EDWISE CONSULTANT P.LTD ( FORMELRY M.S, RIGHT FINCAP P.LTD), V. ADDL CIT 4(3),

MA 265/MUM/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1672 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SAHOO
• Keywords: Business income; Rectification of order; Salary income; Tax effect
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/201) ASSESSMENT YEAR : 2007-08 M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.), JER MAHAL, OPP. METRO CINEMA, DHOBI TALOA, MUMBAI 400 002 PAN: AAACR2363N VS. ADDL. COMMISSIONER OF INCOME TAX 4(3), ROOM NO.635, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400020 (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI MADHUR AGARWAL REVENUE BY : SHRI R.K. SAHOO, D.R. DATE OF HEARING : 31.01.2014 DATE OF PRONOUNCEMENT : 12.02.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN MOVE D BY THE ASSESSEE/APPLICANT UNDER SECTION 254(2) OF THE INCO ME TAX ACT, FOR RECALLING OF THE ORDER DATED 19.04.13 PASSED IN ITA NO.391/M/201 1 PLEADING THAT THERE IS A MISTAKE APPARENT ON THE RECORD IN THE ABOVE SAID OR DER. 2. THE MISTAKES ALLEGED TO BE CREPT IN THE ORDER, W HICH THE ASSESSEE HAS CLAIMED TO BE APPARENT ON RECORD, HAVE BEEN MENTION ED IN PARAGRAPH 2 (I) OF THE APPLICATION WHICH, FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: I. THE APPLICANT SUBMITS THAT THE FOLLOWING MISTAKES ARE APPARENT M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 2 FROM THE RECORD IN THE ORDER PASSED BY THE HON'BLE TRIBUNAL DATED 19 TH APRIL, 2013:- (1) THE HON'BLE TRIBUNAL HAD PROCEEDED ON THE FOOTING THAT MR. AJAY SUKHWANI WAS PAID RS.3,60,000/- AS SALARY AND AN AD DITIONAL SUM OF RS.3,60,000/- AS CONSULTATION CHARGES AND IN ADDITI ON THERETO MR. AJAY SUKHWANI HAD A BUSINESS INCOME OF RS.2,82,534/-. TH E TRIBUNAL ERRED IN NOT APPRECIATING THAT MR. AJAY SUKHWANI WAS PAID ONLY THE CONSULTATION CHARGES OF RS.3,60,000/- AND NOT RS.7, 20,000/- AS STATED BY THE TRIBUNAL. FURTHER, THE SAID CONSULTATION INC OME HAS BEEN OFFERED UNDER THE HEAD 'INCOME FROM BUSINESS AND PR OFESSION' AT RS. 2,82,534/- AFTER REDUCING THE EXPENDITURE INCURRED BY THE ASSESSEE. THEREFORE, THE INCOME OF RS.2,82,534/- IS NOT FROM SOME OTHER BUSINESS BUT IS THE SAME CONSULTATION CHARGES WHICH MR. AJAY SUKHWANI HAS RECEIVED FROM THE APPLICANT. THE APPLICANT SUBMITS THAT THE WHOLE BASIS OF DECIDING THE APPEAL THAT MR. AJAY SUKHWANI HAS RECEIVED RS.3,60,000/- + RS. 3,60,000/- FROM THE APPLICANT A ND HAS AN ADDITIONAL BUSINESS INCOME OF RS.2,82,534/- IS FACT UALLY INCORRECT AND, THEREFORE, THERE IS A MISTAKE APPARENT FROM THE REC ORD, AND THE ORDER OF THE TRIBUNAL OUGHT TO BE RECALLED. (2) THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN T HE CASE OF CIT V/S INDO-SAUDI SERVICES (TRAVELS) P. LTD. (SUPRA) WHICH WAS RELIED ON BY THE APPLICANT DURING THE COURSE OF THE ARGUMENT BEFORE THE TRIBUNAL AND WHICH IS DIRECTLY APPLICABLE ON THE FACTS OF TH E PRESENT CASE, HAS NOT BEEN CONSIDERED BY THE TRIBUNAL IN DECIDING THE APPEAL AND, HENCE, THERE IS MISTAKE APPARENT FROM THE RECORD. T HE HON'BLE BOMBAY HIGH COURT HAS HELD THAT, IF THERE IS NO ATTEMPT TO EVADE TAX, THEN, PAYMENTS MADE TO RELATIVES OR SISTER CONCERNS CANNO T BE DISALLOWED UNDER SECTION 40A(2) OF THE ACT. THE APPLICANT SUBMITS THAT ALTHOUGH THE TRIBUNAL HA S RECORDED THE ARGUMENT OF THE APPLICANT THAT THERE IS NO EVASION OF TAX AS THE DIRECTORS ARE ALSO PAYING TAX AT THE MAXIMUM RATE A T PARA 4 IF ITS ORDER, THE TRIBUNAL HAS ERRED IN NOT CONSIDERING TH E SAID ARGUMENT AND THE DECISION OF THE JURISDICTIONAL HIGH COURT W HICH GIVES RISE TO A MISTAKE APPARENT FROM THE RECORD. (3) THE APPLICANT SUBMITS THAT THE APPLICANT HAD RELIE D ON THE BOARD'S CIRCULAR NO.6-P DATED 6 TH JULY, 1968, TO ARGUE THAT IF THERE IS NO EVASION OF TAX, THEN PROVISION OF SECTION 40A (2)(B) IS NOT M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 3 APPLICABLE. THE HON'BLE TRIBUNAL HAS FAILED TO CONS IDER THE SAME IN ITS ORDER, WHICH GIVES RISE TO THE MISTAKE APPARENT FROM THE RECORD. (4) THE TRIBUNAL HAS CONCLUDED THAT THE THREE DIRECTOR S ARE NOT WORKING WITH THE APPLICANT ON FULL-TIME BASIS AS TH EY ARE DERIVING SALARY INCOME FROM OTHER COMPANIES OR THEY HAVE BUS INESS PROFITS AS SHOWN IN THE RETURN OF INCOME. THE APPLICANT SUBMIT S THAT THIS FINDING OF THE TRIBUNAL IS FACTUALLY ERRONEOUS AND INCORRECT. THE TRIBUNAL ERRED IN NOT APPRECIATING THAT THE OTHER S ALARY INCOMES OF RS. 2,10,000/- AND RS.1,50,300/- RECEIVED BY MR. AS SAN SUKHWANI AND RS.2,10,000/- RECEIVED BY MR. AJAY SUKHWANI, IS BECAUSE BOTH OF THEM ARE DIRECTORS IN OTHER COMPANIES AND AS DIRECT ORS, THEY ARE ENTITLED TO RECEIVE SALARY INCOME AND ARE NOT WORKI NG WITH THOSE COMPANIES. THE APPLICANT SUBMITS THAT IT WAS NEITHE R THE CASE OF THE ASSESSING OFFICER NOR THE COMMISSIONER OF INCOME-TA X (APPEALS) THAT THE THREE DIRECTORS ARE NOT WORKING WITH THE A PPLICANT ON FULL- TIME BASIS. FURTHER, IT WAS NOT EVEN THE ARGUMENT O F THE RESPONDENT BEFORE THE TRIBUNAL. AND AS THE HON'BLE BENCH HAD A LSO NOT RAISED THIS ISSUE AT THE TIME OF THE HEARING, THE APPLICAN T HAD NO OPPORTUNITY TO EXPLAIN THE SAME. THE TRIBUNAL FAILED TO APPRECI ATE THAT A PERSON CAN BE A DIRECTOR IN MORE THAN ONE COMPANY, HOWEVER , HE CAN BE A WORKING DIRECTOR IN ONE OF THE SAID COMPANIES. THEREFORE, THE ORDER OF THE TRIBUNAL RAI SES A MISTAKE APPARENT FROM THE RECORD. (5) THE TRIBUNAL HAS HELD THAT THE A.R. COULD NOT POIN T OUT AS TO WHAT EXTRA SERVICES WERE OFFERED BY MR. AJAY SUKHWANI FO R THE EXTRA INCENTIVE OF RS.10 LAKHS PAID TO HIM. THE TRIBUNAL ERRED IN NOT APPRECIATING THAT UNDER SECTION 40A(2)(B) OF THE AC T WHAT HAS TO BE SEEN IS WHETHER RS.13,60,000/- AS PAID TO MR. AJAY SUKHWANI IS REASONABLE ON THE BASIS OF THE SERVICES RENDERED BY HIM AND NOT WHETHER THE ADDITIONAL RS.10 LAKHS HAS BEEN PAID IN THE RELEVANT YEAR FOR ANY EXTRA SERVICES WHICH HAVE BEEN RENDERED BY HIM. THE TRIBUNAL ERRED IN NOT APPRECIATING THAT, INCENTIVE PAYMENT I S NEVER ON THE BASIS OF EXTRA SERVICES RENDERED BY ANY PERSON, AS THE SA ME WOULD BE IN THE NATURE OF OVERTIME PAYMENT. THE APPLICANT SUBMITS T HAT THE ORDER OF THE TRIBUNAL TREATING INCENTIVE AKIN TO AN OVERTIME PAYMENT IS A MISTAKE APPARENT FROM THE RECORD. (6) AT PARAGRAPH 5 OF THE ORDER, THERE IS A FINDING TH AT IF THE DIRECTORS HAVE NOT RECEIVED ANY REMUNERATION IN THE PAST, IT DOES NOT MEAN THAT M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 4 THEY ARE BARRED FROM RECEIVING REASONABLE REMUNERAT ION FOR THEIR SERVICES TO THE APPLICANT IN REQUIREMENT OF THE LEG ITIMATE NEEDS OF BUSINESS OF THE COMPANY. THE APPLICANT SUBMITS THAT THE AFORESAID OBSERVATION OF THE TRIBUNAL IS CONTRADICTORY TO THE FINDING OF THE TRIBUNAL THAT THE APPLICANT HAS NOT BEEN ABLE TO SH OW WHAT EXTRA SERVICES WERE PROVIDED OR OFFERED BY MR. AJAY SUKHW ANI FOR RECEIVING THE EXTRA INCENTIVE OF RS.L0 LAKHS. THEREFORE, THE APPLICANT SUBMITS THAT THERE IS A MISTAKE APPARENT FROM THE RECORD IN THE ORDER OF THE TRIBUNAL. (7) THE TRIBUNAL, AFTER HAVING ACCEPTED THAT THE REMUN ERATION SHOULD BE PAID TO MR. ASSAN SUKHWANI AND MR. SUSHIL SUKHWA NI, ERRED IN ONLY STATING THAT THE REASONABLE REMUNERATION FOR T HEM OUGHT TO BE RS.30,000/- PER MONTH I.E., RS.3,60,000/- PER YEAR CONSIDERING THEIR EDUCATIONAL QUALIFICATION AND WORK EXPERIENCE. 3. IN PARA 2. I (1) OF THE APPLICATION, THE ASSESSE E HAS CLAIMED THAT THE TRIBUNAL, VIDE IMPUGNED ORDER, HAS OBSERVED THAT MR . AJAY SUKHWANI, DIRECTOR OF THE COMPANY WAS PAID RS.3,60,000/- AS SALARY AND AN ADDITIONAL SUM OF RS.3,60,000/- AS CONSULTATION CHARGES TOTALING RS.7 ,20,000/-. HOWEVER, MR. AJAY SUKHWANI WAS IN FACT PAID RS.3,60,000/- ONLY A S CONSULTATION CHARGES OUT OF WHICH MR. AJAY SUKHWANI HAS OFFERED THE NET INCO ME OF RS.2,82,534/- IN HIS RETURN OF INCOME UNDER THE HEAD INCOME FROM BUSINE SS AND PROFESSION AFTER REDUCING THE EXPENDITURE INCURRED BY THE ASSESSEE. 4. WE HAVE GONE THROUGH THE RECORD OF THE CASE. IT MAY BE OBSERVED FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAD CLAIMED PAYMENT OF REMUNERATION INCLUDING INCENTIVE TO MR. AJAY SUKHWANI AMOUNTING TO RS.13,60,000/- AS MENTIONED IN PARA 4 OF THE ASSESSMENT ORDER, UNDER THE HEAD INCENTIVE TO DIRECTORS, OUT OF WHICH A SUM OF RS.3,60,000/- HAS BEEN CLAIMED TO BE PAID TO SAID MR. AJAY SUKHWANI AS SALARY AND THE REMAINING RS.10,00,000/- AS INCENTIVE. THE AO ALLOWED THE SALARY PAYMENT AS DE DUCTION WHEREAS DISALLOWED THE INCENTIVE PAYMENT OF RS.10,00,000/- CLAIMED TO BE PAID TO M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 5 MR. AJAY SUKHWANI. IN THE PARA 5 UNDER THE HEAD C ONSULTATION CHARGES A PAYMENT OF RS.3,60,000/- HAS BEEN CLAIMED TO BE PAI D BY THE ASSESSEE TO THE SAID MR. AJAY SUKHWANI WHICH WAS DISALLOWED BY THE AO. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 5. IN THE STATEMENT OF FACTS SUBMITTED BEFORE THE L D. CIT(A) DULY SIGNED BY MR. ASSAN SUKHWANI, ANOTHER DIRECTOR OF THE COMPANY , THE ASSESSEE HAD SPECIFICALLY MENTIONED THAT A SUM OF RS.13,60,000/- WAS PAID BY THE ASSESSEE TO MR. AJAY SUKHWANI WHICH INCLUDES A SALARY PAYMENT O F RS.3,60,000/-. UNDER CONSULTATION CHARGES PAID TO RELATED PARTIES RS.9 ,60,000/- HAS BEEN CLAIMED OF WHICH A SUM OF RS.3,60,000/- HAS BEEN SHOWN TO B E PAID TO MR. AJAY SUKHWANI, WHICH DEDUCTION HAS BEEN SEPARATELY CLAIM ED UNDER THE HEAD INCENTIVE TO DIRECTORS. FURTHER, THE LD. CIT(A) VIDE ORDER DATED 21.09.10 THOUGH CONFIRMED THE DISALLOWANCE OF PAYMENT OF RS. 30,00,000/- PAID AS INCENTIVE TO THE DIRECTORS INCLUDING RS.10,00,000/- TO MR. AJAY SUKHWANI, ALLOWED THE PAYMENT OF CONSULTATION CHARGES OF RS.9 ,60,000/- TO RELATED PARTIES INCLUDING A PAYMENT OF RS.3,60,000/- TO MR. AJAY SU KHWANI. THUS, THE ASSESSEE CLAIMED THE TOTAL PAYMENT OF RS.17,20,000/ - TO MR. AJAY SUKHWANI OUT OF WHICH A CLAIM OF DEDUCTION OF RS.7,20,000/- HAD ALREADY BEEN ALLOWED TO THE ASSESSEE BY THE LOWER AUTHORITIES. 6. THE ASSESSEE HAD COME INTO APPEAL BEFORE THE TRI BUNAL INTER ALIA CHALLENGING THE VARIOUS DISALLOWANCES MADE BY LOWER AUTHORITIES INCLUDING THE DISALLOWANCE OF RS.10,00,000/- PAID TO MR. AJAY SUK HWANI. NOW THE ASSESSEE WITHOUT PRODUCING ANY MATERIAL ON RECORD AND AFTER ALREADY CLAIMING THE DEDUCTION OF RS.7,20,000/- PAID AS SALARY PLUS CONS ULTATION CHARGES TO MR. AJAY SUKHWANI HAS CLAIMED THROUGH THIS APPLICATION THAT ONLY A SUM OF RS.3,60,000/- WAS PAID TO MR. AJAY SUKHWANI. THE A SSESSEE NEVER CLAIMED BEFORE THE LOWER AUTHORITIES THAT ONLY A SUM OF RS. 3,60,000/- WAS PAID TO MR. M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 6 AJAY SUKHWANI AS SALARY AND CONSULTATION CHARGES AN D NOT A SUM OF RS.3,60,000/- FOR EACH OF THE ABOVE ACCOUNT TOTALI NG RS.7,20,000/-. RATHER THE ASSESSEE CONTINUED TO ENJOY THE BENEFIT OF DEDUCTIO N OF RS.7,20,000/- ALLOWED BY THE LOWER AUTHORITIES. 7. NOW THE ASSESSEE HAS COME WITH A NEW CASE THAT O NLY A SUM OF RS.3,60,000/- WAS PAID TO MR. AJAY SUKHWANI ON ACCO UNT OF CONSULTATION CHARGES AND THIS TRIBUNAL HAS COMMITTED AN ERROR WH ILE OBSERVING THAT A SUM OF RS.7,20,000/- (RS.3,60,000/-FOR SALARY + RS.3,60,00 0/- FOR CONSULTATION CHARGES) WAS PAID TO MR. AJAY SUKHWANI. THIS PLEAD ING OF THE ASSESSEE IS NOT ONLY AGAINST THE OWN CASE OF THE ASSESSEE BEFORE TH E LOWER AUTHORITIES BUT ALSO AGAINST THE FACTS ON RECORD. 8. IN THE NEXT PARA I.E. 2.I.(2), THE ASSESSEE HAS CLAIMED THAT THIS TRIBUNAL HAS FAILED TO TAKE NOTE OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. INDO-SAUDI SERVICES (TRAVELS) P . LTD. [(2009) 310 ITR 306 BOM.] WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HEL D THAT IF THERE IS NO ATTEMPT TO EVADE TAX THEN PAYMENT MADE TO RELATIVES OR SISTER CONCERNS CANNOT BE DISALLOWED UNDER SECTION 40A(2) OF THE INCOME TA X ACT (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSEE HAS CLAIMED THAT IT WAS ARGUED BEFORE THE TRIBUNAL THAT THERE WAS NO EVASION OF TAX AS THE DI RECTORS WERE ALSO PAYING TAX AT THE MAXIMUM RATE, HENCE THERE IS A MISTAKE APPAR ENT ON THE RECORD IN NOT CONSIDERING THE ABOVE SAID DECISION OF THE HONBLE BOMBAY HIGH COURT. THOUGH, AS OBSERVED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF PREM COLONISERS (P.) LTD. [(2013) 56 SOT 121], TH E MISTAKES WHICH CAN BE RECTIFIED UNDER SECTION 254(2) SHOULD BE ONE WHICH IS PATENT, OBVIOUS AND WHOSE DISCOVERY IS NOT DEPENDENT ON ARGUMENT OR ELA BORATION. HOWEVER, A DECISION ON A DEBATABLE POINT OF LAW OR FACT OR FAI LURE TO APPLY THE LAW TO A SET OF FACTS WHICH REMAINS TO BE INVESTIGATED CANNOT BE CORRECTED BY WAY OF M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 7 RECTIFICATION. MERELY BECAUSE A DECISION CITED BY THE ASSESSEE HAS NOT BEEN DISCUSSED IN THE ORDER THAT ITSELF CANNOT BE SAID T O BE A MISTAKE APPARENT ON THE RECORD OF LAW ESPECIALLY WHEN THE SAID DECISION HAS NO BEARING ON THE ULTIMATE CONCLUSION ARRIVED AT BY THE TRIBUNAL. THE PLEADIN G OF THE ASSESSEE THAT THERE WAS NO EVASION OF TAX AS THE DIRECTORS HAD PAID TAX ES AT THE HIGHEST RATE IS NOT CORRECT. IT MAY BE OBSERVED THAT THE COMPANY HAS P AID THE AMOUNT IN QUESTION TO THE DIRECTORS AS INCENTIVES TO ESCAPE FROM THE P ROVISIONS OF SECTION 115.O OF THE ACT. IF THE SAID AMOUNT WOULD HAVE BEEN PAID BY THE COMPANY TO THE DIRECTORS AS DIVIDEND, THE COMPANY WOULD HAVE BEEN LIABLE TO PAY ADDITIONAL TAX AT THE RATE OF 12.5% (WHICH HAS BEEN INCREASED TO 15% BY FINANCE ACT, 2007 W.E.F. 01.04.07) WHICH THE COMPANY TRIED TO AV OID BY PAYING THE AMOUNT IN QUESTION AS INCENTIVES AND NOT AS DIVIDEND TO TH E DIRECTORS. SO THE PLEADING THAT THERE WAS NO ATTEMPT TO EVADE TAX IS WRONG AND FALSE, HENCE THE CASE LAW RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO TH E FACTS OF THE CASE OF THE ASSESSEE. MERELY BECAUSE THE SAME HAS NOT BEEN DIS CUSSED IN THE ORDER, THAT ITSELF CANNOT BE SAID TO BE A MISTAKE APPARENT ON T HE RECORD OF THE ORDER. 9. VIDE PARA 2.I.(3), THE ASSESSEE HAS AGAIN RELIED UPON A BOARDS CIRCULAR TO ARGUE THAT IF THERE IS NO EVASION OF TAX THEN PROVI SION OF SECTION 40A(2)(B) IS NOT APPLICABLE. IN VIEW OF OUR ABOVE DISCUSSION OF THE MATTER, WE HAVE ALREADY OBSERVED THAT IT WAS A CASE OF EVASION OF TAX BY WA Y OF ESCAPING THE PROVISIONS OF SECTION 115.O OF THE ACT, HENCE THIS CONTENTION OF THE ASSESSEE IS ALSO PROVED TO BE WRONG. EVEN OTHERWISE THE ABOVE CANNO T BE SAID TO BE A MISTAKE APPARENT ON RECORD. 10. VIDE PARA 2.I (4), THE ASSESSEE HAS CLAIMED THA T THE TRIBUNAL HAS ERRED IN CONCLUDING THAT THE THREE DIRECTORS OF THE COMPANY WERE NOT WORKING ON FULL TIME BASIS AS THEY WERE DERIVING SALARY INCOME FROM OTHER COMPANIES OR THEY HAVE BUSINESS PROFITS IN THEIR RETURN OF INCOME. T HE APPLICANT THROUGH THIS M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 8 GROUND HAS CONTESTED THE FINDING OF FACTS ARRIVED A T BY THE TRIBUNAL ON THE MERITS OF THE CASE. THE TRIBUNAL AFTER DETAILED DI SCUSSION OF THE MATTER AS WELL AS AFTER ANALYZING THE FACTS AND MATERIAL ON RECORD INCLUDING THE INCOME TAX RETURNS OF THE DIRECTOR HAS GIVEN A FINDING OF THE FACT WHICH CANNOT BE SAID TO BE A MISTAKE APPARENT ON THE RECORD. IT WAS THE ASSES SEE WHO HAS CLAIMED THAT THE THREE DIRECTORS OF THE COMPANY TO WHOM THE INCENTIV E OF RS.10,00,000/- EACH WAS CLAIMED TO BE PAID, WERE FULLTIME DIRECTORS AND THE SAME WAS PAID TO THEM IN LIEU OF THEIR SERVICES, WHICH WAS DISALLOWED BY THE AUTHORITIES BELOW. HENCE, IT WAS INCUMBENT UPON THIS TRIBUNAL TO DISCU SS THIS CONTENTION OF THE ASSESSEE AS TO WHETHER THE PAYMENT OF INCENTIVES PA ID TO THE DIRECTORS WAS JUSTIFIED OR NOT. EVEN OUT OF RS.10,00,000/- EACH PAID TO THE OTHER TWO DIRECTORS A SUM OF RS.3,60,000/- EACH HAS BEEN ALLO WED BY THE TRIBUNAL VIDE IMPUGNED ORDER IN CASE OF OTHER TWO DIRECTORS EXCEP T MR. AJAY SUKHWANI, IN CASE OF WHOM THE TRIBUNAL OBSERVED THAT RS.3,60,000 /- HAD ALREADY BEEN PAID IN VIEW OF HIS SERVICES OF CONSULTATION CHARGES APA RT FROM SALARY OF RS.360000/- AND FURTHER PAYMENT OF RS. 10 LACS AS INCENTIVE TO HIM WAS NOT JUSTIFIED. 11. EVEN IF THE PLEA OF THE ASSESSEE IS TO BE ADMIT TED THAT NO CONSULTATION CHARGES WERE PAID TO MR. AJAY SUKHWANI, THEN THE DE DUCTION CLAIMED BY THE ASSESSEE IN THIS RESPECT WILL BE REQUIRED TO BE DEL ETED AND ACCORDINGLY THE INCENTIVE CLAIM AS ALLOWED TO THE OTHER TWO DIRECTO RS OF THE COMPANY AT THE RATE OF RS.3,60,000/- IS TO BE ALLOWED TO MR. AJAY SUKHW ANI. THE NET TAX EFFECT OF ANY SUCH DISALLOWANCE/DEDUCTION WILL BE NIL IN THAT EVENT ALSO. 12. THE REST OF THE AVERMENTS MADE IN SUB PARA NUMB ERS (5) TO (7) OF PARA 2.I OF THE APPLICATION ARE THE CONTENTIONS OF THE ASSES SEE RAISED ON MERITS OF THE CASE AND DO NOT POINT OUT ANY MISTAKE APPARENT ON T HE RECORD. 13. THE ASSESSEE EARLIER CLAIMED DEDUCTION OF RS.7, 20,000/- O N ACCOUNT OF PAYMENT OF RS.3,60,000/- AS SALARY AND FURTHER PAYM ENT OF RS.3,60,000/- AS M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 9 CONSULTATION CHARGES TO MR. AJAY SUKHWANI WHICH WAS ALLOWED BY THE AUTHORITIES BELOW, NOW, WHEN IT HAS FAILED IN ITS A TTEMPT TO CONVINCE THE TRIBUNAL ABOUT JUSTIFICATION OF PAYMENT OF ANOTHER RS.10,00,000/- AS INCENTIVE TO MR. AJAY SUKHWANI HAS COME UP WITH THE PLEA THAT THE EARLIER DEDUCTION OF EXPENDITURE AT RS.3,60,000/- PAID TO MR. AJAY SUKHW ANI AS SALARY WAS WRONGLY CLAIMED BY THE ASSESSEE. ONE MORE INTERESTING FACT ON THE FILE IS THAT THE ASSESSEE AFTER THE ASSESSMENT ORDER DATED 24.11.09 HAD MADE AN APPLICATION FOR RECTIFICATION OF MISTAKE UNDER SECTION 154 OF THE A CT TO THE AO RELATING TO SOME DOUBLE ASSESSMENT OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, THE ASSESSEE DID NOT POINT OUT IN THE SAID RECTIFICATION APPLICATION THAT THE ASSESSEE HAD CLAIMED A DOUBLE DEDUCTION IN CASE OF PAYMENT PAID TO MR. AJAY SUKHWANI. NOT ONLY THIS, THE ASSESSEE CONTINU ED TO CONTEST THE DISALLOWANCE CLAIMED TO BE PAID AS CONSULTATION CHA RGES TO RELATED PARTIES INCLUDING RS.3,60,000/- TO MR. AJAY SUKHWANI BEFORE THE CIT(A), WHICH WAS IN FACT ALSO ALLOWED TO THE ASSESSEE. EVEN THEREAF TER THE ASSESSEE DID NOT MOVE ANY RECTIFICATION APPLICATION. THE ASSESSEE EVEN D ID NOT POINT OUT THIS DOUBLE BENEFIT CLAIMED AND ALLOWED TO THE ASSESSEE DURING THE ARGUMENT ON MERITS IN THE MAIN APPEAL BEFORE THIS TRIBUNAL. HOWEVER, WHE N DEFINITE FACTUAL OBSERVATIONS WERE MADE BY THE TRIBUNAL THAT AN AMOU NT OF RS.7,20,000/- HAD ALREADY BEEN PAID TO MR. AJAY SUKHWANI AND NO FURTH ER INCENTIVE WAS JUSTIFIED THEN THE ASSESSEE HAS COME UP WITH THE STAND THAT T HE EARLIER DEDUCTION WAS WRONGLY CLAIMED BY THE ASSESSEE. WE MAY FURTHER ADD THAT IF THE AVERMENTS AS MADE IN THE APPLICATION ARE TAKEN TO BE CORRECT, TH E ASSESSEE MIGHT HAVE PUT ITSELF INTO THE RISK OF INITIATION OF PENALTY AND P ROSECUTION PROCEEDINGS AGAINST IT UNDER THE RELEVANT PROVISIONS OF THE ACT FOR FUR NISHING FALSE STATEMENT OF ACCOUNTS AND THEREBY CONCEALING THE ACTUAL INCOME. HOWEVER, SINCE WE HAVE M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 10 NOT ACCEPTED THE CONTENTION OF THE ASSESSEE, WE DO NOT DEEM IT PROPER TO FURTHER DELIBERATE ON THIS ASPECT OF THE MATTER IN THE PRES ENT RECTIFICATION APPLICATION. 14. THE ASSESSEE THROUGH THIS APPLICATION HAS ATTE MPTED TO DISSECT THE ORDER OF THE TRIBUNAL INTO PIECES THEN TO VENT OUT HIS DI SSATISFACTION REGARDING THE FINDING ARRIVED AT BY THE TRIBUNAL ON THE FACTUAL M ATRIX OF THE CASE IN THE GARB OF APPLICATION UNDER SECTION 254(2) ALLEGING MISTAK ES APPARENT ON THE RECORD. THE ALLEGED MISTAKES POINTED OUT BY THE ASSESSEE DO NOT FALL IN ANY MANNER EVEN IN THE DEFINITION OF MISTAKES, WHAT TO SAY OF ANY MISTAKE APPARENT ON THE RECORD. IF THE ASSESSEE HAD NOT BEEN SATISFIED WITH THE ORDER OF THE TRIBUNAL, THE PROPER COURSE FOR HIM WAS TO FILE AN APPEAL BEFORE THE HIGHER APPELLATE AUTHORITY. EVEN THE SCOPE OF PROVISIONS OF SECTION 254(2) IS VERY LIMITED AND THIS TRIBUNAL HAS GOT NO AUTHORITY TO RECALL OR REV IEW ITS ENTIRE ORDER PASSED ON MERITS OF THE CASE. DIFFERENT BENCHES OF THE TRIBUN AL HAVE TIME AND AGAIN DEPRECIATED THE PRACTICE OF RE-CONTESTING THE MATTE R ON MERITS OF THE CASE IN THE GARB OF THE RECTIFICATION APPLICATION UNDER SECTION 254(2) OF THE ACT. SUCH A PRACTICE ON THE PART OF THE ASSESSEE IS STRONGLY DE PRECIATED IN THIS CASE ALSO. HOWEVER, WE REFRAIN OURSELVES THIS TIME FROM IMPOSI NG EXEMPLARY COSTS ON THE ASSESSEE. 15. IN VIEW OF OUR ABOVE OBSERVATIONS, THE APPLICAT ION OF THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.2014. SD/- SD/- (D. KARUNAKARA RAO) (SANJAY GARG) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATED: 12 TH FEBRUARY 2014. * KISHORE M.A. NO.265/M/2013 (ARISING OUT OF ITA NO.391/M/2011) M/S. RIGHT FINCAP PVT. LTD. (FORMERLY KNOWN AS EDWISE CONSULTANTS PVT. LTD.) 11 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.