DAISY HOLDINGS P.LTD, MUMBAI V. ITO 3(1)(2), MUMBAI

MA 168/MUM/2022

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Daisy Holdings Pvt. Ltd. filed a Miscellaneous Application seeking the recall of an order dated 23/03/2022 concerning the assessment year 2010-11. The original appeal by the Revenue challenged the deletion of certain additions made by the Assessing Officer, which were later upheld by the CIT(A). The Tribunal had remanded the issues back to the Assessing Officer for proper adjudication, noting that the issues were not properly verified by the lower authorities. The assessee argued that the CIT(A)'s detailed findings were ignored and that the remand was a blanket one, giving a fresh innings to the AO. However, the Tribunal, referencing the Supreme Court's decision in CIT vs Reliance Telecom Ltd., held that the powers under section 254(2) are limited to rectifying mistakes apparent from the record and do not extend to re-evaluating the merits of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125806 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-11-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 20-06-2022
• Other Referred Cases: CIT vs Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER, AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER M.A. no.168/Mum./2022 IN ITA no.6486/Mum./2014 (Assessment Year : 2010–11) Daisy Holdings Pvt. Ltd. C/o Laxsons India P. Ltd.) Cama India, Est Goregaon (East) Mumbai 400 063 PAN – AABCD3259L ................ Applicant (Original Respondent) v/s Income Tax Officer Ward–3(1)(2), Mumbai ................Respondent (Original Appellant) Assessee by : Shri Deepak Tralshawala Revenue by : Shri Soumendu Kumar Dash Date of Hearing – 18/11/2022 Date of Order – 15/02/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. By way of this Miscellaneous Application filed under section 254(2) of the Income Tax Act, 1961 ("the Act"), the assessee seeks recall of the order dated 23/03/2022, passed under section 254(1) of the Act by the coordinate bench of the Tribunal in Revenue’s appeal being ITA no.6486/Mum./2014, for the assessment year 2010-11, to the extent of adjudication of grounds no.1, 2 and 3. Daisy Holdings Pvt. Ltd. M.A. no.168/Mum./2022 Page | 2 2. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the order passed by the coordinate bench of the Tribunal is a non-speaking order and the issue raised in ground no.1 was remanded to the file of the Assessing Officer (“AO”) without assigning any reasons. The learned AR submitted that the various decisions cited by the assessee on the issue of non-taxability of notional income were not considered by the coordinate bench of the Tribunal while passing the order, which results in mistake apparent from the record. The learned AR further submitted that the other two issues raised in grounds no.2 and 3 were also remanded to the file of AO giving fresh innings to the AO to make the assessment. 3. On the contrary, the learned Departmental Representative (“learned DR”) vehemently opposed the admission of the present miscellaneous application and submitted that the coordinate bench of the Tribunal after considering all the aspects of the matter rendered its decision and restored the issue to the file of the AO. The learned DR further submitted that all the aspects in respect of these grounds are still open for both parties. 4. We have considered the rival submissions and perused the material available on record. The issue arising in ground No. 1, raised in Revenue’s appeal, was pertaining to the deletion of addition on account of accrued profits. From the perusal of the record, we find that the assessee is a builder and developer, and pursuant to the development agreement entered between the assessee and the owners of the land, the assessee was, inter-alia, entitled to 7% profit of the assumed cost of construction. By a subsequent amendment Daisy Holdings Pvt. Ltd. M.A. no.168/Mum./2022 Page | 3 agreement, the assessee had forgone the profit of 7% in lieu of the owners agreeing to pay for the interior work for the building. The AO treated the 2 nd agreement to be a sham and added 7% of the cost of construction as the income of the assessee. The learned CIT(A) allowed the appeal filed by the assessee and deleted the addition made by the AO. In further appeal, the coordinate bench of the Tribunal vide order dated 23/03/2022 noted that this issue has not been properly verified either by the AO or by the learned CIT(A) and accordingly remanded the same to the file of AO for proper adjudication. The relevant findings of the coordinate bench of the Tribunal are as under: – “7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(A) has not given detailed finding as to why the second amendment to the agreement was beneficial and how it has sustained in the eyes of law. This issue has not been properly verified either by the Assessing Officer or by the CIT(A). Therefore, this needs to be verified. Hence, we are remanding back this issue to the file of Assessing Officer for proper adjudication. Ground no.1 is partly allowed for statistical purposes.” 5. As per the assessee, the learned CIT(A) in para 12.2 of its order has given clear findings as to how the amendment agreement is more beneficial to the assessee, however, these findings were completely ignored by the coordinate bench and the issue was remanded to the file of AO for proper adjudication. Further, as per the assessee, the various decisions relied upon on the aspect that tax can only be levied on real income were completely ignored by the bench. 6. In ground no.2 of its appeal, the Revenue had challenged the deletion of interest paid to Oriental Bank of Commerce. Learned CIT(A) granted relief to the assessee on the basis that one of the projects was already completed, Daisy Holdings Pvt. Ltd. M.A. no.168/Mum./2022 Page | 4 while in respect of the other project, the construction was not commenced during the year. In further appeal, the coordinate bench of the Tribunal vide order dated 23/03/2022 remanded the issue to the file of the AO, by observing as under: “10. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(A) has not correlated the amount which was taken from the Oriental Bank of Commerce and how the property which was not in existence as well as the property which was leased out will come in the picture related to disallowance of interest. The issue needs to be verified. Therefore, we are remanding back this issue to the file of the Assessing officer. Ground no.2 is partly allowed for statistical purposes.” 7. In ground no.3 of its appeal, the Revenue had challenged the deletion of interest of Rs.7,55,173. The coordinate bench of the Tribunal vide order dated 23/03/2022 remanded the issue to the file of the AO, by observing as under: “13. We have heard both the parties and perused all the relevant materials available on record. This addition of Rs.7,55.173/- is in respect of Imperial Windsor and Model Town Projects itself and the CIT(A) has not given a detailed finding as to how the same has to be deleted. Therefore, this issue also needs to be verified. We therefore, remand back this issue to the file of Assessing Officer. Thus, ground no.3 is partly allowed for statistical purpose. 8. As per the assessee, in respect of both the issues learned CIT(A) has given detailed findings and passed a reasoned order, therefore, the same does not require any further verification. Thus, it is the plea of the assessee that remand by the coordinate bench of the Tribunal vide aforesaid order is a blanket remand, which will give fresh innings to the AO and therefore needs to be recalled under section 254(2) of the Act. 9. Section 254(2) of the Act provides that the appellate tribunal may with a view to rectify any “mistake apparent from the record” amend the order Daisy Holdings Pvt. Ltd. M.A. no.168/Mum./2022 Page | 5 passed under section 254(1) of the Act. The term “mistake apparent from the record” has been the subject matter of interpretation before various courts including the Hon’ble Supreme Court. We find that the Hon’ble Supreme Court in CIT vs Reliance Telecom Ltd., [2022] 440 ITR 1 (SC), observed as under: “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 to 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.” (emphasis supplied) 10. The Hon’ble Supreme Court further held that if the assessee was of the opinion that the order passed by the Tribunal was erroneous, either on facts or in law, in that case, the only remedy available to the assessee was to prefer the appeal before the High Court. Further, the recall of the order will result in the review of the earlier order passed by the coordinate bench, which has been held by Hon’ble Courts to be not permissible under section 254(2) of the Act. Thus, respectfully following the aforesaid decision of the Hon’ble Supreme Court, we are of the considered opinion that the relief claimed by the assessee vide present miscellaneous application is outside the scope of section 254(2) of the Act. Further, the issue whether income is notional or not is a factual determination and the judgments relied upon by the assessee are of significance only after the determination of the aforesaid aspect. Therefore, respectfully following the decision of the Hon’ble Supreme Court in Reliance Telecom Ltd. (supra), we are of the considered opinion that the relief sought by the assessee by way of the present miscellaneous application is completely Daisy Holdings Pvt. Ltd. M.A. no.168/Mum./2022 Page | 6 outside the ambit of section 254(2) of the Act since the same will result in revisiting the view taken earlier by the coordinate bench of the Tribunal. Thus, in view of our aforesaid findings, we find no merits in the present Miscellaneous Application filed by the assessee. Accordingly, the same is dismissed. 11. In the result, the Miscellaneous Application by the assessee is dismissed. Order pronounced in the open Court on 15/02/2023 Sd/- B.R. BASKARAN ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 15/02/2023 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai