3M India Ltd, Bangalore V. Addl.CIT, LTU, Bangalore

MA 42/BANG/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5320 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 22-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAMALADAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER MP NO.42/BANG/2017 (IN IT (TP) A NO. 72 7 / BANG/20 1 1 ) (ASSESSMENT YEAR: 2005 - 06) AND MP NO.140/BANG/2016 (IN IT(TP)A NO.72 5 /BANG/2011 ) (ASSESSMENT YEAR: 2005 - 06) M/S. 3M INDIA LTD., NO.48/51, ELECTRONIC CITY, HOSUR ROAD, BANGALORE - 560 100. PAN:AAACB 5724H VS. PETITIONER ADDL. COMMISSIONER OF INCOME - TAX (LTU), BANGALORE. RESPONDENT AND PETITIONER BY : SHRI SHARATH RAO, CA. RESPONDENT BY : SHRI KAMALADAR, STANDING COUNSEL DATE OF HEARING : 17/03/2017 DATE OF PRONOUNCEMENT : 31 /03/2017 O R D E R PER I NTURI RAMA RAO, AM : THESE ARE MPS FILED BY THE ASSESSEE PRAYING TH AT THE ORDER OF THE TRIBUNAL DATED 13/05/2016 IN IT (TP)A NO.725 & 727/BNAG/2011 REMANDING ISSUES TO THE AO/TPO FOR VERIFICATION OF WHETHER SERVICES ARE ACTUALLY RENDERED IN RESPECT OF PROVISION FOR ADMINISTRATIVE AND BUSINESS SUPPORT SERVICES AND TECHNICAL MP NO . 42 /BANG/201 7 PAGE 2 OF 5 SERVICES IS UNWARRANTED A S T HE FINDING OF THE TRIBUNAL IN PARA.4 OF THE ORDER THAT EVIDENCE IN SUPPORT OF BUSINESS SERVICES WAS FURNISHED FOR THE FIRST TIME BEFORE THE TRIBUNAL IS CONTRARY TO THE FACT THAT INFORMATION FILED FOR THE FIRST TIME BEFORE THE C IT(A). 2. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE TRIBUNAL, IN THE IMPUGNED ORDER, WHILE DEALING THE ISSUE OF ADMINISTRATIVE AND BUSINESS SUPPORT SERVICES AND TECHNICAL FEES HELD THAT ALP OF THE ABOVE TRANSACTIONS CANNOT BE DETER MINED AT NIL ON THE GROUND THAT NO BENEFIT WAS DERIVED BY THE ASSESSEE - COMPANY BY INCURRING SUCH EXPENDITURE AND THEREFORE THERE WAS NO NECESSITY OF INCURRING OF SUCH EXPENDITURE. HOWEVER, THIS TRIBUNAL HELD THAT ONUS LIES ON THE ASSESSEE - COMPANY TO PROVE THAT ABOVE SERVICES WERE ACTUALLY RENDERED BY THE AE COMPANY. THE ASSESSEE - COMPANY HAD FILED, FOR THE FIRST TIME, CERTAIN EVIDENCE BEFORE THE CIT(A) IN AN ATTEMPT TO PROVE THAT SERVICES ARE ACTUALLY BENEFITTED THE ASSESSEE - COMPANY. THE CIT(A), ON CONSID ERING THAT EVIDENCED HAD GRANT E D RELIEF IN RESPECT OF EXPENDITURE INCURRED ON IT SUPPORT SERVICES TO THE EXTENT OF RS.1,16,13,640/ - . THE CIT(A) HAD GRANTED RELIEF TO THE ASSESSEE - COMPANY CONSIDERING BENEFITS DERIVED BY THE ASSESSEE - COMPANY ON ACCOUNT OF I NCURRING OF SUCH EXPENDITURE. BUT ON PERUSAL OF THE ORDER OF THE CIT(A) (PARAS.10.201 AND 10.202) IT IS NOT DISCERNABLE THAT THE CIT(A) HAS COME TO THE CONCLUSION THAT SERVICES ARE ACTUALLY RENDERED BY THE AE IN RESPECT OF IT SUPPORT SERVICES. THEREFORE THE TRIBUNAL, IN ITS WISDOM, FELT THAT THE MP NO . 42 /BANG/201 7 PAGE 3 OF 5 MATTER REQUIRE S REMAND TO THE AO/TPO FOR DUE VERIFICATION OF ASPECT OF RENDITION OF ACTUAL SERVICES AS NOTHING IS DISCERN ABLE FROM THE ORDER OF THE CIT(A) THAT THE CIT(A) HAS REACHED SATISFACTION AS TO RENDITION O F SERVICES BY AE. IT APPEARS FROM PERUSAL OF THE ORDER OF THE CIT(A) THAT THE CIT(A) HAD DEALT THIS ISSUE FROM THIS PERSPECTIVE. THE TRIBUNAL HAS ALREADY RENDERED A FINDING THAT EVIDENCE ON RECORD DOES NOT CONCLUSIVELY PROVE THAT SERVICES ARE ACTUALLY RE NDERED BY AE. IT IS FURTHER MENTIONED THAT THE ASSESSEE - COMPANY MERELY DESCRIBED THE NATURE OF SERVICES RENDERED WHICH DOES NOT CONCLUSIVELY PROVE THAT SERVICES ARE RENDERED BY THE AE. THIS ISSUE UNDOUBTEDLY REQUIRES VERIFICATION OFVARIOUS FACTUAL EVIDEN CE. THEREFORE, TRIBUNAL FELT THAT THIS ISSUE REQUIRES REMAND TO THE AO/TPO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. FURTHER JURISDICTION OF CIT(A) ON ISSUES INVOLVING FACT S CAN BE EXERCISED ONLY IF THERE IS A FINDING BY LOWER AUTHORITIES . THE CIT (A) CAN ONLY GIVE A FINDING AS TO CORRECTNESS OR OTHERWISE OF THE DECISION OF THE LOWER AUTHORITIES IN THE GIVEN FACTS OF THE CASE. IT IS NOT THE CASE OF THE ASSESSEE - COMPANY THAT IT HAS FILED THIS INFORMATION BEFORE TPO/AO AND HE HAD FAILED TO RENDER A FINDING ON THIS ISSUE. THE SUBMISSION OF THE ASSESSEE - COMPANY THAT WHEN THE CIT(A) HAD CALLED FOR INFORMATION ON HIS OWN, THERE IS NO NEED TO CALL FOR REMAND REPORT FROM THE AO IS IRRELEVANT IN THE FACTS OF THE PRESENT CASE BECAUSE ASSESSEE - COMPANY HAS NOT PROVED THAT THE CIT(A) HAS CALLED FOR INFORMATION/EVIDENCE TO PROVE THAT SERVICES ARE ACTUALLY RENDERED MP NO . 42 /BANG/201 7 PAGE 4 OF 5 BY THE ASSESSEE - COMPANY. THIS TRIBUNAL REMANDED THE MATTER AFTER CONSIDERING THE ENTIRE SUBMISSIONS OF THE ASSESSEE - COMPANY AND HAD COME TO CONCLUSION THAT THE CASE REQUIRES REMAND TO THE TPO/AO FOR DUE VERIFICATION OF THE EVIDENCE ON THE ASPECT OF RENDITION OF SERVICES . THEREFORE, WE DO NOT FIND ANY ILLEGALITY OR MISTAKE APPARENT IN THE IMPUGNED ORDER SO AS TO ENABLE US TO MODIFY THE DIRECTION OF REMA ND TO THE AO/TPO. FURTHER IT IS TRITE LAW THAT IN THE PROCEEDINGS U/S 254, THE FINAL CONCLUSION REACHED BY THE TRIBUNAL IN THE EARLIER ORDER CANNOT BE DISTURBED. RELIANCE IN THIS REGARD CAN BE PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. MCDOWELL & CO.LTD . (2 69 ITR 451) WHEREIN IT WAS HELD AS FOLLOWS: '9. WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE ISSUE. SECTION 35(1)(E) PROVIDES THAT WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD, THE TRIBUNAL MAY AME ND ANY ORDER PASSED BY IT UNDER SECTION 24. SUB SECTION (5) OF SECTION 35 PROVIDES THAT WHERE AN AMENDMENT IS MADE UNDER SECTION 35, AN ORDER SHALL BE PASSED IN WRITING BY THE TRIBUNAL. THE POWER VESTED IN THE TRIBUNAL, BY SECTION 35, IS ONLY TO AMEND THE ORDER, TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD AND NOT TO REVIEW ITS ORDER. SECTION 35 ALSO CLEARLY STATES THE MISTAKE SHOULD BE RECTIFIED BY AMENDING THE ORIGINAL ORDER. THEREFORE, RECTIFICATION PRESUPPOSES THE CONTINUED EXISTENCE OF THE ORIGINAL ORDER. WHEN AN AMENDMENT IS MADE TO THE ORIGINAL ORDER, THE AMENDMENT MERGES WITH THE ORIGINAL ORDER. THE ORIGINAL ORDER IS READ WITH THE AMENDMENT THERETO. IF THE POWER TO RECTIFY THE ORIGINAL ORDER BY WAY OF AMENDMENT TO THAT ORDER IS TO BE INTERPRETED A S PERMITTING RECALLING OF THE ORIGINAL ORDER, THEN THE ORIGINAL ORDER CEASES TO EXIST AND A FRESH ORIGINAL ORDER IS MADE. RECALLING THE ORIGINAL ORDER INVOLVES REHEARING OF THE MATTER WHICH IS NOT THE PURPOSE AND INTENTION OF THE PROVISION FOR RECTIFICATIO N. WHEN THE WORDING OF THE STATUTORY PROVISION ARE CLEAR AND UNAMBIGUOUS AND CAN BE GIVEN EFFECT WITHOUT ANY DIFFICULTY, IT IS NOT PERMISSIBLE TO GIVE AN EXTENDING MEANING TO THE PROVISION. THE WORDS 'AMENDED THE ORIGINAL ORDER TO RECTIFY ANY MISTAKE APPAR ENT FROM THE RECORD' DOES MP NO . 42 /BANG/201 7 PAGE 5 OF 5 NOT MEAN RECALL THE ORIGINAL ORDER, REHEAR THE MATTER AND REPLACE THE ORIGINAL ORDER BY A FRESH ORDER. THE PURPOSE CAN BE ACHIEVED BY CONTINUING THE ORIGINAL ORDER AND PASSING AN AMENDMENT ORDER STATING WHATEVER IS NECESSARY TO RE CTIFY THE MISTAKE APPARENT FROM THE RECORD. WHETHER THE ISSUE INVOLVED IS ONE OR MORE MAKES NO DIFFERENCE, AS WHAT IS CONTEMPLATED AND PROVIDED FOR IS AN AMENDMENT TO THE ORIGINAL ORDER AND NOT AN ORDER IN SUBSTITUTION OF THE ORIGINAL ORDER. THE FINDING O F THE TRIBUNAL THAT INFORMATION WAS FILED FOR THE FIRST TIME IN PARA.4.1 IS HEREBY DELETED. 3. THE MP IS DISPOSED ON THE ABOVE LINES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST M ARCH, 2017 SD/ - SD/ - (VIJAY PAL RAO) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 31 /0 3/2017 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE