DIGITAL ELECTRONICS LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 8(1), MUMBAI

MA 322/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0338 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 30-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Capital asset; Cost of acquisition; Capital receipt
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) MA NO. 322/MUM/2017 (ITA NO. 3258/MUM/2014) ASSESSMENT YEAR: 2007 - 08 DIGITAL ELECTRONICS LTD. 86, JOLLY MAKERS CHAMBERS NO. 11, 8 TH FLOOR, NARIMAN POINT, MUMBAI - 400021. VS. ACIT - 8(1), AAYAKAR BHAVAN, MUMBAI. PAN NO. AAACD1798F APPELLANT RESPONDENT ASSESSEE BY : MR. NITESH JOSHI, AR REVENUE BY : MR. RAM TIWARI, DR DATE OF HEARING : 15/06/2018 DATE OF PRONOUNCEMENT : 07/09/2018 ORDER PER N.K. PRADHAN, AM BY MEANS OF THIS MISCELLANEOUS APPLICATION (MA), THE APPLICANT SEEKS RECALL OF THE ORDER DATED 16.12.2016 PASSED BY THE ITAT D BENCH MUMBAI (ITA NO. 3258/MUM/2014) FOR THE ASSESSMENT YEAR (AY) 2007 - 08. IN PART - I , HERE - IN - BELOW, WE MENTION THE CONTENTIONS OF THE LD. COUNSEL OF THE APPLICAN T , IN PART - II, THE SUBMISSIONS OF THE LD. DR AND IN PART - III, THE REASONS FOR OU R DECISION. I 2. THE CONTENTIONS OF THE LD. COUNSEL FOLLOW THE WRITTEN SUBMISSION DATED 29.06.2017 FILED BY THE APPLICANT BEFORE THE TRIBUNAL. THEREFORE, WE REFER BELOW THE SAID WRITTEN SUBMISSION. DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 2 THE APPLICANT SUBMITS THAT THE FACTS WERE BROUGHT TO THE NOTICE OF THE TRIBUNAL IN THE COURSE OF HEARING AND REITERATES THE SAME AS UNDER: A. ON MAY 27, 2005 THE A PPLICANT HAD ENTERED INTO A JOINT VENTURE AGREEMENT WITH LAND INSTRUMENTS INTERNATIONAL LIMITED (LAN D). THE SAID JV WAS FORMED FOR THE PURPOSES OF CARRYING ON BUSINESS OF MANUFACTURE, SALE AND PROVIDING SERVICES FOR NON - CONTACT TEMPERATURE MEASUREMENT PRODUCTS SYSTEMS AND COMPONENTS THEREOF. TECHNOLOGY IN RESPECT OF THE SAID BUSINESS WAS TO BE PROVIDED B Y LAND. THE SAID AGREEMENT DEFINED UNIDEL GROUP AS MEANING THE A PPLICANT OR ITS SUBSIDIARY OR ANYBODY CORPORATE IN WHICH IT HAS CONTROLLING INTEREST. SIMILARLY, LAND GROUP WAS DEFINED TO MEAN LAND OR ITS SUBSIDIARY COMPANY. IN ARTICLE 8.6 OF THE SAID AGREE MENT IT WAS AGREED THAT, IN THE EVENT CITHER GROUP IS AMALGAMATED WITH OR IS BEING TAKEN OVER BY A THIRD PARTY, THE OTHER GROUP SHALL HAVE THE OPTION OF PURCHASING ALL THE SHARES IN JV COMPANY OF THE GROUP AMALGAMATING OR BEING TAKEN OVER OR OF SELLING ALL ITS SHARES IN JV COMPANY TO THE GROUP BEING AMALGAMATED OR TAKEN OVER. ENABLING PROVISION IN THIS REGARD WAS MADE IN ARTICLE 8.7 AT PAGE 7 OF THE PAPER BOOK. THE JV COMPANY FORMED PURSUANT TO THE JV AGREEMENT WAS LAND DEL INFRARED PVT. LTD. B. SINCE, THE A PPLICANT APPREHENDED THE BREACH OF ARTICLE 8.6 OF THE JV AGREEMENT IT ADDRESSED LETTER DATED JANUARY 31, 2006 IN THE MANAGING DIRECTOR OF LAND FOR CONFIRMATION IF THERE WAS ANY VIOLATION OF THE JV AGREEMENT. C. SINCE, THE LAND GROUP WAS BEING TAKEN OVER BY AMTEK INC. OF USA , THE A PPLICANT BY ITS LETTER DATED MAY 08, 2006 INVOKED ARTICLE 8.6 OF THE JV AGREEMENT AND CALLED UPON LAND TO PURCHASE 3,25,000 EQUITY SHARES HELD BY IT IN THE JV COMPANY VIZ., LAND DEL INFRARED PVT. LTD. D. SINCE LAND DID NOT WANT TO HONOUR ITS COMMITMENT AS PER ARTICLE 8.6 AND 8.7OF THE JV AGREEMENT, IT PERSUADED THE A PPLICANT TO ENTER INTO A WAIVER AGREEMENT, WAIVING AND GIVING UP ALL ITS RIGHT AND ENTITLEMENT UNDER THOSE ARTICLES. PURSUANT THERETO, A WAIVER AGRE EMENT DATED JUNE DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 3 15, 2006 WAS EXECUTED BETWEEN THE A PPLICANT AND LAND WHEREBY IT RECEIVED POUNDS STERLING 250,000 EQUIVALENT TO INDIAN RUPEES 2,10,75,000. 2.1 THE APPLICANT SUBMITS THAT THE AFORESAID AMOUNT OF RS.2,10,75,000 WAS RECEIVED BY IT AS A COMPENSATION FOR BREACH OF THE JV AGREEMENT WHICH WOULD BE A CAPITAL RECEIPT NOT CHARGEABLE TO INCOME - TAX UNDER THE INCOME - TAX ACT (THE ACT).IT WAS ALSO URGED THAT, ASSUMING WITHO UT ADMITTING THAT A VIEW IS TAKEN THAT THE A PPLICANT HAS RELINQUISHED ITS RIGHTS ON ACCOUNT OF WAIVER OF ITS RIGHTS AS PER CLAUSES 8.6 AND 8.7 OF THE JV AGREEMENT, THEN, NO CAPITAL GAINS COULD BE CHARGED IN THE PRESENT CASE, AS THERE WAS NO COST OF ACQUISI TION OF THE SAID RIGHTS RESULTING IN FAILURE OF THE COMPUTATION MACHINERY. 2.2 THE APPLICANT STATES THAT THE TRIBUNAL IN PARAGRAPHS 7.7 AND 7.9 OF THE ABOVE ORDER HAS PROCEEDED ON THE BASIS THAT THAT CAPITAL ASSET' GIVING RISE TO THE CAPITAL GAINS IN T HE PRESENT CASE IS SHARES OF LAND DEL INFRARED PVT. LTD. TRANSFER' FOR THE PURPOSES OF GIVING RISE TO CHARGEABLE CAPITAL GAINS HAS BEEN REFERRED TO AS LETTER DATED MAY 08, 2006 BY WHICH THE A PPLICANT EXERCISED ITS OPTION TO SELL ITS SHAREHOLDING IN LAND D EL INFRARED PVT. LTD. TO LAND. FOR THE PURPOSES OF ARRIVING AT THE COST OF ACQUISITION OF THE CAPITAL ASSET TO OVERCOME THE A PPLICANT'S SUBMISSION ON FAILURE OF COMPUTATION MACHINERY, IT HAS BEEN HELD THAT JV AGREEMENT CONFERRED ON THE A PPLICANT THE RIGHT THAT ENABLED IT TO CARRY ON BUSINESS AND TRIBUNAL HELD THAT SINCE, COST OF ACQUISITION IN RESPECT OF RIGHT TO CARRY ON ANY BUSINESS IS NIL AS PER SECTION 55(2) OF THE ACT, THE REVENUE WAS JUSTIFIED IN CHARGING CAPITAL GAINS IN THE PRESENT CASE. DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 4 2.3 THUS T HE APPLICANT SUBMITS THAT A. THE 'CAPITAL ASSET IN THE PRESENT CASE, IF ANY, WAS RIGHTS CONFERRED ON IT BY CLAUSES 8.6 AND 8.7 OF THE JV AGREEMENT AS PER WHICH IT COULD BIND LAND TO ACQUIRE ITS SHAREHOLDING IN LAND DEL INFRARED PVT. LTD. ON THE HAPP ENING OF SPECIFIED EVENTS. THEREFORE, REFERENCE TO THE CAPITAL ASSET GIVING RISE TO CAPITAL GAINS IN THE PRESENT CASE AS SHARES OF THE JV COMPANY IS FACTUALLY INCORRECT AND HAS NO BASIS. AS A MATTER OF FACT, THE A PPLICANT CONTINUED TO HOLD THE SHARES OF LA ND DEL INFRARED PVT. LTD. AND THE SAID SHARES WERE RIOT TRANSFERRED TO LAND. B. FURTHER, 'TRANSFER', IF ANY, IN THE PRESENT CASE IS THE WAIVER AGREEMENT DATED JUNE 15, 2016 BY WHICH THE A PPLICANT HAS WAIVED THE RIGHTS CONFERRED ON IT BY CLAUSES 8.6 AND 8.7 OF THE JV AGREEMENT. IN THE ORDER, THE TRIBUNAL HAS ERRONEOUSLY PROCEEDED ON THE BASIS THAT LETTER DATED MAY 08 2006 BY WHICH THE APPLICANT EXERCISED ITS OPTION TO SELL ITS SHAREHOLDING TANTAMOUNT TO TRANSFER. FURTHER, AS A MATTER OF FACT LAND DID NOT DISCHARGE ITS OBLIGATION TO ACQUIRE THE SHARES WHICH A PPLICANT HELD IN LAND DEL INFRARED PVT. LTD. AND WHICH THE A PPLICANT HAD OFFERED FOR SALE AS PER CLAUSES 8.6 AND 8.7 OF THE JV AGREEMENT . C. LASTLY, THE TRIBUNAL WHILE DEALING WITH THE A PPLICANT'S SUBMISSION ON FAILURE OF COMPUTATION MACHINERY IN VIEW OF INDETERMINATE COST OF ACQUISITION HAS REFERRED TO THE CAPITAL ASSET AS 'RIGHT OF FIRST REFUSAL'. ACCORDING TO THE TRIBUNAL, THIS WAS AN IMPORTANT RIGHT WHICH ENABLED INTER - ALIA THE A PPLICANT TO CARRY ON A BUSINESS. THE A PPLICANT SUBMITS THAT THERE IS AN INHERENT CONTRADICTION IN THE TRIBUNAL'S FINDING ON CAPITAL ASSETS WHICH HAS GIVEN RISE TO CAPITAL GAINS. AS A MATTER OF FACT, THE JV AGREEMENT DID NOT CONFER ANY RIGHT TO THE A PPLICANT TO CARRY ON ANY BUSINESS AND THE A PPLICANT CONTINUED TO CARRY ON BUSINESS AFTER SIGNING THE SAID WAIVER AGREEMENT. THEREFORE, PROVISIONS OF SECTION 55(2) OF THE ACT HAVE NO APPLICATION 10 THE PRESENT CASE . DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 5 IN VIEW THEREOF, IT IS SUBMITTED BY THE APPLICANT THAT THE BASIS ON WHICH THE TRIBUNAL HAS UPHELD THE ASSESSMENT OF CAPITAL GAINS IN THE PRESENT EASE IS CONTRARY TO THE FACTS ON RECORD BASED ON INHERENT CONTRADICTION BETWEEN VARIOUS CRUCIAL FINDINGS IN T HE ORDER AND EFFECTIVELY TANTAMOUNT TO NON - ADJUDICATION OF THE REAL DISPUTE UNDER CONSIDERATION WHICH, WITH RESPECT, DISCLOSES A MISTAKE APPARENT FORM THE RECORD. 2.4 THE APPLICANT SUBMITS WITH REFERENCE TO TRIBUNAL'S ORDER M THE CASE OF PAYAL KAPUR V S. AC IT 9 8 ITD 19 , THAT THE SAID ORDER SUPPORTS ITS CASE FOR THE AMOUNT RECEIVED FROM LAND BEING REGARDED AS A CAPITAL RECEIPT. THE TRIBUNAL HAS ERRED IN DISTINGUISHING THE SAID CASE FROM THE CASE OF THE A PPLICANT BY OBSERVING THAT, IN THE PRESENT CASE, IT DID NOT COME TO THE A PPLICANT'S NOTICE THAT LAND INTENDED TO SELL ITS SHAREHOLDING IN LAND DEL INFRARED PVT. LTD. WITHOUT ITS CONSENT. AS A MATTER OF FACT, THE ENTIRE DISPUTE AROSE BETWEEN THE A PPLICANT A ND LAND BECAUSE LAND TRANSFERRED THE SHARES HELD BY IT IN THE JV COMPANY IN BREACH OF ITS COMMITMENT AS PER ARTICLES 8.6 AND 8.7 OF THE JV AGREEMENT TO AMTEK INC. USA . FURTHER, OVERLOOKING THE CLEAR BREACH OF CLAUSE 8.6 OF THE JV AGREEMENT BY LAND, THE TRI BUNAL HAS HELD THAT THERE WAS NO BREACH OF JV AGREEMENT IN THE PRESENT CASE. THE ASSESSEE SUBMITS THAT THIS ORDER OF THE TRIBUNAL WAS SQUARELY APPLICABLE TO ITS CASE MAKING THE RECEIPT AS CAPITAL IN NATURE. DISTINCTION AS MADE BY THE TRIBUNAL ON A FACTUALL Y ERRONEOUS BASIS, WITH RESPECT, DISCLOSES A MISTAKE WHICH IS APPARENT FROM THE RECORD. 2.5 THE APPLICANT FURTHER SUBMITS THAT THE TRIBUNAL'S ORDER IN THE CASE OF DCIT V S. SAK INDUSTRIES PVT. (2005) 1 SOT 798 ALSO SUPPORTED ITS SUBMISSION THAT THE RECEIPT WAS CAPITAL IN NATURE. HOWEVER, DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 6 CONTRARY TO THE FACTS ON RECORD, THE TRIBUNAL HAS HELD THAT THERE WAS NO BREACH OF ANY AGREEMENT IN THE PRESENT CASE. IN FACT, THERE WAS A CLEAR VIOLATION OF CLAUSES 8.6 AND 8.7 OF THE JV AGREEMENT AS, FIRSTLY LAND HAD TRANS FERRED ITS SHAREHOLDING IN LAND DEL INFRARED PVT. LTD. T O AMTEK INC. USA AND SECONDLY, IT WAS NOT WILLING TO HONOUR ITS OBLIGATION TO PURCHASE SHARES HELD BY THE A PPLICANT IN THE JV COMPANY WHEN IT EXERCISED ITS RIGHTS ON MAY 08, 2006. IT HAS ALSO OBSERVED THAT, IN THE PRESENT, CASE, THE A PPLICANT, HAS NOT GIVEN UP ITS RIGHTS OF FIRST PURCHASE OF SHARES ON ACCOUNT OF PERCEIVED/ ALLEGED VIOLATION OF AGREEMENT, FIRSTLY, THIS IS CONTRARY TO THE FINDING GIVEN BY THE TRIBUNAL WHILE DEALING WITH ITS ARGUMENT ON C OST OF ACQUISITION BEING INDETERMINATE, WHERE IT WAS HELD THAT THE CAPITAL ASSET WHICH GAVE RISE TO THE CAPITAL GAINS IN THE PRESENT CASE WAS RIGHT OF FIRST REFUSAL. THIS IS NOTWITHSTANDING THE FACT THAT THE JV AGREEMENT DID NOT CONFER ON IT ANY RIGHT OF F IRST REFUSAL. 2.6 THE APPLICANT FURTHER SUBMITS THE JUDGMENT OF THE HON'BLE APEX COURT IN OBEROI HOTELS (P.) LTD. V S. CIT 103 TAXMAN 203 WHICH ALSO SUPPORTED ITS CASE ON CAPITAL RECEIPT HAS BEEN DISTINGUISHED ON THE GROUND THAT, IN THE PRESENT CASE, THE AMOUNT OF RS.2,10,75,000 WAS NOT RECEIVED BY THE A PPLICANT FOR GIVING UP ITS RIGHTS. THIS IS CONTRARY TO THE FACTS ON RECORD THAT BY WAIVER AGREEMENT DATED JUNE 15, 2006 THE - A PPLICANT GAVE UP THE RIGHTS CONFERRED ON IT BY CLAUSES 8.6 AND 8.7 OF THE JV AG REEMENT AND THE AMOUNT OF RS.2,10,75,000 WAS RECEIVED IN CONSIDERATION THEREOF. 2.7 FINALLY, THE APPLICANT SUBMITS THAT, ABOVE REFERRED MISTAKES GO TO THE ROOT OF THE MATTER AS THE FUNDAMENTAL FACTS INVOLVED IN THE APPEAL HAVE BEEN OVERLOOKED. FURTHER, THE TRIBUNAL HAS ADJUDICATED ISSUES DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 7 WHICH DID NOT ARISE FOR CONSIDERATION IN THE PRESENT CASE AS THE FACTS ON THE BASIS OF WHICH THE APPEAL HAS BEEN DISPOSED OF ARE IRRELEVANT. CONSEQUENTLY, THE ISSUES AS REALLY ARISING FOR CONSIDERATION IN THE PRESENT EAS E HAVE REMAINED ADJUDICATED. NON - ADJUDICATION OF ISSUES ARISING IN THE PRESENT APPEAL DISCLOSES MISTAKES, WHICH IT IS RESPECTFULLY SUBMITTED, ARE APPARENT FROM THE RECORD. 2.8 IN VIEW OF THE ABOVE, THE APPLICANT SUBMITS THAT THE TRIBUNAL SHOULD RECALL ITS ORDER DATED 16.12.2016 AS IT DISCLOSES MISTAKES WHICH ARE APPARENT FROM RECORD, AND/OR GRANT SUCH FURTHER OR OTHER RELIEFS AS THE NATURE AND CIRCUMSTANCES OF THE CASE MAY REQUIRE. II 3. ON THE OTHER HAND, THE LD. DR SUBMITS THAT THERE IS NO MISTAKE APPAR ENT FROM RECORD IN THE IMPUGNED ORDER PASSED BY THE TRIBUNAL. HE SUBMITS THAT THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER IN THE GARB OF SECTION 254(2) OF THE ACT. THE LD. DR RELIES ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CIT V. RAMESH ELECTR IC & TRADING CO. (1993) 203 ITR 497 (BOM) AND FILES A COPY OF IT. III 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISION ARE GIVEN BELOW. THE APPLICANT HAD ENTERED INTO A JOINT VENTURE AGREEMENT (JVA) DATED 27.05.2005 WITH M/S LAND INSTRUMENT INTERNATIONAL LTD. (LAND). AS PER THE SAID AGREEMENT, BOTH THE PARTIES WILL HOLD 50% SHARE IN THE JOINT VENTURE COMPANY (JVCO) AND EACH WILL SUBSCRI BE AND TAKE UP 1,25,000 EQUITY SHARES OF THE JVCO. AS PER THE TERMS OF 8.6 AND 8.7.1 OF THE SAID AGREEMENT, IN CASE ANY OF THE JV PARTNER IS DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 8 AMALGAMATED OR TAKEN OVER BY A THIRD PARTY, THE OTHER JV PARTNER HAS THE OPTION OF EITHER PURCHASING ALL THE SHARES OF THE PARTNER GETTING AMALGAMATED OR TAKEN OVER. IT IS FOUND THAT LAND WAS TAKEN OVER BY A COMPANY INCORPORATED IN USA DURING FINANCIAL YEAR (FY) 2006 - 07. SUBSEQUENT TO THE TAKEOVER, THE APPLICANT EXERCISED THE OPTION STATED IN PARA 8.6 OF THE JVA AND SO LD ITS 50% SHARES IN THE JVCO TO M/S LAND INSTRUMENT INTERNATIONAL LTD., UK FOR RS.2,10,75,000/ - . WHILE DECIDING THE APPEAL, WE HAVE REFERRED TO CLAUSE 2.2, 2.3, 3.1, 4.1 ,8.6 AND 8.7.1 OF THE JVA DATED 27.05.2005. WE REFER HERE TO PARA 7.5.1, 7.5.2. 7.5.3. 7.5.4 AND 7.5.5 OF THE IMPUGNED ORDER OF THE TRIBUNAL. ALSO WE HAVE REFERRED TO THE WAIVER AGREEMENT DATED 15.06.2006 BETWEEN THE APPLICANT AND LAND. WE REFER HERE TO PARA 7.5.6 OF THE IMPUGNED ORDER OF THE TRIBUNAL . DUE TO THE TAKEOVER OF LAND BY A US A - BASED COMPANY, THE APPLICANT EXERCISED ITS OPTION TO SELL ALL THE SHARES OF THE JVCO TO THE OTHER PARTNER. SECTION 2(14) DEFINES THAT CAPITAL ASSET MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSIO N. FURTHER, WE HAVE MENTIONED AT PARA 7.7 OF THE IMPUGNED ORDER , HOW TRANSFER HAS TAKEN PLACE IN THE ABOVE CASE. IN THIS CONTEXT REFERENCE HAS BEEN MADE TO THE WAIVER AGREEMENT DATED 15.06.2006 BETWEEN THE APPLICANT AND LAND. AT THE TIME OF ENTERING THE JVA, THE APPLICANT HAD PUT 50% FINANCIAL STAKE IN JVCO AND WAS ALSO ACTIVELY INVOLVED AND THE BUSINESS ACTIVITY OF THE SAID JVCO. THE RIGHT WAS BESTOWED, IN LIEU OF, OR ON THE CONSIDERATION OF SUCH FINANCIAL AND MANAGERIAL AND HRD INVESTMENT BY THE APPLICA NT IN JVCO. WE HAVE DISCUSSED THE SAME AT PARA 7.5.3 OF THE IMPUGNED ORDER. THE APPLICANT HAD ACQUIRED THIS RIGHT OF FIRST REFUSAL, DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 9 THE DATE IT ENTERED INTO THE JVA. THEREFORE, THE APPLICANT HAD NOT ACQUIRED THIS RIGHT FROM ANY PREVIOUS OWNER. ALL THE MORE , IT IS AN IMPORTANT RIGHT WHICH ENABLES THE APPLICANT AS WELL AS THE OTHER JV PARTNER TO CARRY ON THE BUSINESS. THEREFORE, THE COST OF ACQUISITION OF SUCH A RIGHT SHALL BE NIL AS PER THE PROVISIONS OF SECTION 55(2)(A) OF THE ACT. THUS, WE ARRIVED AT A FINDING THAT THE SAME IS CHARGEABLE AS SHORT TERM CAPITAL GAINS BECAUSE THE APPLICANT HAD EXERCISED ITS OPTION TO SALE ITS RIGHTS ON 08.05.2006 I.E. WITHIN 12 MONTHS OF THE JVA DAT ED 27.05.2005. 4.1 THE APPLICANT HAS MENTIONED THE DECISION IN PAYAL KAPUR (SUPRA) . WE HAVE DISCUSSED THE SAID DECISION AT PARA 7.1 OF THE IMPUGNED ORDER AND STATED THEREIN HOW THE CASE OF THE APPLICANT IS DISTINGUISHABLE FROM THE ABOVE CASE. ALSO THE APPLICANT HAS MENTIONED THE DECISION IN SAK INDUSTRIES PVT. LTD. (SUPRA) . WE HAVE DISCUSSED THE SAID DECISION AT PARA 7.2 OF THE IMPUGNED ORDER AND STATED THEREIN HOW THE CASE OF THE APPLICANT IS DISTINGUISHABLE FROM THE ABOVE CASE. FURTHER, THE APPLICANT HAS MENTIONED THE DECISION IN OBEROI HOTELS (P.) LTD. (SUPRA) . WE HAVE DISCUSSED THE SAID DECISION AT PARA 7.3 OF THE IMPUGNED ORDER AND STATED THEREIN HOW THE CASE OF THE APPLICANT IS DISTINGUISHABLE FROM THE ABOVE CASE . 4.2 A PERUSAL OF THE ABOVE FACTS CLEARLY INDICATE THAT THE APPLICANT HAS NOT POINTED OUT ANY MISTAKE APPARENT FROM THE RECORD. A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH TH ERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 10 A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN T.S. BALARAM, ITO V. VOLKART BROS ., (1971) 82 ITR 50 (SC), MASTER CONSTRUCTION CO. P. LTD. V. STATE OF ORISSA , AIR 1966 SC 1047, KARAM CHAND THAPAR & BROS. (COAL SALES) LTD. V. STATE OF U.P. (1976) TAX LR 1921, 1927 (SC) AND CCE V. ASCU LTD ., (2003) 9 SCC 230, 232. IN FACT, NOT A SINGLE ERROR IN THE IMPUGNED ORDER HAS BEEN POINTED OUT BY THE APPLICANT. WHAT THE APPLICANT WANTS IS A REVIEW OF THE ORDER PASSED BY THE TRIBUNAL. THE TRIBUNAL IS A CREATURE OF THE STATUTE. THE TRIBUNAL CANNOT REVIEW ITS OWN DECISION UNLESS IT IS PERMITTED TO DO SO BY THE STATUTE. THE HONBLE SUPREME COURT HAS HELD IN PATEL NARSHI THAKERSHI V. PRADYUMANSINGHJI ARJUNSINGHJI [AIR 1970 SC 1273] THAT THE POWER TO REVIEW IS NOT AN INHERENT POWER. IT MUST BE CONFERRED BY LAW EITHER SPECIFICALLY OR BY NECESSARY IMPLICATION. IT IS A SETTLED LAW THAT THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER IN THE GARB OF SECTION 254(2) OF THE ACT AS HELD IN CIT V. GLOBE TRANSPORT CORPN. [1992] 195 ITR 311 (RAJ) (HC), CIT V. ROOP NARAIN SARDAR MAL [2004] 267 ITR 601 (RAJ) (HC), CIT V. DEVILAL SONI [2004] 271 ITR 566 (RAJ) (HC), JAINARAIN JEEVRAJ V. CIT [1980] 121 ITR 358 (RAJ.) (HC), PRAJATANTRA PRACHAR SAMITI V. CIT [2003] 264 ITR 160 (ORI S SA) (HC), CIT V. JAGABAN DHU ROUL [1984] 145 ITR 153 (OR I S SA) ( HC), CIT & ANR. V. ITAT & ANR. [1992] 196 ITR 640 (ORISSA) (HC), SHAW WALLACE & CO. LTD. V. ITAT & OTHERS [1999] 240 ITR 579 (CAL) (HC), CIT V. SUMAN TEA & PLYWOOD INDUSTRIES PVT. LTD. [1997] 226 ITR 34 (CAL) (HC), ITO V. ITAT & ANR. [1998] 229 ITR 651 (PAT.) ( HC), CIT & ANR. V. ITAT & ANR. [1994] 206 ITR 126 (AP) (HC), ACIT V. C. N. ANANTHRAM [2004] 266 ITR 470 (KAR) (HC). DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 11 4.3 IN THE CASE OF RAMESH ELECTRIC & TRADING CO . (SUPRA), THEIR LORDSHIPS OF THE HONBLE BOMBAY HIGH COURT HAVE HELD: UNDER S. 254(2) OF THE IT ACT, 1961, THE TRIBUNAL MAY, WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD , AMEND ANY ORDER PASSED BY IT UNDER SUB - S (1) WITHIN THE TIME PRESCRIBED THEREIN. IT IS AN ACCEPTED POSITION THAT THE TRIBUNAL DOES NOT HAVE ANY POWER TO R EVIEW ITS OWN ORDERS UNDER THE PROVISIONS OF THE IT ACT, 1961. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO RECTIFY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. IN THE PRESENT CASE, IN T HE FIRST ORDER, THERE IS NO MISTAKE WHICH IS APPARENT FROM THE RECORD AT ALL. THE TRIBUNAL WAS REQUIRED TO DECIDE WHETHER THE COMMISSION PAYMENT OF RS.54,000 WAS DEDUCTIBLE UNDER S. 37. AFTER EXAMINING THE CIRCUMSTANCES, THE TRIBUNAL CAME TO A CONCLUSION T HAT IT WAS NOT SO DEDUCTIBLE. THE TRIBUNAL CANNOT, IN EXERCISE OF ITS POWER OF RECTIFICATION, LOOK INTO SOME OTHER CIRCUMSTANCES WHICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION SO ARRIVED AT. THE MISTAKE THE TRIBUNAL IS ENTITLED TO CORRECT IS NOT AN ERRO R OF JUDGMENT BUT A MISTAKE WHICH IS APPARENT FROM THE RECORD ITSELF. THE TRIBUNAL HAS, PATENTLY, FAR EXCEEDED ITS JURISDICTION UNDER S. 254(2) IN REDECIDING THE ENTIRE DISPUTE WHICH WAS BEFORE IT, IN THIS FASHION, AND THE TRIBUNAL HAS COMMITTED A GROSS AN D INEXPLICABLE ERROR. FAILURE BY 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. 5. IN VIEW OF THE FACTUAL SCENARIO AND POSITION OF LAW DELINEATED HEREINBEFORE , THE PRESENT MA, BEING DEVOID OF MERIT, IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 07/09/2018. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI ; DATED: 07/09/2018 RAHUL SHARMA, SR. P.S. DIGITAL ELECTRONICS LTD. MA NO. 322/MUM/2017 12 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI