JACOB ENGINEERING INDIA Private Limited , MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 10(2)(1), MUMBAI

MA 471/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6839 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Rectification of order; Search and seizure; International transaction
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE S/SHRI M BALAGANESH , ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER M.A. N O . 471 /M/201 8 (ARISING OUT OF ITA NO. 3700 /MUM/201 6 ) ( / ASSESSMENT YEAR: 2010 - 11 ) M/S. JACOB ENGINEERING INDIA PVT. LTD. JACOB HOUSE RAMKRISHNA MANDIR ROAD KONDIVITA, ANDHERI (E), MUMBAI - 400059 . / VS. ACIT - 10(2)(1) ROOM NO.216A AAYAKAR BHAVAN M.K. ROAD, MUMBAI - 400020. /. /. PAN/GIR NO. : AAACH 0456 J ( / APPELLANT ) / APPLICANT .. ( / RESPONDENT ) / DATE OF HEARING: 22 .0 2 .201 9 /DATE OF PRONOUNCEMENT: 28. 02. 2019 ORDER PER AMARJIT SINGH, J M BY VIRTUE OF THIS MISCELLA N EOUS APPLICATION THE ASSESSEE SEEKS TO MODIFY THE ORDER PASSED BY THIS TRIBUNAL ORDER IN ITA. NO.3700/M/2016 FOR THE A.Y.2010 - 11 DATED 10.01.2018. 2. DURING THE HEARING BEFORE US, T HE LD. AR STATED THAT AT THE TIME OF HEARING OF MAIN APPEAL BY THIS TRIBUNAL, HE HAD SUBMIT TED BEFORE THIS TRIBUNAL THAT IF THE COMPARABLE S WHICH AR E GOVERNMENT COMPANIES INCLUDED BY LD. TPO ARE EXCLUDED BY THIS TRIBUNAL , T HEN THE ASSESSEE WOULD BE FALLING WITHIN THE +/ - 5% RANGE AND ACCORDINGLY , T HE ENTIRE VALUE OF INTERNATIONAL TRANSACTION S OF THE ASSESSEE WOULD BE AT ARMS LENGTH WARRANTING NO ADJUSTMENT TO ARMS LENGTH PRICE (ALP). IN THAT SCENARIO, THE ADJUDICATION OF OTHER GROUND S RAISED BY THE ASSESSEE IN ITS APPEAL AS WELL AS BY THE REVENUE IN ITS APPEAL WOULD BECOME REVENUE BY: SHRI VIJARY KR. JAISWAL ASSESSEE BY: S HRI NIRAJ SHETH MA 471 / MUM/201 8 ACADEMIC IN NATURE. WE FIND THIS TRIBUNAL HAD INDEED PASSED AN ORDER ON 10.01.2018 VIDE PARA NO. 6 TO 8 WHEREIN IT HAD HELD THAT COMPARABLE WHICH ARE GOVERNMENT COMPANIES ARE NOT TO BE CONSIDERED AS COMPARABLE S FOR THE PURPOSE OF BENCH MARKING THE INTERNATIONAL TRANSAC TION S OF THE ASSESSEE. THIS TRIBUNAL BY PLACING RELIANCE ON THE ARGUMENT OF THE LD. AR AT THE TIME OF HEARING HAD ACCORDINGLY NOT ADJUDICATED OTHER GROUND S OF THE ASSESSEE AND THE REVENUE. 3. THE LD. AR AT THE TIME OF MISCELLANEOUS APPLICATION PROCEEDING STATED THAT ONLY IF THE COMPARABLE OF M.N. DASTUR AND COMPANY PVT. LTD. WHICH WAS SOUGHT TO BE INCLUDED BY THE LD. CIT (A), AGAINST WHICH REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL, IS DECIDED I N FAVOUR OF THE ASSESSEE, THEN ALONE THE ASSESSEE S MARGIN WOULD BE FALLING WITHIN +/ - 5% RANGE. THE LD. AR FAIRLY ADMITTED HIS MISTAKE OF MAKING AN INCORRECT STATEMENT BEFORE THIS TRIBUNAL AT THE TIME OF HEARING OF THE MAIN APPEAL WHICH WAS APPARENTLY MAD E BY HIM WITHOUT THE BENEFIT OF WORKINGS OF ARM S LENGTH PRICE PURSUANT TO EXCLUSION OF COMPARABLES WHICH ARE GOVERNMENT COMPANIES. THE LD. AR ALSO FAIRLY ADMITTED THAT BECAUSE OF HIS MISTAKE IN MAKING A WRONG STATEMENT BEFORE THIS TRIBUNAL, IT HAD EVENTUALLY RESULTED IN THE ORDER OF THIS TRIBUN AL BECOMING ERRONEOUS, WARRANTING RECTIFICATION U/S 254(2) OF THE ACT. THE LD AR ALSO STATED THAT THE LD. CIT(A) HA D INCLUDED M.N. DASTUR COMPANY PVT. LTD. AS A COMPARAB LES AS CHOSEN BY THE ASSESSEE BY HOLDING THAT THE TURNOVER FROM THE RELEVANT SEGMENT IS MORE THAN 90% AND HENCE NO SEGMENTAL DATA IS REQUIRED FOR THE SAME. IN RESPONSE THERETO, THE LD. DR STATED THAT THERE IS NO ERROR IN THE ORDER OF THE TRIBUNAL AND VEHEM ENTLY RELIED ON THE ORDER OF THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSION S . THE FACT S STATED HEREINABOVE BY LD. AR REMAIN UN DISPUTE D . WE FIND FROM THE ARGUMENT S OF THE LD. AR THAT IT IS ONLY HIS MISTAKE OF WRONGLY ADMITTING BEFORE THIS TRIBUNAL AT THE TIME OF HEARING OF THE MAIN APPEAL WHICH HAD EVENTUALLY RESULTED IN THE ORDER OF THIS TRIBUNAL BECOMING ERRONEOUS. IN THIS REGARD, HE PLACED RELIANCE UPON THE DECISION OF THE MA 471 / MUM/201 8 HONBLE SUPREME COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS L TD. VS. CIT REPORTED IN (295 ITR 466)(SC) WHEREIN HE PLACED RELIANCE ON PARA NO. 12 WHICH IS HEREBY REPRODUCED AS UNDER.: - 12 AS STATED ABOVE, IN THIS CASE WE ARE CONCERNED WITH THE APPLICATION U/S 254(2) OF THE 1961 ACT. AS STATED ABOVE, THE EXPRESSION RECTIFICATION OF MISTAKE FROM THE RECORDOCCURS IN SECTION 154. IT IS ALSO FINDS PLACE IN SECTION 254(2). THE PURPOSE BEHIND EN ACTMENT OF SECTION 254(2) IS BASED ON THE FUNDAMENTAL PRINCIPLE THAT NO PARTY APPEARING BEFORE THE TRIBUNAL, BE IT AN ASSESSEE OR THE DEPARTMENT, SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL. THIS FUNDAMENTAL PRINCIPLE HAS NOTHING TO D O WITH THE INHERENT POWERS OF THE TRIBUNAL. IN THE PRESENT CASE, THE TRIBUNAL IN ITS ORDER DATED 10.09.2003 ALLOWING THE RECTIFICATION APPLICATION HAS GIVEN A FINDING THAT SAMTEL COLOR LTD.S CASE (SUPRA) WAS CITED BEFORE IT BY THE ASSESSEE BUT THROUGH OVE RSIGHT IT HAD MISSED OUT THE SAID JUDGMENT WHILE DISMISSING THE APPEAL FILED BY THE ASSESSEE ON THE QUESTION OF ADMISSIBLE/ALLOWABILITY OF THE CLAIM OF THE ASSESSEE FOR EN HANCED DEPRECIATION U/S 43A. ONE OF THE IMPORTANT REASONS FOR GIVING THE POWER OF REC TIFICATION TO THE TRIBUNAL IS TO SEE THAT NO PREJUDICE IS CAUSED TO EITHER OF THE PARTIES APPEARING BEFORE IT BY ITS DECISION BASED ON A MISTAKE APPARENT FROM THE RECORD. 5. WE FIND THAT IT IS ADMITTED FACT THAT THE MISTAKE WAS COMMITTED ONLY BY THE LD. AR AT THE TIME OF HEARING OF THE MAIN APPEAL BY MAKING CERTAIN STATEMEN TS AS STATED (SUPRA). HENCE THERE CANNOT BE ANY MISTAKE THAT COULD BE ATTRIBUTED IN THE ORDER OF THIS TRIBUNAL WITHIN THE MEANING OF SECTION 254( 2 ) OF THE ACT WARRANTING RECTIFICATION. WE FIND THAT THE RELIANCE PLACED BY THE LD. AR OF ON THE DECISION OF HONBLE SUPREME COURT REFERRED TO (SUPRA) IS FACTUALLY DISTINGUISHABLE IN AS MUCH AS THE HONBLE SUPREME COURT HAD LAID DOWN ONLY A PROPOSITIO N THAT NOT FOLLOWING AN ORDER / JUDGMENT WHICH ACT AS A BINDING PRECEDENT WOULD MAKE THE ORDER OF THE TRIBUNAL ERRONEOUS WAR RANTING RECTIFICATION U/S 254(2 ) OF THE ACT. IN THE INSTANT CASE, IT IS THE LD. AR WHO HAD ADMITTED BY MAKING CERTAIN STATEMENTS AT THE TIME OF HEARING OF THE MAIN APPEAL WHICH WA S ACCEPTED AND FOLLOWED BY TRIBUNAL WHILE DISPOSING OFF THE MAIN APPEAL. WE ARE AFRAID THAT IF THE ARGUMENT OF THE LD. AR IS APPRECIATED THAT IT WOULD BE AGAINST THE PRO POSITION OF BINDING NATURE OF L AW OF C ONTRACTS , IN AS MUCH AS THE COUNSEL HAS BEEN APPOINTED BY THE ASSESSEE BY GIVING PROPER MA 471 / MUM/201 8 VAKALATNAMA IN THE NAME OF THE COUNSEL AND THE STATEMENT AND ARGU MENT ADVANCED BY SAID COUNSEL ARE TO BE CONSTRUED TO HAVE BEEN MADE ON BEHALF OF ASSESSEE AND SHALL BIND THE ASS ESSEE. WE ARE NOT INCLINED TO OPEN UP A PANDORA BOX BY AGREEING TO THE PROPOSITION ADVANCED BY THE LD. AR BEFORE US IN THE MISCELLANEOUS APPLICATION PROCEEDING. WITH THESE OBSERVATIONS , WE DO NOT DEEM IT FIT TO RECALL THE ORDER PASSED BY THIS TRIBUNAL. IN THE RESULT , THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED . ORDER WAS PRON OUNCED IN TH E OPEN COURT ON 28. 02.2019 SD/ - SD/ - ( M BALAGANESH ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI, DT: 28. 02.2019 VIJAY COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE, K , BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES