PFIZER PRODUCTS INDIA P. LTD, V. DCIT 8(2),

MA 291/MUM/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2549 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARMINDAR
• Keywords: Rectification of order; Rule of consistency
• Section: 143(3); 194C

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH. , , ! BEFORE S.SH.VIJAY PAL RAO,JUDICIAL MEMBER AND RAJEN DRA,ACCOUNTANT MEMBER MA NO.291/MUM/2014-ARISING OUT OF ITA NO. 3158/MUM /2012 ASSESSMENT YEAR 2007-08 PFIZER PRODUCTS INDIA PVT. LTD. 5,PATEL ESTATE, OFF. S.V. ROAD, JOGESHWARI (WEST), MUMBAI- 400102 V/S. DCIT 8(2), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400 020. PAN: AADCP8985B ( '# / APPELLANT ) ( $%'# / RESPONDENT ) '# '# '# '# & & & & / APPELLANT BY: :SHRI KIRIT KAMDA R $%'# ' & / RESPONDENT BY : MS.PARMINDAR ( ( ( ( ' '' ' )* )* )* )* / DATE OF HEARING : 05 -09-2014 +,- ' )* / DATE OF PRONOUNCEMENT :31 -10-2014 ORDER PER RAJENDRA, A.M. VIDE ITS APPLICATION DATED 22.05.2014,THE ASSESSEE- COMPANY HAS STATED THAT THERE WERE MISTAKES IN THE ORDER PASSED BY THE TRIBUNAL,ON 09. 10.2013,WHILE ADJUDICATING THE APPEAL FILED FOR THE AY.2007-08, THAT SAME SHOULD BE RECTI FIED AS THE PROVISIONS OF SECTION 254(2) OF THE ACT. 2. AS PER THE ASSESSEE,THE FIRST APPELLATE AUTHORITY(F AA)HAD CONFIRMED THE DISALLOWANCE MADE BY THE THE ASSESSING OFFICER(AO),AMOUNTING TO RS.10.90 CRORES,U/S.40(A)(IA)OF ACT,THAT THE ASSESSEE HAD PAID SAID AMOUNT TO PFIZER LIMITED (PL),THAT THE BASIS OF COST SHARING WAS THE EXACT REIMBURSE -MENT OF THE COST OF THE IDENTIFIED PERSONNEL WITHOUT MARK UP,THAT WHILE DECIDING THE APPEAL THE TRIBUNAL HAD NOT CONSIDERED CLAUSE 3.4OF THE COST SHARING AGREEMENT(CSA),THAT THE ASSESSEE HAD RELIED UPON TH E ORDER OF BAYER MATERIAL SCIENCES(ITA/ 7977/MUM/2011),THAT THE ASSESSEE TRIBUNAL HAD HELD THAT FACTS OF BOTH THE CASES WERE DIFFERENT,THAT WHILE ARRIVING AT THE CONCLUSION THE TRIBUNAL HAD COMPLETELY IGNORED THE CLAUSE 3.4 OF THE CSA,THAT THERE WAS OMISSION TO DEAL WITH REGARD TO SAID CALUSE,THAT NOT CONSIDERING THE CLAUSE WAS A MISTAKE APPARENT FROM THE RECORD. 3. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE(AR)MADE THE SAME SUBMISSIONS THAT ARE PART OF THE APPLICATION FILED BY THE ASSESSEE.DEPARTMENTAL REPRESENTATIVE (DR) STATED THAT THE ASSESSEE WAS ASKING FOR REVIEW OF THE ORDER WHICH WAS NOT PERMISSIBLE UNDER THE PROVISIONS OF SECTION 254(2)OF THE ACT. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.IN THE CASE UNDER CONSIDERATION BASIC ISSUE WAS APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA)OF THE ACT. WHILE DECIDING THE APPEAL THE TRIBUNAL HAD HELD AS UNDER: 2.4.B. NOW,WE WOULD LIKE TO TAKE REMAINING TWO ITEMS I.E. STAFF COST AND ADVERTISING AND PROMOTIONAL EXPENSES.FROM THE PB FILED BY THE ASSES SEE,(PG.13-14) IT IS CLEAR THAT SAID EXPENDITURE PERTAINED TO MARKETING AND FIELD-SELLIN G ACTIVITIES CARRIED OUT DURING THE YEAR UNDER CONSIDERATION. BUT,IT IS NOT CLEAR AS TO HOW THE ASSESSEE ARRIVED AT THE CONCLUSION THAT PAYMENTS MADE BY IT FOR SAID ACTIVITIES WERE PURE R EIMBURSEMENT.AR ALSO COULD NOT THROW LIGHT IN THIS REGARD,WHEN A SPECIFIC QUERY RAISED B Y THE BENCH,DURING THE COURSE OF HEARING BEFORE US. MA/291/214 PFIZER LTD. 2 NOW,WE WOULD LIKE TO DISCUSS THE EXPENDITURE INCURR ED THE HEAD STAFF COST.AR AS WELL AS THE DR HAD REFERRED TO THE COST SHARING AGREEMENT DATED 21.11.2003 TO STRENGTHEN THEIR SUBMISSIONS. AR REFERRED TO CLAUSES 2.3 AND 2.4 OF THE AGREEMENT,WHEREAS DR REFERRED TO CL.3.1.TO 3.4.WE WOULD LIKE TO REPRODUCE THE RELEVA NT CLAUSES: X X X X FROM THE ABOVE IT IS CLEAR THAT THE AGREEMENT TALKS OF ESTIMATION OF EXPENSE.IN OUR OPINION,WHEN THERE WAS ONLY ESTIMATION,HOW COULD AS SESSEE CLAIM THAT THE PAYMENT MADE WAS REIMBURSEMENT ONLY.IN THE PAPER BOOK FILED BY THE A SSESSEE,WE HAD NOT FOUND ANY DOCUMENT THAT COULD THROW LIGHT THE BASIS OF CALCULATING THE FIGURES OF SO CALLED REIMBURSEMENT.IN THE DEBIT NOTES SOME PERCENTAGE IS MENTIONED,BUT HOW TH AT PERCENTAGE WAS ARRIVED AT,IS NOT KNOWN NOR WAS IT EXPLAINED TO US.IN THESE CIRCUMSTA NCES,WE AGREE WITH THE FAA THAT PAYMENT IN QUESTION WAS NOT PURE AND SIMPLE REIMBURSEMENT.D ETAILS LIKE NATURE OF SERVICES RENDERED BY THE EMPLOYEES ALONG WITH THE WORKING HOURS SPENT ,GRADE AND SALARIES OF THE EMPLOYEES OF THE ASSESSEE AND EMPLOYEES OF PL, WHO HAD RENDERED THE SERVICES TO THE ASSESSEE;ARE SOME OF THE ELEMENTS THAT COULD PROVE EXISTENCE OR OTHERWIS E OF THE PROFIT OF ELEMENT.WE TAKE AN EXAMPLE OF AN ACCOUNTANT OF THE ASSESSEE WHO IS IN WORKING WITH IT IN A PARTICULAR PAY- GRADE.IF SOME PORTION OF HIS JOB IS CARRIED OUT BY AN ACCOUNTANT OF PL;WHO IS IN LOWER PAY- GRADE THEN PAYMENT MADE TO THAT PERSON CANNOT BE TE RMED A PAYMENT WHERE NO PROFIT IS EMBEDDED.FOR CLAIMING A PAYMENT REIMBURSEMENT,ASS ESSEE IS REQUIRED TO BRING SUFFICIENT MATERIAL ON RECORD, BUT IN THE CASE UNDER CONSIDERA TION SUCH MATERIAL IS NOT AVAILABLE.BY TREATING THE PAYMENTS- IN-QUESTION REIMBURSEMENT, ASSESSEE HAS TAKEN OVER THE ROLE OF THE AO.IT IS THE DUTY RATHER RIGHT OF THE AO TO DECIDE THE NATURE OF PAYMENTS AS WHETHER SAME IS REIMBURSEMENT OR NOT.IF THE ASSESSEES ARE ALLOWED T O DECIDE THE TAXABILITY OR OTHERWISE OF CERTAIN PAYMENTS,THE INSTITUTION OF AO WILL BECOME REDUNDANT.IN A RECENT CASE,HONBLE ALLAHABAD HIGH COURT HAS HELD THAT AN EMPLOYER IS N OT COMPETENT TO DETERMINE THE ALLOWANCES,WHICH ARE EXEMPT FROM TAX ( 2013-TIOL-720-HC-ALL-IT).ON THE SAME ANALOGY AN ASSESSEE IS NOT COMPETENT TO HOLD THAT WHETHER ANY PAYMENT IS PURELY REIMBURSEMENT OR NOT ESPECIALLY WHEN IT DOES NOT PRODUCE COGENT AND RELI ABLE DOCUMENTARY EVIDENCES AT THE FIRST AVAILABLE OPPORTUNITY.HONBLE APEX COURT,IN THE MAT TER OF TRANSMISSION CORPORATION OF A.P.LTD.(239ITR587),HAS HELD THAT IF PROFIT IS EMBE DDED IN A PAYMENT,TAX HAS TO BE DEDUCTED AT SOURCE.WE ARE AWARE THAT THE SAID JUDGMENT WAS D ELIVERED BY THE COURT WHILE DECIDING THE PROVISIONS OF SECTION 195 OF THE ACT AND THE PRESEN T CASE DEALS WITH SECTION 194C.BUT,THE BASIC CONCEPT OF DEDUCTION OF TAX AT SOURCE REMAINS SAME.IN OUR OPINION WORD EMBEDDED PROFIT IS NARROWER THAN THE WORD PROFIT.TO FIND OUT EMBEDDING OF PROFIT ONE HAS TO SCRUTINISE THE BOOKS OF ACCOUNTS AND ONLY THEN A FINAL DECISIO N CAN BE ARRIVED AT.THE PROCESS AND THE MATERIAL;WHICH CAN PROVE THE EMBEDDING OF PROFIT-EL EMENT OR OTHERWISE;HAS TO BE BROUGHT ON RECORD BY THE AO OR THE ASSESSEE.AS STATED EARLIER, ASSESSEE HAD NOT PRODUCED ANY POSITIVE EVIDENCE THAT COULD PROVE THAT PAYMENT IN QUESTION WAS NOT EMBEDDED WITH PROFIT.THEREFORE,PARTLY CONFIRMING THE ORDER OF THE AO WE HOLD PAYMENT MADE BY THE ASSESSEE UNDER THE HEADS STAFF COST, ADVERTISING AND PROMOTI ONAL EXPENSES,OTHER MISC. EXPENSES WERE NOT PURE REIMBURSEMENT AND IT HAD TO DEDUCT TA X AT SOURCE AS PER THE PROVISIONS OF SECTION 194C OF THE ACT. 2.4.C. WE HAVE GONE THROUGH THE ORDER OF BAYER MATERIAL SC IENCES PVT. LTD.(SUPRA).WE WOULD LIKE TO REPRODUCE THE RELEVANT PARAGRAPHS OF THE OR DER THAT READ AS UNDER: 33.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE ASSESSEE IS A MANUFACTURER O F HIGH PERFORMANCE MATERIAL SUCH AS POLYURETHANE ETC. APART FROM ENGAGED IN TRADING OF POLYCARBONATE. BCS IS SISTER CONCERN OF THE ASSESSEE ENGAGED IN MANUFACTURING AN D DISTRIBUTION OF CROP PROTECTION PRODUCTS, FUNGICIDES AND NON-AGRICULTURAL BASED CON TROL AND RELATED PRODUCTS. THEY ARE AFFILIATES OF BAYER AG, GERMANY. BOTH BCS AND THE A SSESSEE COMPANY ENTERED INTO MA/291/214 PFIZER LTD. 3 TWO SEPARATE AGREEMENTS DATTED 18-4-2005 EFFECTIVE FROM 1-4-2005 UNDER WHICH IT WAS AGREED TO SHARE PERSONNEL AND FACILITIES OF EAC H THIS REGARD, THE ASSESSEE MADE PAYMENT OF RS.2.9CORES TO BCS FOR,UTILISING THEIR E MPLOYEES AND SERVICES DURING THE YEAR. COPIES OF BOTH THE AGREEMENTS ARE AVAILABLE O N PAGES 874 AND 887 ONWARDS OF THE PAPER BOOK. IN THESE AGREEMENTS, IT HAS BEEN PR OVIDED THAT THE PARTIES SHALL SHARE THE COSTS IN RESPECT OF IDENTIFIED PERSONNEL UTILIZ ED BY THEM AND THE IDENTIFIED FACILITIES USED BY THEM ON THE BASIS SPECIFIED IN A RTICLE 3 OF THESE AGREEMENTS.IT HAS BEEN STIPULATED THAT THE IDENTIFIED PERSONNEL WHEN ACTING FOR THE OTHER COMPANY WILL ACT UNDER THE DIRECTION AND/OR WITH THE SUPPORT OF THE MANAGEMENT AND PERSONNEL OF SUCH OTHER COMPANY, BUT WILL CONTINUE TO REMAIN EMP LOYEES OF ITS BASE COMPANY.FURTHER THE EMPLOYER COMPANY SHALL AT ALL T IMES REMAIN RESPONSIBLE FOR ALL THE STATUTORY COMPLIANCES OR COMMITMENTS RELATING T O EMPLOYMENT OF THE IDENTIFIED PERSONNEL. IN SO FAR AS THE PAYMENT TOWARDS USING O F FACILITIES IS CONCERNED, IT HAS BEEN PROVIDED IN THE SECOND AGREEMENT THAT BOTH THE COMPANIES WOULD SHARE THE IDENTIFIED FACILITIES DEPENDING ON THEIR REQUIREMEN TS. THE IDENTIFIED FACILITIES SHALL ALWAYS REMAIN THE PROPERTY OF THE FACILITATING COMP ANY WHICH OWNS THEM. CLAUSE 3.4 OF THE EMPLOYEES SHARING AGREEMENTS PROVIDES : THE BASIS OF COST SHARING SHALL BE AN EXACT REIMBURSAL OF THE PROPORTIONAL TIME, COST OF THE IDENTIFIED PERSONNEL, WITHOUT ANY MARK UP, MARGIN OR ADDITION. SIMILARLY, CLAUSE 3.4 OF THE SECOND AGREEMENT PROVIDING FACILITIES TO EACH OTHER STATES THAT THE BASIS OF COST SHARING SHALL BE AN EXACT REIMBURSAL OF THE PROPORTIONAL COST OF THE ID ENTIFIED FACILITIES, WITHOUT ANY MARK UP, MARGIN OR ADDITION. FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE, I T IS SEEN UNDER SCHEDULE 18 THAT THE ASSESSEE INDEPENDENTLY INCURRED VARIOUS EXPENSES SU CH AS STORES AND SPARES CONSUMED, POWER AND FUEL, FREIGHT, RENT, REPAIRS AN D TRAVELLING, ETC.,APART FROM PAYING COST SHARING EXPENSES OF RS.2.96 CRORES.THE P & L ACCOUNT OF BCS IS ALSO AVAILABLE ON RECORD. IT CAN BE SEEN FROM IT THAT TH E AMOUNT RECOVERED BY BCS FROM THE ASSESSEE AND OTHER GROUP COMPANIES TOWARDS COST SHA RING HAS BEEN EXCLUDED FROM THE EXPENDITURE INCURRED BY IT. THE NET EFFECT OF THESE TRANSACTIONS IS THAT BCS PROVIDED ITS PERSONNEL AND SERVICES TO THE ASSESSEE ON COST TO COST BASIS WHICH THE ASSESSEE INCLUDED IN ITS EXPENDITURE, WHEREAS THE BCS REDUCE D THE AMOUNT RECOVERED FROM THE ASSESSEE AND OTHER GROUP CONCERNS FROM ITS EXPENSES . THE CONTENTION THAT THERE WAS NO PROFIT ELEMENT IN SUCH REIMBURSEMENT OF EXPENSES WAS ALSO RAISED BEFORE THE AO, WHICH REMAINED UNCONTROVERTED. NOW,THE POSITION WHI CH EMERGES IS THAT BCS INCURRED CERTAIN COSTS ON EMPLOYEES AND FACILITIES WHICH WERE UTILIZED BY THE ASSESSEE AND THE OTHER GROUP CONCERNS FOR WHICH THERE WAS RE IMBURSEMENT OF ACTUAL EXPENDITURE INCURRED TO BCS WITHOUT ANY PROFIT ELEM ENT.THE LD. DR ALSO FAILED TO LEAD ANY MATERIAL TO SHOW THAT THERE WAS ANY PROFIT ELEM ENT IN SUCH PAYMENT.THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS.SIMON AKTIONGTS ELLSCHAFT (2009)310 ITR 320 (BOM) HAS HELD THAT PAYMENT BY WAY OF REIMBURSEMENT OF EXPENSES INCURRED ON BEHALF OF PAYER IS NOT AN INCOME CHARGEABLE TO TAX IN THE HANDS OF PAYEE. SIMILAR VIEW HAS BEEN TAKEN BY THE SPECIAL BENCH OF THE TRIBUNAL IN MAHINDRA & MAHINDRA LTD. VS. DCIT (2009) 122 TTJ (BORN) (SB) 577. IN VIEW OF THE AFORE NOTED PRECEDENTS,IT BECOMES CLEAR THAT WHERE PAYMENT IS MADE TOWARDS RE IM -BURSEMENT OF EXPENSES,THERE CANNOT BE ANY ELEMENT OF INCOME IN S UCH PAYMENT IN THE HANDS OF THE PAYEE.ONCE THE ELEMENT OF INCOME IS MISSING, NATURA LLY, THERE CANNOT BE ANY QUESTION OF DEDUCTING TAX AT SOURCE FROM SUCH PAYMENT MADE, WHICH PRE-SUPPOSES THE TAXABILITY OF SUCH SUM IN THE HANDS OF PAYEE.IT IS FURTHER RELEVANT TO NOTE THAT BCS ENTERED INTO COST SHARING AGREEMENT NOT ONLY WITH T HE ASSESSEE,BUT OTHER GROUP CONCERNS AS WELL.WHEREAS THE ASSESSEE PAID RS.2.96 CRORES TO BCS, M/S. BAYER PHARMACEUTICAL PVT. LTD. PAID RS.2.81 CRORES, M/S. BAYER BIOCIDES PVT. LTD. PAID RS.4.02 CRORES AND OTHER ASSOCIATED CONCERNS ALSO P AID TO BCS FOR SIMILAR SERVICES.THE LD. A.R. HAS PLACED ON RECORD COPIES O F THE ASSESSMENT ORDERS PASSED U/S 143(3) OF THESE CONCERNS TO DEMONSTRATE THAT NO DIS ALLOWANCE HAS BEEN MADE IN ANY OF MA/291/214 PFIZER LTD. 4 THE ABOVE REFERRED CONCERNS U/S.40(A)(IA). IN VIEW OF THE ABOVE DISCUSSED PRINCIPLE EMANATING FROM THE JUDGMENT OF HONBLE JURISDICTION AL HIGH COURT AND THE SPECIAL BENCH THAT REIMBURSEMENT OF COST DOES NOT REQUIRE D EDUCTION OF TAX AT SOURCE AND FURTHER FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE HOLD THAT THE AO WAS NOT JUSTIFIED IN MAKING SAID ADDITION .. WE ARE OF THE OPINION THAT THE FACTS OF BAYER MATER IAL SCIENCES PVT. LTD.(SUPRA)WERE DIFFERENT FROM THE CASE BEFORE US.THE ONLY SIMILARITY BETWEEN BOTH THE CASES IS THE DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT, IN THAT MATTER OF TRIBUNA L HAD OBSERVED THAT THE CONTENTION THAT THERE WAS NO PROFIT ELEMENT IN SUCH REIMBURSEMENT OF EXPE NSES WAS ALSO RAISED BEFORE THE AO, WHICH REMAIN UNCONTROVERTED.IN OUR OPINION,IN THE C ASE UNDER CONSIDERATION,AO AND FAA HAVE GIVEN A CLEAR FINDING OF FACT THAT PAYMENT MAD E BY THE ASSESSEE WAS NOT IN THE NATURE OF REIMBURSEMENT.THEY HAVE ALSO STATED THAT SERVICE TA X WAS PAID BY THE ASSESSEE. IN THE CASE OF BAYER(SUPRA) TRIBUNAL HAS NOT MENTIONED ANYTHING AB OUT PAYMENT OF SERVICE TAX.BESIDES, IN THAT MATTER IT WAS ALSO FOUND BY THE TRIBUNAL THAT AMOUNTS RECOVERED FROM THE ASSESSEE AND OTHER GROUP COMPANIES TOWARDS COST SHARING HAD BEEN EXCLUDED FROM THE EXPENDITURE INCURRED BY IT.FAA HAS MENTIONED THAT IN THE AGREEM ENT THERE WAS A CLAUSE ABOUT NOT TREATING THE AGREEMENT AS SERVICE CONTRACT,THAT IN SPITE OF THE SAID CLAUSE THE REAL NATURE OF THE AGREEMENT WAS OF THE SERVICE-CONTRACT.WE ARE ALSO O F THE OPINION THAT RECITALS OF AN AGREEMENT OR THE WORDS USED IN IT HAVE TO BE INTERP RETED ONLY AFTER THE FULL AGREEMENT IS CONSIDERED IN RIGHT PERSPECTIVE.AS PER THE ACCEPTED PRINCIPLES OF TAX-JURISPRUDENCE ENTRIES IN THE BOOKS OF ACCOUNTS ARE NOT THE CONCLUSIVE PROOF OF ANY TRANSACTION. SIMILARLY,FOR UNDERSTANDING THE REAL MEANING AND INTENT OF AN AGR EEMENT,ONLY A WORD OR A SINGLE CLAUSE CANNOT BE A DECISIVE FACTOR.WE ARE OF THE OPINION T HAT CLAUSE-3 OF THE AGREEMENT PROVES THAT THE AGREEMENT WAS IN THE NATURE OF A SERVICE CONTRA CT.PAYMENT OF SERVICE TAX IS ALSO A VITAL FACTOR TO DECIDE THE PRESENT CASE.IN SHORT,CONSIDER ING THE FACTS THAT ASSESSEE HAD NOT PRODUCED EVIDENCE TO PROVE THE PROPOSITION THAT PAYMENTS MAD E BY IT WERE NOT EMBEDDED WITH PROFIT,THAT SERVICE TAX WAS PAID AND THAT REAL NATU RE OF THE AGREEMENT WAS OF THE SERVICE CONTRACT,WE ARE OF THE OPINION THAT PROVISIONS OF S ECTION 194C ARE APPLICABLE IN THE CASE UNDER CONSIDERATION.THEREFORE,WE UPHOLD THE ORDER O F THE FAA AS FAR AS PAYMENTS MADE UNDER THREE HEADS;STAFF COST, ADVERTISING AND PROMO TIONAL EXPENSES,OTHER MISC.EXPENSES;ARE CONCERNED. 4. FROM THE ABOVE IT IS CLEAR THAT ON A SPECIFIC QUERY RAISED BY THE BENCH THE ASSESSEE DID NOT THROW ANY LIGHT AS TO WHETHER THE PAYMENTS IN QUEST ION WERE PURE REIMBURSEMENT OR NOT.IN OUR OPINION, THE TRIBUNAL HAS CONSIDERED THE AGREEM ENT AS A WHOLE AND NOT IN PIECE MEAL.AS FAR AS ARRIVING AT THE WRONG CONCLUSION IN CONCERNE D,WE ARE OF THE OPINION THAT SAME DOES NOT CONSTITUTE MISTAKE APPARENT FROM RECORD.WE FIND THA T NON CONSIDERATION OF ARGUMENT BY THE TRIBUNAL, ADVANCED BY THE ASSESSEE AND ARRIVING AT A WRONG CONCLUSIONS HAS BEEN DELIBERATED UPON BY VARIOUS COURTS ON DIFFERENT OCCASIONS. HON BLE DELHI HIGH COURT IN THE MATTER OF SMT. BALJEET JOLLY (250 ITR113),HAS HELD AS UNDER: IN ORDER TO THE POWER TO RECTIFY UNDER SECTION 25 4(2) OF THE INCOME-TAX ACT, 1961, IT IS NOT SUFFICIENT IF THERE IS MERELY A MISTAKE IN THE ORDE R SOUGHT TO BE RECTIFIED. THE MISTAKE TO BE RECTIFIED MUST BE ONE APPARENT FROM THE RECORD. A D ECISION ON A DEBATABLE POINT OF LAW OR DISPUTED QUESTION OF FACT IS NOT A MISTAKE APPARENT FROM THE RECORD. THE PLAIN MEANING OF THE WORD 'APPARENT' IS THAT IT MUST BE SOMETHING WHICH APPEARS TO BE SO EX FACIE AND IS INCAPABLE OF ARGUMENT OR DEBATE. IN THAT MATTER IN THE APPLICATION FILED UNDER SECTI ON 254(2) OF THE ACT, HE ASSESSEE CONTENDED THAT THE TRIBUNALS CONCLUSION WAS NOT IN ACCORDANC E WITH THE FACTS ON RECORD.THE TRIBUNAL, AFTER CONSIDERING OF THE STAND OF THE ASSESSEE AND ITS FINDING RECORDED IN THE ORIGINAL ORDER, CAME TO THE CONCLUSION THAT A CASE FOR RECTIFICATIO N UNDER SECTION 254(2) WAS NOT MADE OUT. DECIDING THE MATTER THE HONBLE COURT HELD THAT WHE RE AN ERROR WAS FAR FROM SELF EVIDENT, IT MA/291/214 PFIZER LTD. 5 CEASED TO BE AN APPARENT ERROR,THAT THE SO CALLED I NACCURACIES OR WRONG RECORDING OF FACTS AS ALLEGED WERE NOT PATENT MISTAKES WHICH CONSTITUTED THE SINE QUA NON FOR EXERCISE OF POWER UNDER SECTION 254(2) OF THE ACT. SIMILARLY,IN THE MATTER OF PERFETTI VAN MELLE INDIA P. LTD.(296ITR595)HONBLE DELHI HIGH COURT HAS AGAIN HELD AS FOLLOWS: SECTION 254(2) OF THE INCOME-TAX ACT, 1961, ENABLE S THE CONCERNED AUTHORITIES TO RECTIFY ANYMISTAKE APPARENT FROM THE RECORD.AN OVERSIGHT OF A FACT CANNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER THIS SECTION. SIMILARLY, FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION, IS NOT AN ERROR APPARENT ON THE RECORD,ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE MERE FACT THAT THE TRIBUNAL HAS NOT ALLOWED A DEDUCTION,EVEN IF THE CONCLUSION IS WRONG , WILL BE NO GROUND FOR MOVING AN APPLICATION UNDER SECTION 254(2) OF THE ACT. HONBLE KARNATAKA HIGH COURT HAD AN OCCASION TO DEA L WITH THE SAME SUBJECT IN THE MATTER OF MCDOWELL AND COMPANY LTD. (310.215).IN THAT CASE TR IBUNAL HAD DECIDED THE APPEAL APPEAL OF THE ASSESSEE AFTER CONSIDERING THE RIVAL SUBMISS IONS.LATER ON AN APPLICATION WAS MOVED BY THE ASSESSEE U/S.254 OF THE ACT FOR RECTIFYING THE MISTAKE.TRIBUNAL ALLOWING THE MA FILED BY THE ASSESSEE GRANTED IT RELIEF.REVERSING THE ORDER OF THE TRIBUNAL,THE HONBLE LAID DOWN FOLLOWING PRINCIPLES: APPLICATION OF THE PRINCIPLES LAID DOWN BY THE SUP ERIOR COURTS TO THE FACTS OF THE CASE BEFORE THE TRIBUNAL ON ERRONEOUS UNDERSTANDING OF SUCH PRI NCIPLES, RECORDING OF AN ERRONEOUS FINDING BY IT BASED ON THE FACTS ON RECORD, ARRIVIN G AT A CONCLUSION ON ERRONEOUS APPLICATION OF PROVISIONS OF LAW TO THE FACTS OF THE CASE, ETC. , CANNOT BE HELD TO BE A MISTAKE APPARENT FROM THE RECORD WARRANTING ANY RECTIFICATION BY TH E TRIBUNAL IN EXERCISE OF ITS POWER UNDER SECTION 254(2) OF THE INCOME-TAX ACT,..SUCH AN E XERCISE OF POWER UNDER SECTION 254(2) OF THE ACT AMOUNTS TO REVIEW OF ITS EARLIER ORDER O N THE MERITS BUT NOT RECTIFICATION OF MISTAKE APPARENT FROM THE RECORD AND SUCH REVIEW WOULD CER TAINLY BE BEYOND THE SCOPE OF SECTION 254(2) OF THE INCOME-TAX ACT. THE WORDS MISTAKE APPARENT FROM RECORD,AS APPEARING IN THE SECTION 254(2) HAS A SPECIAL MEANING AND DEFINITE CONNOTATION.AS PER THE SETTLED PRINCIPLE OF TAXATION JURISPRUDENCE A PATENT,MANIFEST AND SELF-EVIDENT ERROR WHICH DOES N OT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENTS TO ESTABLISH IT, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND ONLY SUCH A MISTAKE CAN BE CORRECTED WHILE APPLYING PROVISIONS OF SECTION 254(2) OF THE ACT. IT IS A SETTLED LEGAL PROPOSITION OF LAW THAT THE S COPE OF SECTION 254(2) IS VERY LIMITED AND CIRCUMSCRIBED. FOR EXERCISING JURISDICTION UNDER TH E SAID SECTION,IT IS A MANDATORY CONDITION THAT SUCH MISTAKE SHOULD BE SO APPARENT THAT A MERE LOOK AT IT CAN PROVE ITS THE EXISTENCE.IF THE APPLICANT HAS TO ADVANCE LONG ARGUMENTS IT WILL NOT FALL UNDER THE CATEGORY OF APPARENT MISTAKE.IT IS SAID THAT PROVISIONS OF SECTION 254(2 ) DO NOT CONFER POWER ON THE TRIBUNAL TO REVIEW ITS EARLIER ORDER OR RE-APPRECIATE OR RE-EVA LUATE EVIDENCE. 5. AFTER CONSIDERING THE ABOVE REFERRED THREE JUDGMENT S AND THE DISCUSSION,WE ARE OF THE OPINION THAT UNDER THE PROVISIONS OF SECTION 254(2) OF THE ACT IT IS NOT PERMISSIBLE FOR THE ASSESSEE TO CONTEND THAT THE APPELLATE ORDER WAS VI TIATED ON THE GROUND THAT THE TRIBUNAL FAILED TO DISCUSS ALL THE CONTENTIONS RAISED BY COUNSEL BE FORE IT AND TO GIVE REASONS FOR COMING TO THE CONCLUSION WHICH IT DID. IF ASSESSEE FINDS AN ORDE R DEFECTIVE ON THIS GROUND, THE REMEDY LAY ELSEWHERE, AND NOT BY WAY OF A MISCELLANEOUS APPLIC ATION.IT IS SAID THAT THE INCOME-TAX APPELLATE TRIBUNAL IS A CREATURE OF THE STATUTE AND IT IS NOT BEEN VESTED WITH THE REVIEW JURISDICTION BY THE STATUTE CREATING IT. THE TRIBUN AL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN JUDGMENTS OR ORDERS.WHAT ASSESSEE DESIRES, IN THE C ASE UNDER CONSIDERATION, IS REVIEW OF THE ORDER PASSED ON IN THE GRAB OF RECTIFICATION APPLIC ATION. THE LANGUAGE OF SECTION 254(2) OF THE ACT IS VERY CLEAR.THE FOUNDATION FOR EXERCISING THE JURISDICTION IS WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT ON THE RECORD AND THE OBJECT IS A CHIEVED BY AMENDING ANY ORDER PASSED BY MA/291/214 PFIZER LTD. 6 IT.AS STATED EARLIER,IN THE CASE UNDER CONSIDERATI ON ASEESSEE WANTS REAPPRAISAL OF THE ENTIRE CASE. IT IS NOT POSSIBLE UNDER THE PROVISIONS OF SE CTION 254(2) OF THE ACT.AS PER THE HONBLE JURISDICTIONAL HIGH COURT,AS HELD IN THE MATTER OF RAMESH ELECTRIC AND TRADING CO. THE POWER OF RECTIFICATION U/S. 254(2) OF THE ACT,CANNOT BE E XERCISED ON FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR A RRIVING AT A CONCLUSION BECAUSE IT IS AN ERROR OF JUDGMENT AND NOT AN ERROR APPARENT ON THE RECORD((203ITR497). 6. FINALLY,WE WOULD LIKE TO STATE THAT THE TRIBUNAL HA D ARRIVED AT THE CONCLUSION AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE.IT HAD HELD THAT FOR REIMBURSEMENT THERE WAS NO NEED TO DEDUCT TAX AT ALL,BUT WHETHER IN A PARTICULAR PAYMENT THERE WAS REIMBURSEMENT OR NOT WAS TO BE PROVED BY THE ASSESS EE.IN THE APPEAL BEFORE US,THE ASSESSEE HAD NOT LED THE EVIDENCE,INSPITE OF THE SPECIFIC QU ERY,TO PROVE THAT THE PAYMENTS DID NOT HAVE PROFIT ELEMENT.IN THESE CIRCUMSTANCES,AFTER TAKING IN CONSIDERATION TOTALITY OF THE FACTS,THE TRIBUNAL HAD ADJUDICATED THE APPEAL.WE ARE OPINION THAT THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL THAT COULD BE RECTIFIED AS PER THE PRO VISIONS OF SECTION 254(2)OF THE ACT. AS A RESULT, MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMISSED. .)/ (1) 2 3 4 5 ( 6 ( 7 4 ) 89. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST,OCTO BER, 2014 . ; ' +,- < 4( 31ST => 7 , 201 4 , ' 5 ? SD/- SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 4( / DATE: 31 .10.2014 ; ; ; ; ' '' ' $) $) $) $) @-) @-) @-) @-) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ A B , 4. THE CONCERNED CIT / A B 5. DR I BENCH, ITAT, MUMBAI / C5 $)( , . . . 6. GUARD FILE/ 5 . %) %) %) %) $) $)$) $) //TRUE COPY// ;( / BY ORDER, D / 8 DY./ASST. REGISTRAR , /ITAT, MUMBAI