Eskay Electronics India Pvt. Ltd., New Delhi V. ITO, New Delhi

MA 195/DEL/2017

AI Insights

The case revolves around a Miscellaneous Application (M.A.) filed by M/s. Eskay Electronics India Pvt. Ltd., seeking the recall of an earlier Tribunal order which assessed their income from factory premises as 'income from house property'. The assessee argued that this was a mistake apparent from the record and should be reconsidered as 'income from business'. The Tribunal, however, found that the assessee had not pointed out any error that was apparent from the record, and thus dismissed the application, citing the Supreme Court's clarification that the Tribunal's powers under Section 254(2) of the Income Tax Act are limited to rectifying mistakes apparent from the record and do not extend to re-hearing the appeal on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122207 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-11-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2017
• Other Referred Cases: CIT vs Vikram Cotton Mills Ltd., Radhasoami Satsang vs CIT, Laxmi Electronic Corporation Ltd. vs CIT, CIT vs M/s 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 DELHI “FRIDAY-SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER M.A.No.-195/Del/2017 [In ITA No.6444/Del/2014] [Assessment Year : 2010-11] M/s. Eskay Electronics India Pvt.Ltd., B-86/1, Okhla Industrial Area, Phase-II, New Delhi-110070. PAN-AABCE1176D vs ITO, Ward-11(2), New Delhi APPELLANT RESPONDENT Appellant by Shri Anil Kumar Malhotra, CA Respondent by Shri N.K.Bansal, Sr.DR Date of Hearing 25.11.2022 Date of Pronouncement 20.02.2023 ORDER PER KUL BHARAT, JM : This Miscellaneous Application (M.A.) has been filed by the assessee seeking recalling of the order passed by the Tribunal in ITA No.6444/Del/2014 pertaining to Assessment Year 2010-11 vide order dated 03.08.2015. 2. Ld. Counsel for the assessee reiterated the submissions as made in M.A. The relevant contents of the M.A. are reproduced as under:- “The sale ground of appeal is stated as under:- "The Hon'ble CIT(A) has erred in law and on facts in directing the Ld. Assessing Officer to modify the assessment order and treat the entire income assessee by the Ld. Assessing Officer of the assessee as income from house property against income from other sources assessed by him (DClT) whereas the assessee declared the same as income from business. The order passed by the Hon'ble CIT(A) is arbitrary and is no founded on facts." 2 | Page Whereas the Hon'ble ITAT on Para-3 of the ITAT Order on Page-2 has stated: Quote: Para-3 Learned counsel for the assessee submitted that in the earlier years viz. assessment 2006-07 and 2008-09 , learned CIT(A) has decided the issue in favour of the assessee and held that the income from factory premises should be assessed as 'Income from business' and the Revenue has not preferred any appeal against the order of learned CIT(A). He relied on the decision of Hon'ble Apex Court in the case of CIT Vs Vikram Cotton Mills Ltd. - (1988) 169 UTR 597 (SC), He submitted that the total amount received from the factory premises along with its equipments, fixtures etc. was Rs.7 to Rs.8 lakhs per annum only. He submitted that the chairman of the assessee company is an lIT qualified engineer and is 88 years of age. He submitted that the assessee has to discontinue the business since the year 1988 due to litigation pending before Hon'ble Delhi High Court and Central Excise and Sales Tax authorities etc. He submitted that for proper utilization of the premises, the assessee has handed over its entire factory premises alongwith its equipments and furniture & fixtures etc. and could not resume the business till date due to various pending litigation before different Courts and, in fact, intends to restart the business and therefore, the income thereof should be assessed under the head income from business. Quote: Para-5 I have considered the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). I find that in reply to a question from the Bench, the learned counsel for the assessee has submitted that the assessee could not restart its business till date after its discontinuance in the year as back as 1988. The chairman of the assessee company is 88 years of age. I find that merely because in the past the issue was decided 3 | Page in favor of the assessee by the CIT(A) and the Revenue has not preferred any appeal to the Tribunal, it could not be said that the Department is precluded from assessing the income from the factory under the right head of income. I find from the chart filed at page 61 of the compilation by the assessee that the total amount involved in the litigation before Hon'ble Delhi High Court, Delhi Small Industrial Corporation Ltd., Sales Tax authorities, Central Excise authorities and Municipal Corporation of Delhi comes to Rs.1.35 crore only. The assessee is a corporate assessee and the litigation and the amount involved in the litigation could not be said to be of that magnitude that the assessee could not restart its business during the past 27 years. The facts of the case lead to the conclusion that the assessee is no more interested in restarting its business and has let out its factory premises along with its machinery, furniture and fixtures for a fixed amount of rent and therefore, the action of learned CIT(A) in directing to treat the income under the head income from house property was justified and no interference in the same is called for. In this view of the matter, the order of learned CIT(A) is confirmed and the ground of appeal of the assessee is dismissed. Unquote From the above, it can be interpreted that the Hon'ble ITAT has stated that the assessee had to discontinue its business since the year 1988 due to litigation pending before the Delhi High Court of Central Excise and Sales Tax authorities. Whereas the fact is that the assessee company started its business of manufacturing of radio, transistors, T.V. from 1971 till 1988. In 1988, there was workers strike (lockout) as a result of which complete activities of the company came to complete halt. The Management exercising prudence gave its entire wherewithal viz complete factory building, machinery, furniture, fixtures, generator and other utility to a company with similar business viz. Multi-Media Marketing on a license to run the business against a License fee as the Assessee needed cash/funds to fight cases initiated by workers and complaints viz 4 | Page labour laws, labour rights, provident fund, workers welcome passage, sales tax, excise duty, income tax etc. Sir, the assessee has been fighting Court cases for all these 28 years and has now brought them to various levels, as a result of which the list produced on a page 61 of the Paper Book contained pending cases before the Hon'ble Courts (Copy enclosed). Para - 5 of the Order No. ITA No.6444/DeI/2014 - Thus, the view that cases worth Rs.1.35 crores seems the assessee is not serious, is unfair. Apart it is also important, that the assessee filed its appeal before Hon'ble ITAT against the observations of the CIT(A) vide CIT(A) order No. 97/2013- 14 dated 11.09.2014. The moot point observed by the Hon'ble CIT(A) was that the assessee right from the beginning of 1988 of the License Agreement gave absolute right to the licensee. Page - 8 & 9. In other words, it was the will, whim and fancies of the licensee to vacate the premises and no right to the assessee. This observation by the Hon'ble CIT(A) is absolute incorrect as can be seen from the Licensee Agreement (a copy of which is forming of Paper Book also attached with this letter on Page No. 77) Clause No. 17 which specifically states that the Licensee Agreement is renewable after a period of 3 years on consent of the assessee. Then, whereas the absolute power of the licensee as per Hon'ble CIT(A).Further, the Hon'ble ITAT has observed that assessee's chairman is 88 years age and there is no scope of his part to business. In this connection, it is humbly submitted that the Chairman who is 88 yrs has a son who is 40 years old and education lIT, M. Tech having business acumen and is a Member of the Board of Directors. The copy of the Form 32 is attached for your kind consideration. In view of the above, the observation by the Hon'ble ITAT that on account of litigation such as sales tax, excise duty pending in Hon'ble Delhi High Court is not a sufficient reason to apply the facts of Apex Supreme Court decision in CIT vs. Vikram Cotton Mills (Supra) where as it is not the 5 | Page litigation of these two cases of Central Excise, Sales Tax but such labour unrest which lead to the company to handover its entire wherewithal in 1988, but to fight huge number of cases using personal funds by the directors, as can be observed from the liability side of the Balance sheet Rs.35 lacs which money was taken to fight litigation case, the fact of labour and the fact of labour unrest wage heavily on assessee's present and future. Therefore, even passage of 28 years has not severed the responsibilities originating from its original activity of manufacturing T.V. It is notable that had the company not interested in continuity then why it is holding its Brand Bigston T.V. which is worth many millions of payment. Sir, the very basis of the word litigation has been wrongly applied whereas the assessee's main grounds of appeal was against the CIT(A) order who was interpreting the income from business (reflected by assessee) as income from house property, therefore, it is a mistake apparent from record and is prayed to recall subject order and oblige.” 2.1. Ld. Counsel for the assessee submitted that facts are incorrectly appreciated by the Tribunal. Therefore, it is a mistake apparent form the record. Ld. Counsel for the assessee placed reliance on the judgement of Hon’ble Supreme Court rendered in the case of Radhasoami Satsang vs CIT [1992] 193 ITR 0321 (SC). He also placed reliance on the jdugement of Hon’ble Allahabad High Court rendered in the case of Laxmi Electronic Corporation Ltd. vs CIT [1991] 188 ITR 0398 (All.HC). Therefore, he prayed that order dated 03.08.2015 in ITA No.6444/Del/2014 [Assessment year 2010-11] may be recalled and the appeal may be fixed for hearing at its original number. 3. Ld. Sr. DR opposed these submissions and submitted that by way of present M.A, the assessee is seeking the review of the order which is not permissible under law. He relied upon the judgement of Hon’ble Supreme Court rendered in the case of CIT vs M/s Reliance Telecom Ltd. in Civil Appeal 6 | Page No.7110 & 7111 of 2021 order dated 03.12.2021. He submitted that the Hon’ble Supreme Court has made it clear that the Tribunal cannot revisit its order on merit. The Tribunal can only rectify mistake which is apparent from record. 4. In re-joiner, Ld. Counsel for the assessee submitted that non- appreciation of the facts is mistake apparent from record. 5. I have heard the rival submissions and perused the material available on record. I find that the Tribunal has decided the issue by observing as under:- 5. “I have considered the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). I find that in reply to a question from the Bench, the learned counsel for the assessee has submitted that the assessee could not restart its business till date after its discontinuance in the year as back as 1988. The chairman of the assessee company is 88 years of age. I find that merely because in the past the issue was decided in favour of the assessee by the CIT(A) and the Revenue has not preferred any appeal to the Tribunal, it could not be said that the Department is precluded from assessing the income from the factory under the right head of income. I find from the chart filed at page 61 of the compilation by the assessee that the total amount involved in the litigation before Hon’ble Delhi High Court, Delhi Small Industrial Corporation Ltd., Sales Tax authorities, Central Excise authorities and Municipal Corporation of Delhi comes to `1.35 crores only. The assessee is a corporate assessee and the litigation and the amount involved in the litigation could not be said to be of that magnitude that the assessee could not restart its business during the past 27 years. The facts of the case lead to the conclusion that the assessee is no more interested in restarting its business and has let out its factory premises along with its machinery, furniture and fixtures for a fixed 7 | Page amount of rent and, therefore, the action of learned CIT(A) in directing to treat the income under the head ‘income from house property’ was justified and no interference in the same is called for. In this view of the matter, the order of learned CIT(A) is confirmed and the ground of appeal of the assessee is dismissed.” 6. By way of present M.A., the assessee is seeking recalling of the order dated 03.08.2015 in ITA No.6444/Del/2015 passed by the Tribunal. The assessee has failed to point out error which is apparent from the record and can be rectified u/s 254 of the Income Tax Act, 1961 (“the Act”). The law is clear that only mistake apparent from record can be rectified. The Hon’ble Supreme Court in the case of CIT vs M/s Reliance Telecom Ltd. (supra) has held as under:- 3. “We have heard Shri Balbir Singh, learned Additional Solicitor General of India appearing on behalf of the Revenue and Shri Anuj Berry, learned Advocate appearing on behalf of the Resolution Professional of the respondent-company. At this stage, it is required to be noted that the respondent-company / companies - respective assessees currently are undergoing corporate insolvency resolution process and the Resolution Professional is appointed. We have heard learned counsel for the Resolution Professional of the respondent- assessee. 3.1. We have considered the order dated 18.11.2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013 as well as the original order passed by the ITAT dated 06.09.2013. 3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is beyond the scope and ambit of the Commissioner Of Income Tax (11)4 vs M/s. Reliance Telecom Ltd. on 3 December, 2021 powers under 8 | Page Section 254(2) of the Act. While allowing the application under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. 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.” 7. The judgments relied by the Ld. Counsel for the assessee do not help as in the case of Radhasoami Satsang vs CIT (supra). The Hon’ble Supreme Court has clarified that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application. Therefore, respectfully following the judgmeent of Hon’ble Supreme Court in the case of CIT vs M/s Reliance Telecom Ltd. (supra), I do not see any merit in the contention of the assessee that there is a mistake apparent on record and needs to be rectified. 8. On the contrary, it would tantamount to revisit the decision of the Tribunal on merit and to disturb the observations of the Tribunal which was given after appreciating the facts on record. Thus, M.A. filed by the assessee is dismissed. 9 | Page 9. In the result, the Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the open Court on 20 th February, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI