from final comparable." from Para 155 of the ITAT order; and e) An express finding may be given in para 155 that the revenue's appeal in ground of appeal no 37 and 38 have been rejected and the order of the learned CIT(A) deciding "Empire Industries Ltd" as a valid comparable and rejecting "BVG India Ltd" as a comparable, is upheld. 4. We have heard both the parties and perused the records. We note that above miscellaneous application relates with following grounds in revenue’s appeal and assessee’s appeal. Revenue appeal grounds:- 5 R e l i a n c e I n d u s t r i e s L t d . 35. "On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in including the comparable M/s Allsec Technologies Ltd. without appreciating the fact that company is loss making in earlier years as well as in subsequent year." 36. "On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in excluding the comparable M/s Axis Integrated Systems Limited without appreciating the fact that Business Support Services and Management Services are highly skill-based services and by no stretch of imagination BSS and MSS can be treated as low-end services. 37. On the facts and circumstances of the case ld. CIT(A) has erred in including comparable M/s. Empire Industries Ltd. without appreciating that comparable is functionally dissimilar. 38. "On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in excluding comparable M/s BVG India Ltd. without appreciating that comparable is functionally similar." Assessee appeal grounds:- 9. Availing of Business Support Services ('BSS') from RCITPL: 9.1 On the facts and in the circumstances of the case and in law, the learned AO erred in making and the learned CIT(A) erred in determining the arm's length mark-up of 8.20% on the cost of the services without considering the mark-up of 5.90% as determined by the Appellant and proposing the transfer pricing adjustment of INR 3,40,64,984/-; 9.2 The learned CIT(A) erred in rejecting the comparable companies namely Cameo Corporate Services Limited, Neilsoft Limited and Goldmine Advertising Limited without providing any cogent reasons. 9.3 On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the learned AO in cherry picking the comparable company namely Asian Business Exhibition & Conference Limited. 5. The ITAT has dealt with the issues as under:- Para 66. The Revenue’s ground No. 35,36 & 37 are related to ground No. 9 in assessee’s appeal. We are dealing with these grounds in ground No. 9 of the assessee dealt with in assessee’s appeal. Para 145 to 156 Ground No. 9 9. Availing of Business Support Services ('BSS') from RCITPL: 9.1 On the facts and in the circumstances of the case and in law, the learned AO erred in making and the learned CIT(A) erred in determining the arm's length mark-up of 8.20% on the cost of the services without considering the mark-up of 6 R e l i a n c e I n d u s t r i e s L t d . 5.90% as determined by the Appellant and proposing the transfer pricing adjustment of INR 3,40,64,984; ; 9.2 The learned CIT(A) erred in rejecting the comparable companies namely Cameo Corporate Services Limited, Neilsoft Limited and Goldmine Advertising Limited without providing any cogent reasons. 9.3 On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the learned AO in cherry picking the comparable company namely Asian Business Exhibition & Conference Limited. 146. Brief facts of the case are that the AE- RCITPL has entered into an agreement with the assessee for provision of BSS. AE has provided BSS to the eligible business (Reliance Refinery SEZ) of the assessee for a service fee of cost plus a mark-up of 5% on cost of services. As per assessee, the BSS provided by RCITPL is a low end services and routine in nature. In order to render the service no special skill set or intangibles are involved while rendering the services. 147. As per assessee, the assessee has benchmarked the transaction by applying TNMM as the MAM and selecting AE as the tested party. Using the external database the assessee has selected the following comparables: Sr. No. Company Name NCP (%) 1 Empire Industries 4.32 2 HGS Business Services Pvt. Ltd 15.33 3 ICRA Management Consulting Services Ltd. 2.10 4 Spectrum Business Solutions Ltd 1.82 Arithmetic Mean . 5.90 The 5% margin earned by AE is within the tolerance range, hence it was contented that RIL Refinery SEZ is not making more than ordinary profits and the specified domestic transactions between RCITPL with RIL Refinery SEZ related to provision of Business Support Services were consistent with the arm's length standard from Indian transfer pricing regulations perspective. 148. The TPO rejected the search process conducted by the assessee and conducted a fresh search process to determine the arm's length mark-up of the transaction by applying TNMM. The TPO issued a show cause notice proposing to use the following comparable companies:- Sr. No. Name of Comparable Company OP/OE(%) 1 BVG India Limited 24.08 2 Axis Integrated Systems Limited 36.30 3 Asian Business Exhibition & Conferences Limited 12.09 4 HGS Business Services Private Limited. 14.52 7 R e l i a n c e I n d u s t r i e s L t d . Average 21.75 The assessee vide letter dated 18 October 2016 gave reply to the show cause notice of the TPO, objecting to the comparables selected by the TPO. The TPO determined the arm's length margin of 18.09% on cost and proposed an transfer pricing adjustment of INR 13,93,47,074/-. The comparables relied upon by the learned TPO are as under: Sr. No Name of comparable company NCP (%) 1 BVG India Limited 24.08 2 Asian Business Exhibition & Conferences Limited 12.09 Average 18.09 The assessee vide letter dated 6 December 2016 filed a rectification application with the TPO, requesting to rectify the margin of the alleged comparable company M/s. BVG India Limited from 24.08% to 22.49% (correct margin). The TPO recomputed the margin and revised it to 23.47%, accordingly the arm's length margin was revised to 17.78% restricting the alleged adjustment to INR 13,60,47,029/-. 150. Upon the assessee's appeal, the learned CIT(A) gave part relief by retaining some of the comparables. He held as under :- “I have carefully perused the order of the TPO and the submissions made by the Appellant during the course of the Appellate proceedings and the findings are tabulated as under: Name of the company Contention of the appellant Comments of CIT(A) Empire Industries Ltd The trading and indenting segment of the company is engaged in sales and service support of machines in metal forming, metrology, assembly and testing lines, welding, etc. and metal cutting tools for turning, milling, mill turn centers, boring, drilling, etc.. The company earns agency commission from the same. In addition, the company offers various equipment and related installation service support to manufacturers ports, oil and The company has various business segments and low end business support service segment of trading and indenting is comparable with the business activity of the Appellant. The segmental audited accounts of the relevant segment is available and accordingly it can be reliably used for benchmarking analysis and is therefore accepted as comparables. 8 R e l i a n c e I n d u s t r i e s L t d . gas pipelines, power generation, refineries, petrochemicals and other industries. This segment is functionally comparable to that of the tested party. The other segment is engaged in developing, leasing, managing, and maintaining industrial real estate properties and also operates vending machines under the name 'Grabbit, which vend food and nonfood product Cameo Corporate Services Limited The company is an established service provider, Providing business support services to a wide range of clients. Its main businesses are in the areas of Document Management, Medical Transcription, Data Conversion and Registry & Share Transfer. The TPO has not discussed. So no opinion can be given Neilsoft Limited The Company, along with its subsidiaries in USA, Germany and branch located in UK provides Software engineering services to its clients. The Company provides solutions across a range of engineering segments The TPO has not discussed. So no opinion can be given Goldmine Advertising Limited The company is engaged in serviceoriented activities. Its revenue comprises of Space Media, Radio Advertising etc. The TPO has not discussed. So no opinion can be given BVG India Limited BVG India Limited is engaged in providing and undertaking facility management, mechanised, housekeeping, transportation, plant relocations, attendant services and labour supply. It also undertakes various The comparable company is engaged in diverse business activity. It is engaged in high end infrastructure activities, along with other low end services. However, the segmental accounts of the company is not available to compute the 9 R e l i a n c e I n d u s t r i e s L t d . projects for garden development, slum rehabilitation, landscaping, beautification projects, engineering and other contracts Three reportable segments are Facility services The division is engaged in the business of mechanized housekeeping, transportation, labour supply, facility management etc Facility projects The division is engaged in the business of horticultural and landscaping contracts, plant relocation contracts, etc Engineering projects The division is engaged in the business of rural electrification contracts margins earned in each segments. Accordingly, the comparable company is rejected Asian Business Exhibition & Conference Limited No submissions made .not disputed in appeal hence accepted. As regards Cameo Corporate Services Ltd, Neilsoft Limited and Goldmine Advertising Limited the same are not discussed in TPOs order hence not considered. 'Considering the above the arm's length price is as follows: S.No Comparable company % 1 Empire Industries Ltd 4.32 2 Asian Business Exhibition & Conferences Ltd 12.09 3 Arm’s length price 8.20 151. Against this order assessee as well as Revenue both are in appeal. The revenues ground is that learned CIT appeals erred in including the comparable M/S Empire industries Ltd and another ground is that learned CIT appeals erred in excluding the comparable M/S BVG India Ltd. and M/s. Alsec Technologies. 10 R e l i a n c e I n d u s t r i e s L t d . 152. The learned counsel of the assessee states that assessee is aggrieved by the non inclusion of following comparable : Cameo Corporate Services Ltd.,• Neilsoft Limited • Goldmine Advertising Limited 153. In this regard, the learned counsel of the assessee relied upon several case laws. It is the further contention of the learned counsel of the assessee that Cameo Corporate Services Ltd. and Goldmine Advertising Limited, need to be considered for benchmarking purposes, as they are providing business support services and that the entire object of Transfer Pricing studies to determine the ALP of transaction. Therefore, if an assessee mistakenly includes and/or excludes a company from the list of comparables it is not irrevocable or irreversible. The learned counsel of the assessee also submits that assessee is aggrieved that learned CIT (A) erred in confirming the action of the assessing officer in cherry picking the non-comparable company namely Asian Business Exhibition and Conference Ltd. It is the submission that this comparable is to be rejected as the employee cost total operational cost ratio is only 12.83% and that of the assessee's 66.6%. That low cost of the employees cost implies that company would not be providing services by employing its own sources and is following a different business model. Hence, the same is functionally not comparable. Further, the learned counsel of the assessee submits that from the website it is observed that the company is engaged in the business of exhibitions such as trade fair organizer, networking events, conferences, activation, road shows, digital and publications entail completely different set off employee skills and are not comparable. 154. As regards the revenues grounds the learned counsel of the assessee relies upon assessee submission before the learned CIT(appeals). The learned counsel submits that the learned CIT(appeals) has appreciated the submissions and given a finding of facts which have not been controverted by the revenue. 155. Upon careful consideration as regards the revenues grounds relating to comparables namely empire industries Ltd and BVG India Ltd, we note that assessee has given cogent submissions before the learned CIT(appeals). The learned CIT(appeals) has duly appreciated the submissions and found the voracity thereof. The revenue has not produced any cogent submission rebutting the finding of the learned CIT(appeals). As regards Alsec Technologies the revenue’s ground is misplaced as TPO himself has excluded it from final comparable. Moreover, as pointed out by learned Counsel of the assessee that the ITAT in assessee’s own case for A.Y. 2012-13 has held that this is not a valid comparable to assessee. Hence the grounds raised by the revenue in this regard are dismissed. 156. As regards assessee’s plea of inclusion of cameo corporate services, neilsoft ltd and goldmine advertising Ltd, we find that these companies were not selected by the assessee itself in the comparable analysis. Therefore there was no occasion for the Transfer Pricing officer discuss or to include them. The learned CIT(appeals) is therefore not wrong in holding that there is no discussion by assessing officer in this regard. However 11 R e l i a n c e I n d u s t r i e s L t d . since the assessee is also objecting to the inclusion of the only other comparable that is Asian business exhibition and conference Ltd on account of substantial variation in employee cost, it will be in fitness of things these comparables are also considered by transfer pricing officer. As regards the objection to Asian business exhibition and conference Ltd. is concerned, the objection appears to be genuine. The huge variation in employee cost does point out the lack of comparability. However the AO may examine the factual aspect in this regard. Hence the issue stands remitted the file of Transfer Pricing officer. The TPO should consider the issue afresh in light of our observations as above. Needless to add assessee should be granted adequate opportunity of being heard. 6. From the above, it is clear that ITAT has duly adjudicated revenue’s ground No.38, wherein revenue has challenged the Ld.CIT(A) order in excluding the comparable BVG India Ltd.. Hence, we modify para ‘66’ of the aforesaid ITAT order as under:- “The Revenue’s ground No. 35 to 38 are related to ground No. 9 in assessee’s appeal”, in place of “the revenue’s ground No. 35, 36 and 37 are related to ground No.9 in assessee’s appeal” 7. The other error mentioned is that ITAT has observed that Allsec Technologies Ltd. has been excluded by TPO himself. This is also mistake apparent from the record. Hence, following line in Para NO. 155 Line NO. 6, 7 and 8 stands deleted. “As regards Allsec technologies the revenue ground is misplaced as TPO has myself excluded it from final comparable. 8. The other submission that the order should be modified to confirm exclusion of Axis Integrated Systems is not sustainable. The reading of the above order shows that the ITAT has not specifically dealt with the revenue ground relating to Axis Integrated Systems Ltd, raised by revenue in ground no 36. Hence, the Ld. Counsel of the assessee submission that exclusion of Axis Integrated Systems Ltd. is also adjudicated by the Tribunal is not correct. Since, this ground raised by the revenue has not been adjudicated, we recall ground No. 36 of revenue appeal for fresh adjudication. 12 R e l i a n c e I n d u s t r i e s L t d . 9. This miscellaneous application is partly allowed. M.A.No.114/Mum/2021:- 10. The submissions of the assessee in this miscellaneous application are as under:- 1. The Applicant is in receipt of the order of the Income-tax Appellate Tribunal dated 10.11.2020, on 03.12.2020, in respect of the Assessee's appeal in ITA No. 7299/M/2019 and Department's appeal in ITA No.136/Mum/2018 (hereinafter referred as "the ITAT order"). On scrutiny of the said order, the Applicant observes that there is following apparent mistake rectifiable u/s. 254{2) of the Act. [Copy of ITAT order is attached herewith as Annexure 'A'] 2. As regard Additional Ground of Appeal No. 6 of Assessee's Appeal: 2.1. The Applicant Assessee had filed this ground of appeal, vide its letter dated 29.03.2019, for claiming long term capital loss on sale of equity and certain preference shares to its subsidiary company which was inadvertently not claimed in the return of income. [Copy of the letter is attached herewith as Annexure 'B'], However, the said ground has not been adjudicated in the ITAT order. 11. We have heard both the parties and perused the records. It is noted that assessee has pleaded that one issue raised in additional ground No.6 raised by the assessee has remained to be adjudicated by the Tribunal. Ld. Counsel of the assessee has further submitted following details. The Applicant submits that the said additional ground of appeal no. 6 (with its covering letter dated 29 th March 2019) was handed over to the Hon'ble Bench during the course of first hearing of the captioned appeal on 01.04.2019. In this regard, the Applicant Assessee craves leave to file the Copy of letter dated 29.03.2019 along with copy of Additional Ground of Appeal filed which is subject matter of the Miscellaneous Petition for ready reference. Vide the said additional ground no. 6, the Assessee sought to claim Long Term Capital Loss on sale of equity and preference shares of M/s. Reliance Exploration and Production DMCC to Assessee's subsidiary, namely M/s. Reliance Industrial Investments and Holdings Ltd, totaling to Rs. 9,29,34,61,459/-. The Assessee did not claim the said loss in its return of income under an inadvertent belief that the said loss 13 R e l i a n c e I n d u s t r i e s L t d . would be covered by the provisions of section 47(iv) of the Income-tax Act. 1961 ("the Act") and as such sale of the said shares would not be considered as 'transfer', thereby exempted from chargeability as 'Capital Gains 1 u/s. 45 of the Act. The Applicant further submits that during the course of assessment proceedings, vide its letter dated 15 th September 2016, it had filed summary of Long Term Capital Loss as claimed in the return of income and scrip wise details of sale of equity and preference shares, including the said equity and preference shares. In order to establish the foregoing facts before the Hon'ble Bench, the Applicant Assessee craves leave to file the following: Sr. No. Particulars Pg. No. 1. Copy of letter dated 29.3.201 9 along with copy of Additional Ground of Appeal 1-2 2. Copy of Revised Computation of Income 3-6 3. Copy of letter dated 1 5.9.201 6 filed during assessment proceedings providing details of claim of Long Term Capital Loss along with the relevant Annexures 7-11 4. Copy of statement showing computation of the Long Term Capital Loss in question before your honours vide additional grounds of appeal 12 12. The letter dated 29.03.2018 by which assessee had filed application from additional ground No.6 of appeal read as under:- “We refer to the appeal no ITA 7299/ MUM/ 2017 preferred by the Appellant before the Hon'ble ITAT Members - 'J' Bench, which is fixed for hearing on 1 st April 2019 In this connection, we had vide our letters dated 13 12.2018 and 1803.2019, filed 5 additional grounds of appeal We now wish to file a 6"' additional ground of appeal which is enclosed as Annexure -1 The Appellant humbly submits that the additional ground No 6 ts purely legal in nature and all the facts are on record. Considering that the Appellate authorities have jurisdiction to entertain claim which were not made before lower authorities or in return of income and relying on the 14 R e l i a n c e I n d u s t r i e s L t d . Hon'ble Supreme Court judgement in the case of National Thermal Power Company Ltd (229 ITR 383). we request your Honour to kindly grant leave for admission of the additional ground of appeal for adjudication by your Honour.” 13. The said additional ground reads as under:- “The learned Commissioner of income-tax - (Appeals-57) Mumbai, [hereinafter referred to as the CIT(A)] erred in not allowing long term capital loss arising on sale of equity and preference shares of M/s. Reliance Exploration and Production DMCC ('REP DMCC'}, to its subsidiary company M/s, Reliance Industrial Investments and Holdings Ltd {'RIIHL'), which was inadvertently not claimed in the Return of Income on erroneous understanding that the said transaction was not a 'transfer' under section 47(iv} of the Income Tax Act 1961 (Act)', though relevant conditions specified in section 47(iv) were not fulfilled. The appellant submits that the loss on sale of said shares was allowable under section 45 of the Act as the whole of share capital of its subsidiary company M/s. RIIHL was not held by the appellant and hence the sale of equity and preference shares was not covered by the exception under section 47(iv) of the Act .” 14. Further, the assessee has filed following affidavit in support of the aforesaid claim:- “I, Vimal Gala, son of Shri. Vasanji Gala residing at B/24, Garuda CHS, Vidhyalaya Marg, Mulund (E), Mumbai 400081, hereby solemnly swear, affirm and declare as under: 1. THAT I am employed with M/s. Reliance Industries Limited having its registered office at Maker Chambers IV, 3rd Floor, 222, Nariman Point, Mumbai 400021. 2. THAT I am a Senior Manager (Direct Tax) with M/s. Reliance Industries Limited. 3. THAT I am the Authorised Signatory of M/s. Reliance Industries Limited. 4. THAT appeal no ITA 7299/ MUM/ 2017 was filed on 22 December 2017 by M/s. Reliance Industries Limited before the Hon'ble Members of the Income Tax Appellate Tribunal, Mumbai -J Bench. I 5. THAT subsequently, M/s Reliance Industries Limited filed 5 (five) additional grounds of appeal vide letters dated 13 December 2018 (3 grounds of appeal) and 18 March 2019 (2 grounds of appeal), before the Hon'ble Members of the Income Tax Appellate Tribunal, Mumbai - 'J' Bench. 6. THAT thereafter, M/s Reliance Industries Limited filed one more additional ground of appeal, sequentially the 6 th ground of appeal, before the Hon'ble Members of the Income Tax Appellate Tribunal, Mumbai - 'J' Bench. The said 6 th ground of appeal (additional ground) was tendered by me during the course of hearing on 1st April 2019 in the said ITA no ITA 7299/ MUM/ 2017.” 15 R e l i a n c e I n d u s t r i e s L t d . 15. Upon careful consideration, we note that the mistake apparent from the record has crept in the order of this Tribunal inasmuch as the aforesaid additional ground was not adjudicated by the Tribunal. Hence, there is a mistake apparent from the record. However in an MA, the ground on merits cannot be adjudicated. In this regard, we draw support from the following exposition by Hon’ble Apex Court in the case of CIT vs. Reliance Communication Ltd. In Writ appeal No. 7110/2021 vide order dated 03/12/2021. “In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view of rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.” 16. Hence, the order can only be recalled for the limited purpose of adjudicating this additional ground which had remained unadjudicated. Ld. DR has no objection with regard to this miscellaneous application inasmuch as, the recall will be only to adjudicate the issue which had by mistake remained unadjudciated. Accordingly, we recall the aforesaid order for limited purpose of adjudication of the aforesaid additional ground, which has remained to be adjudicated. 17. In the result, this miscellaneous application is partly allowed as above. Order pronounced in the open court on 03.01.2022 Sd/- Sd/- (Amarjit Singh) (Shamim Yahya) Judicial Member Accountant Member Mumbai; Dated : 03.01.2022 Thirumalesh , Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 16 R e l i a n c e I n d u s t r i e s L t d . 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai