SUDHAKAR M. SHETTY, V. ASST. CEN CIR 13,

MA 575/MUM/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6188 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 28-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HEMANT LAL
• Assessee Lawyers: Y P TRIVEDIMS USHA DALAL; UTTAM CHAND BOTHRA
• Keywords: Capital asset; Reassessment proceedings
• Section: 2(14); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER MA NO. 575/MUM/2010 (ARISING OUT OF ITA NO. 1515/MUM/2010) (ASSESSMENT YEAR: 2007-08) SHRI SUDHAKAR M. SHETTY ACIT, CENTRAL CIRCLE - 13 402, SAGAR AVENUE, 54 S.V. ROAD 11TH FLOOR, OLD CGO BLDG. ANDHERI (W), MUMBAI 400058 VS. M.K. ROAD, MUMBAI 400020 PAN - ALPPS 0603 R APPLICANT RESPONDENT APPLICANT BY: SHRI Y.P. TRIVEDI, MS. USHA DALAL & SHRI UTTAM CHAND BOTHRA RESPONDENT BY: SHRI HEMANT LAL O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS A MISCELLANEOUS APPLICATION FILED BY THE AS SESSEE UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT), POINT ING OUT THAT THE ORDER OF THE TRIBUNAL DATED 09.09.2010, SUFFERS FROM CERTAIN APPARENT ERRORS AND IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE EITHE R RECALLED AND/OR REFERRED TO THE SPECIAL BENCH. 2. THE ISSUE THAT THE TRIBUNAL HAD TO ADJUDICATE IN TH E ABOVE APPEAL WAS AS TO WHETHER ON RETIREMENT FROM THE FIRM M/S. D.S. CORPORATION, AND RECEIVING A SUM OF ` 35,59,84,050/- IN LIEU OF GIVING UP ALL HIS RIGHT A S A PARTNER AND RIGHT, TITLE AND INTEREST OVER THE PART NERSHIP ASSETS, WOULD GIVE RAISE TO TRANSFER OF A CAPITAL ASSET GIVING RAISE T O INCIDENCE OF TAX ON CAPITAL GAIN. 3. THE SEQUENCE OF EVENTS BY WHICH THE ASSESSEE BECAME A PARTNER OF THE FIRM AND RETIRED FROM THE FIRM WERE AS FOLLOWS: 1. ASSESSEE AND MR. RAKESH KUMAR WADHWAN ENTERED INTO A PARTNERSHIP UNDER A DEED OF PARTNERSHIP DATED 01.08 .2005 FOR THE PURPOSE OF DEVELOPMENT OF THE PROPERTY. 2. THE NAME OF THE FIRM SO FORMED WAS M/S. D.S. CORPOR ATION. MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 2 3. ON 16 TH SEPTEMBER 2005, ANOTHER DEED OF ADMISSION CUM PARTNERSHIP OF PARTNERS WAS EXECUTED ADMITTING SMT. HEMLATA S. SHETTY AS PARTNER OF THE FIRM. 4. ON 23.09.2005, THE FIRM M/S. D.S. CORPORATION PURCH ASED FROM ONE MR. PERCIVAL JOSEPH PEREIRA THE PROPERTY FOR A CONS IDERATION OF ` 6.50 CRORES. THE SAID PLOT WAS OCCUPIED BY 81 TENANTS. T HE STAMP DUTY OFFICER VALUED THE SAID PLOT, WHICH WAS OCCUPIED BY 81 TENANTS, AT THAT TIME AT ` 6,50,00,000/- AND THE STAMP DUTY WAS PAID ON THE BASIS OF THE SAID VALUATION. THE CONVEYANCE WAS DUL Y REGISTERED. 5. ON 26.09.2005, ANOTHER DEED OF ADMISSION CUM RECONS TITUTION OF PARTNERSHIP WAS EXECUTED. THE FOLLOWING 2 MORE PART NERS WERE ADMITTED TO THE PARTNERSHIP :- 1) PRITHVI REALTORS & CAPITAL PRIVATE LIMITED 2) SHRI SARANG R. WADHWAN 6. THE FIRM THEREAFTER APPLIED TO THE MAHARASHTRA TOUR ISM DEVELOPMENT CORPORATION LTD. AND ALSO TO THE GOVERN MENT OF INDIA, MINISTRY OF TOURISM TO APPROVE A PROPOSAL FOR SETTI NG UP A FIVE STAR HOTEL ON THE SAID PLOT. THE MAHARASHTRA TOURISM DEV ELOPMENT CORPORATION LTD. VIDE THEIR LETTER DATED 18.01.2006 , AND THE GOVERNMENT OF INDIA, MINISTRY OF TOURISM VIDE THEIR LETTER DATED 08.03.2006 GRANTED THEIR SANCTION FOR SETTING UP A FIVE STAR HOTEL ON THE SAID PLOT. IN THE MEANTIME, OUT OF 81 TENANTS, 77 TENANTS WERE PAID COMPENSATION AND THUS SURRENDERED VACANT POSSE SSION. 7. IN THE MEANWHILE SMT. HEMLATA S. SHETTY, FOR DIVERS E REASON, EXPRESSED HER DESIRE TO RETIRE FROM THE PARTNERSHIP WHICH HAS BEEN MUTUALLY AGREED BY THE RETIRING AND CONTINUING PART NERS. FOR SETTLING THE ACCOUNTS OF RETIRING PARTNER, THE ASSETS OF THE PARTNERSHIP FIRM WAS REVALUED AS MUTUALLY AGREED BETWEEN THE RETIRIN G AND CONTINUING PARTNERS AND WHATEVER SURPLUS AVAILABLE ON ACCOUNT OF REVALUTION WERE CREDITED TO THE CAPITAL ACCOUNT OF RETIRING PARTNERS AS WELL AS CONTINUING PARTNERS IN THEIR PROFIT SHARING RATIO. THE REGISTERED VALUER ONE MR. A.R. NIGAM, INSPECTED THE PROPERTY ON 25.03.2006 AND GAVE A CERTIFICATE OF VALUATION DATE D 05.04.2006. AS PER THE SAID CERTIFICATE THE PROPERTY WAS VALUED AT ` 193,90,60,000/-. 8. A DEED OF RETIREMENT-CUM-ADMISSION AND RECONSTITUTI ON DATED 27.03.2006 WAS ENTERED INTO BY WHICH MRS. HEMLATA S UDHAKAR SHETTY RETIRED FROM THE FIRM AND ONE MR. ASHOK KUMA R GUPTA, MR. WARYAM SINGH, MR. KAPIL RAJESHKUMAR AND MR. SUNPREE T SINGH WERE ADMITTED AS INCOMING PARTNERS. 9. PRIOR TO RETIREMENT OF MRS. HEMLATA SUDHAKAR SHETTY , I.E., ON 26.03.2006, A PROFIT AND LOSS ACCOUNT WAS DRAWN. T HE PROPERTY WAS REVALUED AND THE SURPLUS ON REVALUATION OF THE LAND OF ` 1,54,39,90,435/- WAS SHOWN AS PROFIT AND WAS APPROP RIATED TO THE CAPITAL ACCOUNT OF THE PARTNERS OF THE FIRM AS ON 2 6.03.2006 IN THEIR PROFIT SHARING RATIO WHICH WAS AS FOLLOWS: RAKESH WADHWAN ` 54,03,96,652 SUDHAKAR SHETTY ` 30,87,98,087 MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 3 HEMLATA SHETTY ` 30,87,98,087 PRITHVI REALTORS & CAPITAL (P) LTD. ` 30,87,98,087 SARANG R. WADHWAN ` 7,71,99,522 10. ON 27.03.2006 MRS. HEMLATA SUDHAKAR SHETTY WAS PAID A SUM OF ` 31,40,48,088/- BEING THE SUM STANDING IN HER CAPITA L ACCOUNT. SHE RETIRED FROM THE FIRM D.S. CORPORATION AS AND F ROM 27.03.2006. 11. AS ON 31.3.2006, THE CAPITAL ACCOUNT OF THE ASSESSE E IN THE FIRM M/S. D.S. CORPORATION SHOWED THE FOLLOWING POSITION : OPENING BALANCE AS ON 1-4-2005 - NIL- DEPOSITS DURING THE PREVIOUS YEAR ` 4,45,00,000 INTEREST ` 26,85,963 PROFIT ON REVALUATION ` 30,87,98,087 ------------------ TOTAL ` 35,59,84,050 ------------------- THUS AS ON 31.03.2006 THE SUM STANDING TO THE CRED IT OF HIS CAPITAL ACCOUNT WAS ` 35,59,84,050/-. 12. ON 22.05.2006, THE ASSESSEE RETIRED FROM THE PARTNE RSHIP FIRM AND WAS PAID THE SUM STANDING TO THE CREDIT OF HIS CAPI TAL ACCOUNT. BUT FOR THE REVALUATION OF THE ASSET, THE CAPITAL ACCOU NT OF THE PARTNER WOULD NOT HAVE SHOWN A SUM OF ` 35,59,84,050/-. TO THE EXTENT OF ` 30,87,98,087/- THE CAPITAL ACCOUNT HAS BEEN ARTIFIC IALLY INCREASED JUST TO ENSURE THAT THE RETIRING PARTNER IS PAID CO NSIDERATION STANDING TO THE CREDIT OF HIS CAPITAL ACCOUNT. 4. ON THE ABOVE FACTS, THE TRIBUNAL HELD THAT IT WAS A CASE WHERE INSTEAD OF QUANTIFYING THE ASSESSEES SHARE BY TAKING ACCOU NTS ON THE FOOTING OF NOTIONAL SALE, PARTIES AGREED TO PAY A LUMP SUM IN CONSIDERATION TO THE RETIRING PARTNER ASSIGNING OR RELINQUISHING HIS SHA RE OR RIGHT IN THE PARTNERSHIP AND ITS ASSETS IN FAVOUR OF THE CONTINU ING PARTNERS. THUS THE RETIRING PARTNER WAS PAID SOMETHING OVER AND ABOVE THE SUM STANDING TO THE CREDIT OF HIS CAPITAL ACCOUNT AND THEREFORE THERE W AS A CAPITAL GAIN. 5. IN THIS M.A. THE FOLLOWING MISTAKES HAVE BEEN POINT ED OUT IN THE ORDER OF THE TRIBUNAL: 1. THAT THE TRIBUNAL HAS DISCUSSED IN PAGES 7 TO 20 AB OUT HOW PEOPLE ARE AVOIDING TAXES BY BRINING AN ASSET IN PARTNERSH IP AND THEN RETIRING BY TAKING MONEY. ACCORDING TO THE ASSESSE E, THIS DISCUSSION ON THE LAW IS VERY WELL MADE BUT IT IS ONLY ACADEMI C BECAUSE IN THE CASE OF THE ASSESSEE NO ASSET WAS BROUGHT INTO THE PARTNERSHIP BY ANY PARTNER WHO SUBSEQUENTLY RETIRED. MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 4 2. ACCORDING TO THE ASSESSEE, THE PROPERTY WHICH WAS A CQUIRED BY THE FIRM CONTINUED TO BE THE PROPERTY OF THE FIRM AND I T IS ONLY THE FIRM WHICH WILL BE LIABLE TO PAYMENT OF TAX ON CAPITAL G AIN IF IT IS TRANSFERRED AS A CAPITAL ASSET. ACCORDING TO HIM, IF THE PARTNER INSTEAD OF RETIRING AND TAKING THE MONEY STANDING T O HIS CREDIT IN HIS CAPITAL ACCOUNT HAD WITHDRAWN THE MONEY FROM HIS CA PITAL ACCOUNT WITHOUT RETIREMENT, THEN THERE WOULD NOT HAVE BEEN ANY INCIDENCE OF TAX. THUS ACCORDING TO THE ASSESSEE THE INCOME IS TAXED BOTH IN THE HANDS OF THE PARTNER AND THE FIRM AND WOULD AMOUNT TO DOUBLE TAXATION. 3. IT HAS FURTHER BEEN ALLEGED THAT THE TRIBUNAL RELIE D ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF N.A. M ODY VS. CIT 162 ITR 420 (BOM) WHICH WAS A DECISION RENDERED PRIOR T O THE INTRODUCTION OF THE PROVISIONS OF SECTION 45(4) OF THE ACT. AFTER THE INTRODUCTION OF THE PROVISIONS OF SECTION 45(4), IF AT ALL ANY SUM IS FOUND TAXABLE AS CAPITAL GAIN, IT HAS TO BE TAXED O NLY IN THE HANDS OF THE FIRM AND NOT IN THE HANDS OF THE PARTNER. 4. THAT THE TRIBUNAL FAILED TO APPRECIATE THE RATIO LA ID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRASHANT J OSHI 324 ITR 154(BOM) WHEREIN THE HONBLE BOMBAY HIGH COURT WHIL E CONSIDERING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDI NGS IN THE CONTEXT OF THE PROVISIONS OF SECTION 45(4) OF THE ACT HAD C ATEGORICALLY OBSERVED THAT UNDER SECTION 45(4) CHARGE TO CAPITAL GAIN TAX CAN ONLY BE IN THE HANDS OF THE PARTNERSHIP. 5. THE TRIBUNAL HAS NOT FOLLOWED THE DECISION OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF PRASHANT JOSHI (SUPRA) BY OBSERVING THAT THE HONBLE BOMBAY HIGH COURT HAD NOT CONSIDERED IN THE SAID DECISION THE EARLIER DECISION IN THE CASE OF N.A. M ODY (SUPRA). ACCORDING TO THE ASSESSEE, IT WAS NOT OPEN TO THE T RIBUNAL TO SAY SO AND BY DOING SO, THE TRIBUNAL WHICH IS A SUBORDINAT E BODY HAS SAT IN APPEAL OVER THE JUDGMENT OF HIGH COURT. THUS TH E TRIBUNAL BY DISAGREEING WITH THE VIEW EXPRESSED BY THE HONBLE HIGH COURT HAS COMMITTED A MISTAKE WHICH IS APPARENT FROM THE RECO RD. 6. THE TRIBUNAL DID NOT CONSIDER THE ARGUMENT OF THE L EARNED COUNSEL FOR THE ASSESSEE THAT WHATEVER IS RECEIVED BY AN AS SESSEE FROM THE FIRM CANNOT BE TAXED IN THE HANDS OF THE PARTNER IN VIEW OF THE SCHEME OF TAXATION OF FIRMS WHICH EXEMPTS THE SHARE OF PROFITS RECEIVED BY A PARTNER FROM A FIRM FROM TAXATION IN THE HANDS OF THE INDIVIDUAL PARTNER. ACCORDING TO THE ASSESSEE THIS ARGUMENT RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE BY RELYING ON THE PROVISIONS OF SECTION 10(2A) OF THE ACT, HAS NOT BEEN CONSIDER ED BY THE TRIBUNAL. 7. THAT THE TRIBUNAL FAILED TO CONSIDER THE DECISION O F THE CO-ORDINATE BENCH RENDERED IN THE CASE OF ITO VS. SMT. PARU D. DAVE DATED 22.12.2006 IN ITA NO.2583/MUM/1999 FOR A.Y. 94-95 R EPORTED IN 111 TTJ 288 (MUM) IN WHICH THE TRIBUNAL HAS HELD TH AT ON RETIREMENT OF A PARTNER FROM A FIRM, THERE IS NO IN CIDENCE OF CAPITAL GAIN TAX IN THE HANDS OF THE RETIRING PARTNER. ACC ORDING TO THE ASSESSEE, IF THE TRIBUNAL HAS NOT AGREED WITH THE V IEW OF A CO- MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 5 ORDINATE BENCH, THEN IT WAS DUTY BOUND TO REFER THE MATTER TO A LARGER BENCH/SPECIAL BENCH. 8. THAT THE TRIBUNAL HAS WRONGLY HELD THAT THE ASSESSE E WAS PAID A LUMP SUM AMOUNT OVER AND ABOVE THE AMOUNT STANDING TO HIS CAPITAL ACCOUNT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE STAND OF THE ASSESSEE AS STATED IN THE M.A. HE SUBMITTED THAT T HE TRIBUNAL WHEN IT DISAGREES WITH A VIEW TAKEN BY ANOTHER BENCH RENDER ED IN THE CASE OF ITO VS. SMT. PARU D. DAVE DATED 22.12.2006 IN ITA NO.2583/M UM/1999 FOR A.Y. 94-95 REPORTED IN 111 TTJ 288 (MUM) IN WHICH THE TR IBUNAL HAS HELD THAT ON RETIREMENT OF A PARTNER FROM A FIRM, THERE IS NO INCIDENCE OF CAPITAL GAIN TAX IN THE HANDS OF THE RETIRING PARTNER, SHOULD HA VE REFERRED THE MATTER TO A LARGER BENCH AND IN THIS REGARD RELIED ON THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DLF UNIVERSAL LTD. VS. CI T 306 ITR 271 (DEL) AND HONBLE GUJARAT HIGH COURT IN THE CASE OF AFFECTION INVESTMENTS LTD. VS. ACIT 326 ITR 255 (GUJ). IT WAS ALSO SUBMITTED THAT FAILURE TO CONSIDER DECISION OF CO-ORDINATE BENCH CITED AT THE TIME OF HEARING GIVES RAISE TO A MISTAKE APPARENT FROM THE FACE OF THE RECORD AS HEL D BY THE HONBLE SUPREME COURT IN THE CASE OF HONDA SIEL POWER PRODU CTS LTD. VS. CIT 295 ITR 466 (SC). 7. THE LEARNED D.R. SUBMITTED THAT THE ORDER OF THE TR IBUNAL DOES NOT SUFFER FROM ANY MISTAKE APPARENT FROM THE RECORD. IT WAS HIS SUBMISSION THAT IN THE GARB OF AN APPLICATION FOR RECTIFICATIO N, THE ASSESSEE IS VIRTUALLY SEEKING A REVIEW OF THE ORDER OF THE TRIBUNAL. HE SUBMITTED THAT UNDER SECTION 254(2) OF THE ACT ONLY MISTAKES APPARENT FR OM THE RECORD CAN BE RECTIFIED AND THE TRIBUNAL HAS NO POWER TO REVIEW I TS ORDER. ACCORDING TO HIM, THE TRIBUNAL HAS TAKEN A POSSIBLE VIEW AND THE REFORE IT CANNOT BE SAID THAT THERE IS A MISTAKE APPARENT ON THE FACE OF THE RECORD. IN THIS REGARD HE REFERRED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. 256 ITR 1 (DEL) (FB) WHERE IN IN THE CONTEXT OF REOPENING OF A CONCLUDED ASSESSMENT ON A MERE CHANG E OF OPINION OF THE A.O., IT WAS HELD THAT IF A POSSIBLE VIEW IS TAKEN THEN THAT VIEW CANNOT BE SOUGHT TO BE REVIEWED BY RESORTING TO THE POWERS UN DER SECTION 147 FOR REOPENING ASSESSMENT. IT WAS ALSO SUBMITTED BY THE LEARNED D.R. THAT THE DECISION IN THE CASE OF SMT. PARUL DAVE (SUPRA) WAS NEVER DISCUSSED BY THE MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 6 LEARNED COUNSEL FOR THE ASSESSEE IN THE COURSE OF H EARING OF THE APPEAL. IN ANY EVENT ACCORDING TO HIM THE SAID DECISION WAS NO T APPLICABLE AS IT WAS A CASE OF MERE REVALUATION OF ASSETS AND THERE WAS NO RETIREMENT. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF SUN ENGINEERING 198 ITR 297 (SC) FOR THE PROPOSITION THAT ONE CANNO T PICK AND CHOOSE SENTENCES FROM A JUDGMENT DIVORCED FROM THE CONTEXT IN WHICH THE SAID JUDGMENT WAS RENDERED. HE SUBMITTED THAT THE DECIS ION IN THE CASE OF PRASHANT JOSHI (SUPRA) WAS A CASE ON VALIDITY OF IN ITIATION OF REASSESSMENT PROCEEDINGS AND THEREFORE NOT RELEVANT TO THE CASE DECIDED BY THE TRIBUNAL. HE SUBMITTED THAT SECTION 10(2A) OF THE ACT HAD NO APPLICATION BECAUSE IN THE CASE OF THE ASSESSEE WHAT HE RECEIVED WAS NOT S HARE OF PROFITS FROM THE FIRM. ACCORDING TO HIM THE M.A. IS DEVOID OF MERI T AND SHOULD BE DISMISSED AS THERE IS NO APPARENT MISTAKE ON THE FACE OF THE RECORD OF THE TRIBUNAL. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE WILL DEAL WITH EACH OF THE OBJECTIONS RAISED BY THE ASSESSEE IN THE M.A. T HE OBJECTION LISTED AT SERIAL NO.1 ABOVE IS A GENERAL COMMENT AND DOES NOT REQUIRE ANY SPECIFIC CONSIDERATION. WITH REGARD TO OBJECTION AT SERIAL NO.2 AND 3 ABOVE, WE ARE OF THE VIEW SUCH ARGUMENTS BASED ON HYPOTHETICAL SITUA TION CANNOT BE CONSIDERED AT THIS STAGE. WHILE DECIDING THE APPEA L, WE HAVE ALREADY HELD IN PARA 19 AND 20 OF THE ORDER THAT SHARE OR INTEREST OF A PARTNER IN THE PARTNERSHIP AND ITS ASSETS WOULD BE PROPERTY AND TH EREFORE A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. TH EREAFTER WE HAVE EXAMINED THE QUESTION WHETHER ON RETIREMENT OF A PARTNER FRO M THE FIRM CAPITAL ASSET IS TRANSFERRED BY THE RETIRING PARTNER TO THE CONTI NUING PARTNER OR THE FIRM. IT CAN THUS BE SEEN THAT THE INCIDENCE ON TAX UNDER SECTION 45(4) ON THE FIRM ARISES WHEN THE FIRM RELINQUISHES RIGHTS OVER ITS A SSETS IN FAVOUR OF THE PARTNER. WHEN THE PARTNER RELINQUISHES HIS RIGHTS OVER THE ASSETS OF THE FIRM IN FAVOUR OF THE FIRM, THE SITUATION IS NOT COVERED BY SECTION 45(4) OF THE ACT. THESE ASPECTS HAVE BEEN DEALT WITH IN PARA 33 AND 3 4 OF THE ORDER OF THE TRIBUNAL. THEREFORE THE OBJECTION IN SERIAL NO.2 A ND 3 ABOVE IN OUR VIEW IS WITHOUT ANY BASIS. THESE OBJECTIONS DO NOT MAKE OU T A CASE OF MISTAKE APPARENT ON THE FACE OF THE RECORD. 9. WITH REGARD TO THE OBJECTION AT SL. NO. 4 AND 5 ABO VE, WE HAVE EXPRESSED OUR VIEW THAT THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 7 THE CASE OF PRASHANT S.JOSHI VS. ITO 324 ITR 154 (B OM) WAS IN THE CONTEXT OF VALIDITY OF INITIATION OF REASSESSMENT PROCEEDIN GS. IT WAS HELD IN THAT CASE THAT WHERE THE REASONS RECORDED DID NOT JUSTIFY REA SSESSMENT NOTICE, IT CANNOT BE SUPPORTED BY SOME OTHER REASON. IT WAS AL SO OBSERVED THAT WHERE COMPENSATION RECEIVED BY A PARTNER FROM THE FIRM OF WHICH HE WAS A PARTNER WAS SOUGHT TO BE ASSESSED AS REVENUE RECEIPT BY WAY OF A REASSESSMENT NOTICE, THE CLAIM WAS SOUGHT TO BE SUPPORTED BY THE FACT, THAT IT WAS ALLOWED AS REVENUE DEDUCTION IN THE HANDS OF THE FIRM, REAS SESSMENT NOTICE ON THIS GROUND IN THE CASE OF PARTNER WAS FOUND TO BE UNSUS TAINABLE. IN FACT, THE TREATMENT OF THE PAYMENT IN THE HANDS OF THE FIRM W OULD NOT EVEN OTHERWISE BE A RELEVANT INFORMATION FOR JUDGING THE CHARACTER OF RECEIPT IN THE HANDS OF PARTNER. SINCE THE REASONS RECORDED WERE NOT SUSTAI NABLE, THE NOTICE WAS HELD TO BE NOT VALID. THE MODE OF RETIREMENT OF TH E PARTNER IN THAT CASE WAS NOT THE SAME AS IN THE CASE OF THE ASSESSEE BEFORE THE TRIBUNAL. IN FACT, WE HAVE IN PARA 38 OF OUR ORDER EXPLAINED THAT THE MOD E OF RETIREMENT WILL BE RELEVANT AND THEREAFTER WE HAVE EXAMINED THE MODE O F RETIREMENT OF THE PARTNER AND APPLIED THE RATIO LAID DOWN BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF N.A. MODY (SUPRA). THE ALLEGATION I N THE M.A. THAT THE TRIBUNAL HAS REFUSED TO FOLLOW THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRASHANT S. JOSHI BY OBSERVING THAT THE HONBLE COURT HAD NOT CONSIDERED AN EARLIER JUDGMENT ON THE ISSUE AND THAT IT WAS NOT OPEN TO A SUBORDINATE COURT/TRIBUNAL TO DISAGREE WI TH THE DECISION OF HONBLE HIGH COURT, IS NOT CORRECT. THE VIEW EXPRE SSED BY THE TRIBUNAL IN PARA 52 OF ITS ORDER IS THAT MODE OF RETIREMENT IN THE CASE OF N.A. MODY (SUPRA) WAS DIFFERENT FROM THE MODE OF RETIREMENT I N THE CASE OF PRASHANT N. JOSHI (SUPRA) AND SINCE THE MODE OF RETIREMENT IN T HE CASE OF THE ASSESSEE WAS SAME AS WAS IN THE CASE OF N.A. MODY (SUPRA), T HE TRIBUNAL FOLLOWED THE RATIO LAID DOWN IN THAT DECISION. IN PARA 38 OF TH E ORDER, WE HAVE EXPLAINED AS TO HOW THE DECISION IN THE CASE OF N.A. MODY (SU PRA) WOULD STILL BE RELEVANT EVEN AFTER THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF TRIBHUVANDAS G. PATEL 236 ITR 515(SC). IT IS THEREF ORE NOT CORRECT TO SAY THAT THE ORDER OF THE TRIBUNAL SUFFERS FROM AN APPA RENT MISTAKE. 10. WITH REGARD TO OBJECTION AT SL.NO.6 ABOVE, WE ARE O F THE VIEW THAT THE SAME IS WITHOUT ANY BASIS. THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 8 FIRM WAS ON RETIREMENT FROM THE FIRM AND IT WAS NOT A SHARE OF PROFITS OF THE FIRM. THEREFORE SECTION 10(2A) OF THE ACT HAD NO A PPLICATION WHATSOEVER. THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD AS PRO JECTED IN THE M.A. IS DEVOID OF ANY MERIT. 11. WITH REGARD TO OBJECTION AT SL. NO. 7, WE ARE OF TH E VIEW THAT THE DECISION IN THE CASE OF SMT. PARUL DAVE (SUPRA) WAS NOT APPLICABLE AS IT WAS A CASE OF MERE REVALUATION OF ASSETS AND THERE WAS NO RETIREMENT. THEREFORE THE OBJECTION THAT CO-ORDINATE BENCH DECISION WAS N OT FOLLOWED AND IN THE EVENT OF THE BENCH NOT AGREEING WITH THE VIEW EXPRE SSED BY A CO-ORDINATE BENCH, A REFERENCE TO A LARGER BENCH OUGHT TO HAVE BEEN MADE, ARE ALL ALLEGATIONS WHICH IN OUR VIEW ARE DEVOID OF ANY MER IT. 12. THE LAST OBJECTION OF THE ASSESSEE IS THAT THE TRIB UNAL HAS WRONGLY HELD THAT THE PAYMENT BY THE FIRM ON RETIREMENT OF THE PARTNER WAS A LUMP SUM CONSIDERATION. THE TRIBUNAL IN ITS ORDER HAS G IVEN REASONS FOR COMING TO THIS CONCLUSION IN PARA- 39 TO 49 OF ITS ORDER. NO APPARENT MISTAKES IN THESE CONCLUSIONS HAVE BEEN POINTED OUT EXCEPT STAT ING THAT THE SAME IS ERRONEOUS. THEREFORE THE OBJECTION ON THIS COUNT I S ALSO WITHOUT ANY BASIS. 13. THE SCOPE OF POWER OF RECTIFICATION UNDER SECTION 2 54(2) IS WELL SETTLED. THE POWER OF RECTIFICATION UNDER SECTION 254(2) IS CONFINED TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD. THE TRIBUNAL DOE S NOT HAVE INHERENT POWER OF RECTIFICATION OR REVIEW OR REVISION. UNLES S THERE IS MISTAKE APPARENT FROM THE RECORD IN THE SENSE OF PATENT, OBVIOUS, CL EAR ERROR OR MISTAKE, THE TRIBUNAL CANNOT RECALL ITS PREVIOUS ORDER. IF THE E RROR OR MISTAKE IS ONE WHICH COULD BE ESTABLISHED ONLY BY LONG-DRAWN ARGUMENTS O R BY WAY OF PROCESS OF INVESTIGATION AND RESEARCH, IT IS NOT A MISTAKE APP ARENT FROM THE RECORD. UNLESS THERE IS MANIFEST ERRORS WHICH ARE OBVIOUS, CLEAR AND SELF-EVIDENT, THE TRIBUNAL CANNOT RECALL ITS PREVIOUS ORDER IN AN ATT EMPT TO REWRITE THE SAME. FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADV ANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT O N THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE TRIBUNAL CANNOT IN EXERCISE OF ITS POWER OF RECTIFICATION LOOK INTO SOME OTHER CIRCUMSTANCES WH ICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION. THE TRIBUNAL CANNOT REDECID E THE MATTER AND IT HAS NO POWER TO REVIEW ITS ORDER. THE TRIBUNAL HAS NO POWER TO RECTIFY A DECISION MA NO. 575/MUM/2010 SHRI SUDHAKAR M. SHETTY 9 ON DEBATABLE POINT OF LAW. THE TRIBUNAL DOES NOT HA VE THE POWER TO REVIEW ITS OWN DECISION EXCEPT WHAT IS AUTHORISED UNDER SECTIO N 254(2). A DECISION ON DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FR OM THE RECORD. 14. THE CIRCUMSTANCES UNDER WHICH TRIBUNAL CAN EXERCISE POWERS UNDER SECTION 254(2) ARE WHERE THE TRIBUNAL HAS OVERLOOKE D THE RELEVANT MATERIAL ON RECORD. IN SUCH A CASE IT WOULD BE AN ERROR APP ARENT FROM RECORD WHICH CAN BE RECTIFIED BY SETTING ASIDE THE ORDER FOR FRE SH CONSIDERATION. WHERE A MATERIAL FACT BROUGHT TO THE NOTICE OF THE TRIBUNAL HAS BEEN LOST SIGHT OF, THE TRIBUNAL HAS THE POWER TO RECTIFY THE MISTAKE SO CO MMITTED; PROVIDED THE MATERIAL FACT HAS AN IMPORTANT BEARING ON THE ULTIM ATE DECISION. IN THE PRESENT CASE BOTH THE AFORESAID SITUATIONS DO NOT E XIST. 15. WE ARE OF THE VIEW THAT THE PRESENT M.A. IS DEVOID OF ANY MERIT AND THE SAME IS DISMISSED. 16. IN THE RESULT, THE M.A. IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 23 RD MARCH 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) II, MUMBAI 4. THE CIT II, MUMBAI CITY 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.