Signode India Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-3(2), Hyderabad

MA 69/Hyd/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6260 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-12-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-09-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Depreciation; Valuation report; Set aside
• Section: 32; 192; 254(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SH RI SAT B EER S INGH GO DA RA , JU DI CIA L MEMBE R AND SHR I L AXMI PR AS A D SAHU , AC COUNT ANT MEMBE R M.A.No. 69/Hyd/2021 (in ITA No. 954/H/2019 Assessment Year: 2014-15 Signode India Ltd., Hyderabad. PAN – AAHCS 8120 Vs. Dy. Commissioner of Income-tax, Circle – 3(2), Hyderabad. (Appellant) (Respondent) Assessee by: Shri Ajay Vohra Revenue by: Shri YVST Sai/CIT-DR Date of hearing: 22/10/2021 Date of pronouncement: 16/12/2021 O R D E R PER L. P. SAHU, A.M.: This Miscellaneous Application is filed by the assessee u/s 254(2) of the Income Tax Act seeking rectification/modification of the order of the Tribunal dated 24/02/2021 in ITA No. 954/Hyd/2019. 2. In the MA, the assessee stated as under: M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 2 -: “Re: Miscellaneous Application under Section 254(2) of the Income Tax Act, 1961 ('the Act') for rectification of mistakes apparent from the record in the order dated 24.02.2021 passed in ITA No. 954/H/2021 ('order'). In connection with the captioned matter, it is respectfully submitted as under: The impugned order dated 24.02.2021 was passed by the Hon'ble Income Tax Appellate Tribunal, Bench B, Hyderabad ('Tribunal') dismissing the appeal bearing ITA No. 954/H/2019 filed by the Applicant for the Assessment Year ('AY') 2014-15. The present application under Section 254(2) of the Act is being filed for rectification of certain glaring/ patent mistakes apparent from record in the order dated 24.02.2021, which calls to be rectified for the following reasons since these have bearing on the conclusion arrived at by the Hon'ble Tribunal, in denying the claim of depreciation on goodwill and intangible assets acquired by the Applicant: Facts: During the relevant A Y, the Applicant acquired the Industrial Packing Business Undertaking ('IPB undertaking') by way of slump sale from ITW India Limited (ITW India/ 'transferor entity') under business transfer agreement dated 22.11.2013 ('BTA'/ 'slump sale agreement'), for a lumpsum consideration of Rs.1240 crores which was allocated over various tangible and intangible assets (compendiously accounted as goodwill) as per the Purchase Price Allocation Report ('PPA Report') dated 02.06.2014. The slump sale of the IPB undertaking was one of the multiple steps undertaken towards hiving off the entire industrial packaging business globally to an unrelated and independent third-party group i.e., the Carlyle M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 3 -: Group and within a short span of 6 months, the ownership of the Applicant was transferred from Illinois Tools Works Inc, USA ('ITW Inc') to the Carlyle Group. The accounting of various tangible and intangibles acquired under slump sale was based upon the PP A report prepared by independent valuers in accordance with the internationally accepted/ recognized standards of valuation. The terms of engagement of the valuers for the purpose of the PP A report were decided by the Applicant. The Ld. Assessing Officer allowed depreciation on tangible assets acquired under slump sale, at the values allocated thereto; however, depreciation of Rs.99,09,96,797 claimed under Section 32(1)(ii) of the Act on the aforesaid acquired goodwill and intangible assets was disallowed by the Ld. Assessing Officer and further, the appeal against the same was dismissed by the Hon'ble Commissioner of Income tax (Appeals) ['CIT(A)']. The aforesaid finding returned by the Ld. Assessing Officer and affirmed by the Hon'ble CIT(A) was subject matter of challenge before the Hon'ble Tribunal. In our respectful submission, the order dated 24.02.2021 passed by the Hon'ble Tribunal suffers from following patent and glaring errors of fact and law which have vitiated the conclusion arrived at by the Hon'ble Tribunal, requiring the order to be recalled for a fresh hearing in the matter: 1. Hon'ble Tribunal acted in excess of jurisdiction by making out a new case for Revenue The order passed by the Hon'ble Tribunal is in excess of jurisdiction since the Hon'ble Tribunal has made out a completely new case for the Revenue, which was not the case set up by the Ld. Assessing Officer/ Hon'ble CIT(A) against the Applicant, in the absence of appeal being M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 4 -: preferred by the Revenue. The Ld. Assessing Officer I Hon'ble CIT(A) denied in principle the claim of depreciation on intangible assets acquired as part of the undertaking purchased vide slump sale agreement dated 22.11.2013 on the ground that other than goodwill acquired from Mis. Wintek Flexo Prints ('Wintek') in the year 2012, there was no goodwill appearing in the books of the transferor entity and, therefore, the claim of depreciation on the value(s) allocated thereto (out of the slump price) was not admissible under Section 32(1) of the Act. It is relevant to note that the Ld. Assessing Officer/ Hon'ble CIT(A) did not at any stage dispute the allocation of the slump price over depreciable tangible and intangible assets; in the other words, by allowing the claim of depreciation on the value allocated to tangible assets acquired as part of slump price, the Ld. Assessing Officer/ Hon'ble CIT(A) raised no dispute on the valuation placed on intangible assets acquired as part of the undertaking. The Hon'ble Tribunal, however, has made out a completely new case, while dismissing the appeal of the Applicant by holding as under: (i) In paragraphs 7.19 to 7.21 at pages 52-54 of the order, the Hon'ble Tribunal held that as per Paragraph 2 of the slump sale agreement read with Exhibit C thereto, intellectual property rights relating to IPB undertaking were retained and not transferred by ITW India and thus, no intangible assets eligible for depreciation were actually acquired by the Applicant. Further, although the PP A Report stated that goodwill was attributable towards various intangible assets, however, no separate values were assigned to such intangibles. (ii) In paragraphs 7.13 and 7.14 at pages 47-48 of the order, the Hon'ble Tribunal held that the transaction of slump sale of IPB undertaking was carried out to claim higher depreciation through artificially inflating the M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 5 -: transfer! purchase price of the said undertaking since the transaction was carried out between related companies having common parent/holding company. (iii) At page 45 of the order, the Tribunal held that the land was not recorded at fair market value and the value of land was suppressed in order to artificially enhance the value of goodwill! intangible assets for the purpose of claiming depreciation thereon. (iv) In paragraph 7.16 at pages 49-50 of the order, the Hon'ble Tribunal held that since prior to the slump sale, ITW India did not have any goodwill attributable to the IPB undertaking in its books of account, except a small amount of goodwill which had arisen on acquisition of Wintek, fictional goodwill of higher value has been created for the purpose of claiming depreciation. (v) In paragraph 7.18 at page 51 of the order, the Hon'ble Tribunal observed that as per Paragraph 10.2 of the Valuation report dated 02.06.2014, the purchase consideration was for acquisition of 100% equity and thus, the excess consideration paid was for acquiring control over management of ITW India and not towards goodwill. (vi) The Hon'b1e Tribunal has, in paragraphs 7.17, 7.22 -7.24 at pages 54-59 of the order, invoked Explanation 3 to Section 43(1) of the Act [referred as third proviso to Section 43(1) of the Act] to disregard the transfer price and also erroneously relied on Section 55(2)(a)(ii) of the Act and fifth proviso (now sixth proviso) to Section 32(1) of the Act for disallowing depreciation on goodwill in the hands of the Applicant. The Tribunal also relied upon the decision of the Bangalore bench of the Tribunal in the case of United Breweries Ltd. vs. A CIT [2016J 76 taxmann.com 103 (Bangalore Tribunal). It is settled law that the Tribunal cannot make out a new case to the detriment of the assessee, where the M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 6 -: Revenue has not filed an appeal; nor can the Tribunal take away the relief granted by the Assessing Officer. The law in this regard is declared by the apex Court in the case of MCorp Global (P.) Ltd. v. CIT: [2009J 309 ITR 434 (SC) wherein Their Lordships observed as under: "6. In the case of Hukumchand Mills Ltd. v. CIT [1967J 63 ITR 232 this Court has held that under section 33(4) of the Income-tax Act, 1922 [equivalent to section 254(1) of the 1961 Act, the Tribunal was not authorized to take back the bene It ranted to the assessee by the Assessing Officer. The Tribunal has no power to enhance the assessment. Applying the ratio of the said judgment to the present case, we are of the view that, in this case, the Assessing Officer had granted depreciation in respect of 42,000 bottles out of the total number of bottles (5,46,000), by reason of the impugned judgment. That benefit is sought to be taken away by the Department, which is not and the Tribunal.” (Emphasis supplied) In terms of the dictum of law authoritatively pronounced by the Hon'ble Supreme Court, the Tribunal is restricted to the case set up by the Assessing Officer against the assessee and cannot, in an appeal by the assessee enlarge or make out a new case for the Revenue. Having regard to the aforesaid well settled position in law, the Hon'ble Tribunal erred in denying the claim of depreciation on intangible assets acquired as part of the slump purchase on the ground that intangibles were not transferred and fictional goodwill of higher value was created for the purpose of claiming depreciation, etc. While holding as aforesaid, the Hon'ble Tribunal acted in excess of jurisdiction; as a result thereof, the impugned order suffers from mistake apparent from record requiring rectification, by recalling the same for de novo hearing. M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 7 -: Ignoring the binding decisions rendered by the Courts and co-ordinate benches of the Tribunal The Applicant in the course of the hearing referred to the following judicial precedents rendered by the Courts and benches of the Tribunal which have unequivocally and unambiguously held that the valuation placed on intangible assets/ goodwill, basis a scientific and reasonable allocation of the slump price, was entitled for depreciation under Section 32(1) of the Act, notwithstanding that the (self-generated) intangible assets/ goodwill did not appear in the books of the transferor entity: • CIT vs. Smifs Securities Ltd.: (2012) 348 ITR 302 (SC) • Areva T and D India Ltd. vs. DCIT: 345 ITR 421 (Delhi High Court) • Triune Energy Services Private Limited vs. DCIT: 237 Taxman 230 (Delhi High Court) • CIT vs. Hindustan Coca-Cola Beverages (P) Ltd.: 331 ITR 192 (Delhi High Court) - SLP filed by revenue has been dismissed by the Supreme Court in SLP No. 26151/2011 • The AP Paper Mills Ltd. vs. ACIT: 128 TTJ 596 (Hyderabad Tribunal) • SKS Micro Finance Ltd. vs. DCIT: 160 lTD 364 (Hyderabad Tribunal) • ThyssenKrupp Elevator (India) (P.) Ltd. vs. ACIT: 167 TTJ 131 (Delhi Tribunal) • Dr. Reddy's Laboratories Ltd vs. Addl CIT (2017) 53 ITR (T) 285 (Hyderabad Tribunal) M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 8 -: • SWAWS Credit Corporation (P) Ltd vs. DCIT ITAT No.24/Hyd/2013 (Hyderabad Tribunal) Further, the Applicant had specifically referred to the decision of the Delhi High Court in the case of Triune Energy Services Private Limited vs. DCIT (supra) for the proposition that mere non-bifurcation of goodwill into various intangible assets (compendiously described as goodwill does not, by itself, adversely impact the claim of depreciation under Section 32 of the Act. Ignoring the binding precedents in the form of decisions from the Hon'ble Supreme Court/ High Courts and co- ordinate benches of the Tribunal in support of the claim of depreciation on intangible assets acquired as part of the slump purchase of the undertaking, cited during the course of the hearing before the Hon'ble Tribunal amounts to mistake apparent from record, which requires rectification under Section 254(2) of the Act as held by the Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. v CIT: 295 ITR 466 (SC). In the aforesaid decision, the Hon'ble Supreme Court dilated on the scope of rectification under Section 254(2) of the Act, in the following terms: “13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal (or the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 9 -: record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. In our view, the High Court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case. " (Emphasis supplied) 3. Incorrect assumption of facts by the Hon'ble Tribunal The Hon'ble Tribunal has in coming to the conclusion recorded the following incorrect facts: (i) The Hon'ble Tribunal observed that intangible assets relating to IPB undertaking were retained and not transferred by the ITW India without appreciating that Paragraph 2 read with Exhibit B of the slump sale agreement clearly states that the intangible assets of industrial packaging business were specifically transferred by ITW India to the Applicant. Exhibit C as relied upon by the Hon'ble Tribunal refers to intangible assets pertaining to the business other than the IPB undertaking that was retained by ITW India. (ii) Slump sale was carried out to claim higher depreciation by artificially inflating the transfer price! purchase price of IPB undertaking resulting in undue benefit at the cost of Revenue without appreciating that there was no loss of revenue since ITW India paid tax of Rs.183 crores on capital gains of Rs. 807 crores arising from the aforesaid transaction. (iii) Further, given that the Applicant has paid purchase consideration to ITW India for acquiring the IPB undertaking, the difference between the consideration paid and fair market value of net assets taken over which has been recorded as goodwill M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 10 -: represents actual goodwill acquired by the Applicant and not any fictional goodwill as held by the Hon'ble Tribunal (Paragraph 7.13 of the order). (iv) The Hon'ble Tribunal erred in holding that land was not recorded at fair value without appreciating that the value of land was determined by the Independent Valuer in the PP A report based on market approach i.e., sales comparison method and the said value was higher than the market value of land fixed by the Sub-Registrar, which substantiates that the value of land was not deflated for generating artificial goodwill in the books of the transferee company. The Applicant had filed copies of the valuation report containing value of land(s) as certified by the respective Sub- Registrar(s) which was not considered! appreciated by the Hon'ble Tribunal while arriving at the aforesaid conclusion. (v) The Hon'ble Tribunal erred in concluding that the transaction was a related party transaction intended to obtain undue tax benefit without appreciating the fact that slump sale was on account of business! commercial considerations, as part of larger global restructuring and within a short span of 6 months, the ownership of the applicant stood transferred from ITW group to the Carlyle Group which was an unrelated and independent third party. Thus, the Hon'ble Tribunal failed to appreciate that the entire transaction was undertaken at arm's length and for economic and commercial reasons, and the same was not intended to derive any tax advantage. (vi) Goodwill of Wintek unit was the goodwill purchased/ acquired by ITW India and hence, accounted in its books of accounts. However, the goodwill adopted in the books of the Applicant not only included the goodwill as existing in books of ITW India but also the value of self-generated goodwill and other intangible assets relating to the IPB undertaking, which M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 11 -: were acquired for consideration from ITW India by the Applicant. The Hon'ble Tribunal failed to appreciate that the revenue from Wintek division formed just 6% of the total revenue of IPB undertaking and out of goodwill recorded of Rs. 792.79 crores approx., substantial portion related to non- Wintek business of IPB undertaking. Thus, the Hon'ble Tribunal erred in not appreciating that the entire IPB Undertaking (a small part of which comprised of the Wintek business) was transferred by ITW India to the Applicant. (vii) The Hon'ble Tribunal erred in not appreciating that the term "equity" has been used in the Valuation Report to denote the value of the property over and above the indebtedness of the unit acquired and not share capital, per se, as erroneously inferred in the order by the Hon'ble Tribunal. The Applicant did not acquire shares of ITW India nor had any intention to participate in the management of ITW India and the transaction was limited to acquisition of IPB undertaking from ITW India. (viii) The Hon'ble Tribunal referred to the scope and limitations mentioned in Valuation Report and incorrectly observed that valuation was nothing but an arithmetical exercise without appreciating that neither the AO nor the CIT(A) disputed the slump price/ purchase consideration of Rs. 1,240 crores which changed hands between the parties and the allocation thereof between tangible depreciable assets and intangible assets stood accepted in view of the fact that the AO allowed depreciation on the value allocated (out of the slump price) to tangible assets. Further, the limitations mentioned in the Valuation Report and PP A report were standard caveats/ disclaimers required to be stated in accordance with the recognised valuation standards. The incorrect assumption of facts as aforesaid has vitiated the conclusion arrived at by the Hon'ble M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 12 -: Tribunal. The Hon'ble Supreme COUli has in the cases of Dhirajlal Girdharilal vs. CIT: 26ITR 736 (SC) and CIT vs. Daulat Ram Rawatmull: 87 ITR 349 (SC) held that where the Court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used in arriving at its finding and thus, use of inadmissible/ irrelevant material vitiates the entire finding. In that view of the matter, the order passed by the Hon'ble Tribunal suffers from mistake apparent from record which requires rectification. 4. Misplaced reliance on various provisions of the Act The Hon'ble Tribunal has, for the first time, invoked certain provisions of the Act, which have no application in the present case, as elaborated hereunder: _ Explanation 3 to Section 43(1) of the Act - The Hon'ble Tribunal, suo-motu, and for the first time also invoked Explanation 3 to Section 43(1) of the Act [referred as third proviso to Section 43(1) of the Act] to disregard the transfer price of slump sale transaction. In the present case, the transfer price and allocation thereof to various assets is duly supported by independent valuer's report and the Ld. Assessing Officer has not brought out any evidence on record to substantiate that the transfer price is excessive. It is further pertinent to note that Explanation 3 to Section 43(1) of the Act can only be invoked by the assessing officer by discharging the burden set out therein and not by the Hon'ble Tribunal, suo motu, for the first time. Section 55(2)(a)(ii) of the Act - The Hon'ble Tribunal relied upon provisions of Section 55(2)(a)(ii) of the Act to hold that since cost of intangible assets in the hands of transferor is NIL, thus, the cost of such assets in hands of the transferee would also be NIL without M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 13 -: appreciating that Section 55(2) provides for cost of acquisition in the hands of the transferor while computing capital gains on transfer of such assets and the said Section is not relevant for determining the cost of asset in the hands of the acquirer. Since, the Applicant purchased intangible assets by actually discharging consideration, therefore (amount allocated out of the slump price paid) such allocated value shall be the actual cost of acquired assets in the hands of the Applicant (acquirer). Fifth now Sixth to Section 32 1 of the Act - The Hon 'ble Tribunal invoked fifth proviso (now Sixth proviso) to Section 32(1) of the Act for disallowing depreciation on goodwill in the hands of the Applicant. The said proviso has been introduced to bar allowance of depreciation in excess of 100% in aggregate to the successor in business in case of succession! amalgamation! demerger and the application thereof cannot be extended to deny claim of depreciation on goodwill acquired for actual consideration in case of slump sale. - Explanation 4A to Section 43(1) of the Act - The Hon'ble Tribunal incorrectly applied Explanation 4A to Section 43(1) of the Act on the wrong understanding of the fact that the subject transaction of sale ofIPB undertaking falls under the category of hire and purchase transaction. Invoking the aforesaid provisions, which had not been invoked by the Ld. Assessing Officer / Hon'ble CIT(A), and which, in any case, have no application in the present case, has vitiated the conclusion arrived at by the Hon'ble Tribunal, constituting mistake apparent from record requiring rectification. 5. Reliance on the decision in the case of United Breweries Ltd. vs. ACIT (supra} M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 14 -: The Hon'ble Tribunal has in coming to the aforesaid conclusion relied upon the decision of the Bangalore Bench of the Tribunal in the case of United Breweries Ltd. vs. ACIT (supra) wherein claim of depreciation on enhanced goodwill recorded on amalgamation of a holding company with its wholly owned subsidiary was disallowed on the ground that the amalgamated company could not claim depreciation on the value of goodwill more than what was recorded in the books of the amalgamating company; consequently, the amalgamated company could not claim depreciation on assets acquired in scheme of amalgamation more than depreciation that was allowable to the amalgamating company by virtue of fifth proviso (now Sixth proviso) to Section 32(1) of the Act. The aforesaid decision rendered by the Bangalore Bench apart from being distinguishable on facts, is in the teeth of the law declared by the apex Court and applied by the High Courts (in the context of slump sale) and co-ordinate benches of the Tribunal. The said decision was distinguished by the Hyderabad Bench of the Tribunal in the case of Mylan Laboratories Limited vs. DCIT [2018J ITA No. 2335 (Hyderabad Tribunal) wherein it was held that since the goodwill in question was a purchased goodwill and therefore, the ruling of United Breweries Ltd. vs. A CIT (supra) would not apply and by the Delhi Bench of the Tribunal in the case of Aricent Technologies (Holdings) Ltd. vs. DCIT [2019J 109 taxmann.com 47 (Delhi Tribunal), wherein it was observed that the goodwill arising pursuant to amalgamation was eligible for depreciation notwithstanding that the same was not existing in the books of the amalgamating company. Although the aforesaid precedents available at the time of hearing were not cited before the Hon'ble Bench, the Applicant had drawn attention of the Hon'ble Tribunal to several other precedents taking a view in favour of the Applicant. M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 15 -: It is settled law that the Hon'ble Tribunal ought to have considered the decisions rendered by co-ordinate benches of Tribunal, to which attention was drawn in the course of hearing of the appeal. In case, the Hon'ble Tribunal was of the view that the ruling in the case of United Breweries Ltd. vs. ACIT (supra) applied in the facts of the Applicant's case and was to be preferred over the other decisions from co-ordinate benches of Tribunal, the only course open for the Hon'ble Tribunal was to have referred the matter to the Hon'ble President for constitution of a larger bench. It is well settled, as a matter of judicial discipline and propriety that in case of conflict of judicial opinion and/ or the Tribunal not agreeing with the decision rendered by the co-ordinate bench of Tribunal, it is incumbent and indeed mandatory on the successor bench to refer the matter to a larger bench. Not doing so in the present case amounts to mistake apparent from record which requires rectification. Prayer For the cumulative reasons as aforesaid, it is respectfully prayed that having regard to the patent/ glaring mistakes apparent from record, the order passed by the Hon'ble Tribunal needs to be recalled for a fresh hearing in the matter. Reliance in this regard can be placed on the Hon'ble Supreme Court in the case of Honda Siel (supra) and the Full Bench of the Delhi High Court in the case of Lachman Dass Bhatia Hingwala (P) Ltd vs. ACIT: 330 1TR 243 (Delhi High Court) (FB) wherein it was held that while exercising power of rectification under Section 254(2) of the Act, the Hon'ble Tribunal can recall its order in entirety if it is satisfied that prejudice has resulted to party which is attributable to mistake, error or omission on the part of the Hon'ble Tribunal. M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 16 -: Attention of the Hon'ble Tribunal is drawn to the observations of Bhagwati 1. (as his Lordship then was) in Distributors (Baroda) (P.) Ltd. 155ITR 120 (SC) to the following effect: "2. We have given our most anxious consideration to this question, particularly since one of us, namely, P.N Bhagwati, J was a party to the decision in Cloth Traders (P.) Ltd. 's case (supra). But having regard to various considerations to which we shall advert in detail when we examine the arguments advanced on behalf of the parties, we are compelled to reach the conclusion that Cloth Traders (P.) Ltd. 's case (supra), must be regarded as wrongly decided. The view taken in that case in regard to the construction of section 80M must be held to be erroneous and it must be corrected. To perpetuate an error is no heroism. To rectify it is the compulsion or judicial conscience. In this we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce v. A.M Y Delameter at page 18: "a Judge ought to be wise enough to know-that he is fallible and therefore everready to learn: great and honest enough to discard all mere pride of opinion andfollow truth wherever it may lead: and courageous enough to acknowledge his errors. " 19. But even if. in our view, the decision in Cloth Traders (P.) Ltd.'s case (supra)is erroneous, the question still remains whether we should overturn it. Ordinarily, we would be reluctant to overturn a decision given by a Bench of this Court, because it is essential that there should be continuity and consistency in judicial decisions and law should be certain and definite. It is almost as important that the law should be settled permanently as that it should be settled correctly. But there may be circumstances where public interest demands that the previous decision be M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 17 -: reviewed and reconsidered. The doctrine orstare decisis should not deter the Court {rom overruling an earlier decision, int is satisfied that such decision is manifestly wrong or proceeds upon a mistaken assumption in regard to the existence or continuance ora statutory provision or is contrary to another decision ofthe Court. It was Jackson, J who said in his dissenting opinion in Massachusetts v. United States 333 Us. 611: 'I see no reason why I should be consciously wrong today because I was unconsciously wrong yesterday'. Lord Denning also said to the same effect when he observed in Ostime v. Australian Mutual Provident Society [1960} AC 459: 'The doctrine of precedent does not compel Your Lordships to follow the wrong path until you fall over the edge of the cliff'. Here we find that there are overriding considerations which compel us to reconsider and review the decision in Cloth Traders (P.) Ltd 's case (supra). There is also another circumstance which makes it necessary for us to reconsider and review the decision in Cloth Traders P. Ltd.'s case (supra) and that is the decision in Cambay Electric Supply Industrial Co. Ltd. 's case decision in Cloth Traders P. Ltd.'s case is inconsistent with that in Camba Electric Supply Industrial Co. Ltd’s case (supra). Both cannot stand together. If one is correct, the other must logically be wrong and vice versa, It is, therefore, necessary to resolve the conflict between these two decisions and harmonize the law and that necessitates an inquiry into the correctness of the decision in Cloth Traders P. Ltd.'s case or this reason that we have reconsidered and reviewed the decision in Cloth Traders P. Ltd.'s case supra and on such reconsideration and review we have come to the conclusion that the decision in Cloth Traders (P.) Ltd. 's case (supra)is erroneous and must be overturned. " The Applicant trusts that the application shall merit sympathetic consideration.” M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 18 -: 2.1 In addition to the above written submissions, the ld. AR of the assessee made elaborate arguments before us. 3. The ld. DR, on the other hand, made elaborate arguments to submit that the Hon’ble Tribunal being a final fact finding authority has decided the issue within the frame work of the law by considering the facts available on record. With regard to the submissions of the ld. AR that the Hon’ble Tribunal acted in excess of jurisdiction by making out a new case for revenue, he submitted that this argument of the ld. AR is not tenable as per law. The ld. DR also filed a synopsis, contending the ld. AR’s submissions, which is as under: “The synopsis of arguments made by the CIT(DR) during hearing dated 22/10/2021 are filed as directed by Hon'ble Bench and the same are as follows: 1. At the outset, it is submitted that it is incorrect on the part of the learned AR to state that there are mistakes apparent from record in the decision of Hon'ble ITAT dated 24/02/2021. 2. Firstly, the decision cited by the learned AR of Hon'ble Supreme Court in the case of Baroda Distributors is nothing but misinterpreting the powers of Hon'ble ITAT u/s 254 of the IT Act. The decision is rendered by the Hon'ble Supreme Court which has powers of review and it is clear that the learned AR wants a review of the decision of Hon'ble ITAT by seeking complete recall of the order though section 254 bestows only a limited power of rectification of mistakes, if any, apparent from record. M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 19 -: 3. It is also humbly submitted that the learned AR is trying to create an impression that undisputed facts are wrongly presumed by Hon'ble ITAT. The following are the examples from the arguments of the learned AR: a. The first issue raised by the learned AR was that the ITAT presumed that there is 100% transfer of equity where as there is no such transfer. It is humbly submitted that at paragraph 7.4 of the order, Hon'ble ITAT clearly reproduced relevant portions of the valuation report which is very much on record. It is not disputed that the valuation is part of management business plan. It is also evident from the report that the auditors did not make any independent evaluation of the fair market value of the assets nor the fair value has been determined by the valuers. It is also an undisputed fact that both the assessee and ITW India Ltd are subsidiaries of Illinois Tool Works Inc, USA (ITW). ITW India Ltd is a direct subsidiary and the assessee is an indirect subsidiary of ITW Inc. The assessee was-a subsidiary of ITW India Ltd till 22/10/2013 and on 23/10/2013, it became a subsidiary of Strapex Holdings Ltd, UK, which is in turn a subsidiary of ITW Inc. Therefore, the issue is clearly acquisition of the packaging unit of a subsidiary on which the parent has 100% control on equity through its direct subsidiary. Therefore mere observation at paragraph 7.18 that the consideration is for the purpose of acquisition of 100% equity is not an incorrect fact because even if the arguments of the learned AR of infusion of fresh capital is considered that the control on 100% equity is within the same management. In fact, Hon'ble ITAT clearly clarified this aspect from the third line of paragraph 7.18 of its order. Therefore, the argument of assumption of incorrect facts is nothing but a figment of imagination by reading the decision out of context by the learned AR. -, M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 20 -: b. The second issue raised by the learned AR was that it was neither the case of the AO or that of CIT(A) that the valuation was incorrect. This is patently incorrect because the AO clearly stated in his order that the valuation has no basis. Clear findings are recorded by the AO at page 7 of the assessment order. The AO clearly stated that the valuation report has no basis and it is neither justifiable nor supported by any evidence. Therefore, the Hon'ble ITAT rightly recorded a finding that the basis for transfer price is in the individual knowledge of the transferor and transferee (at para 7.13 of the order). It is also humbly submitted that as a fact finding authority, the Hon'ble ITAT has power to look at the correct facts and reach conclusions on the basis of the same. c. The third issue raised by the learned AR is that all values are assigned to all assets. This is also patently incorrect because even in the intangible assets there are different assets and no such individual allocation was made. Simply, the difference between the arbitrary price of transfer and that of tangible assets (as fixed by the assessee) was lumped into goodwill. The intangible assets are not only to goodwill but also other intangible assets like order book, customer relationship, distributor relationship, machine design, plastic IP, new product design, supply chain software, right to use brand and trade mark, non-compete agreement (which is not allowable as revenue expenditure) and parts and service IP which were not valued. Therefore, there is no incorrect assumption of the facts and Hon'ble ITAT looked into the correct facts. d. The fourth issue raised by the learned AR that the land values were not questioned by the AO or CIT(A). There is nothing in the assessment order or order of CIT(A) recording such a finding. On the contrary it was held that the valuation report has ot basis and not based on any evidence. It is only during the course of proceedings before the Hon'ble ITAT, the assessee filed M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 21 -: values of the land which are nothing but values fixed by SRO for registration purpose. It is incorrect to state that the SRO value represents the fair market value as the value is general covering a wide area and no valuation was done in specific reference to the case of the assessee. Therefore, Hon'ble ITAT was very much right in stating that the fair market values are not determined. e. This being the case, there is no merit in the arguments of the learned AR that Hon'ble ITAT assumed incorrect facts. As the learned AR did not press any other aspects of his written submissions, the undersigned is not submitting a point wise response because the learned AR agreed before Hon'ble ITAT to confine to his oral arguments. 4. Regarding case law like decisions in the case of United Breweries etc and also invoking Explanation (3) to section 43(1), third proviso to section 43(1), fifth proviso to section 32(1) and 55(2)(a)(ii) it would not amount to making a new case for Revenue. Also, the argument that once depreciation is granted u/s 32 for tangible assets, the same has to be automatically granted to intangible assets is fallacious in a case where the alleged amount is nothing but a balancing charge and the same is not allocated between amongst alleged intangible assets by any method of valuation and when the entire sum is lumped into goodwill. 5. All the arguments above were submitted by the undersigned in the written submissions during the course of hearings of the main appeal also and hence no new arguments are made by the undersigned. Also, In light of the above, none of the case laws cited by the learned AR are applicable to the facts of the case. 6. Regarding the argument that a new case made in favour of Revenue by Hon'ble ITAT, such an assertion is patently incorrect. It is always open to the Revenue to M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 22 -: make alternate legal prepositions on the given set of facts. Revenue has presented the arguments during the course of hearings before Hon'ble ITAT. Hon'ble ITAT has power to consider alternative arguments of Revenue as held by the Hon'ble Supreme Court in the case of Hukumchand Mills Ltd (1967) 63 ITR 232 (SC). The relevant portion of the decision of Hon'blelT AT in the said case is reproduced as under"lt was certainly open to the deportment, in the appeal filed by the assessee before the Tribunal, to support the finding of the Appellate Assistant Commissioner with regard to the written down value on any of the grounds decided against it. It was argued on behalf of the appellant that the action of the Tribunal in remanding the case is not strictly justified by the language of rule 27 or rule 12. Even assuming that rules 12 and 27 are not strictly applicable, we are of opinion that the Tribunal has got sufficient power under section 33(4) of the Act to entertain the argument of the department with regard to the application of paragraph 2 of the Taxation Laws Order and remand the case to the Income-tax Officer in the manner it has done. It is necessary to state that rules 12 and 27 are not exhaustive of the powers of the Appellate Tribunal. The rules are merely procedural in character and do not, in any way, circumscribe or control the power of the Tribunal under section 33(4) of the Act. We are accordingly of the opinion that the Tribunal had jurisdiction to entertain the argument of the department in this case". In light of this, it is humbly submitted considering the alternate sections in the present case is well within the powers of Hon'ble ITAT, more so when such arguments were never before the Hon'ble Supreme Court in the case of Smifs Securities. In this case, the Hon'ble ITAT did not travel beyond the subject matter of appeal and hence the decisions cited by learned AR in this context are not applicable. 7. Also, regarding the argument of the learned AR that certain decisions of Hon'ble ITAT including that of the M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 23 -: coordinate bench are not cited by Hon'ble Bench, it is humbly submitted every decision is based on its own facts. If the Hon'ble Tribunal has to cite each and every decision on the subject irrespective of the fact that it is applicable to the facts in issue or not, then it would be a mere bibliography or survey of literature. Also as held by the Hon'ble Madras High Court in the case of Sica I Logistics Ltd [2021] 128 taxmann.com 370 (Madras), non-consideration of a judgment of a High Court cannot be construed as mistake as contemplated u/s 254(2) of the Income Tax Act. More so, when in the present case there are no such binding decisions on the facts of the case. 8. Also, the MA suffers from serious defects in questioning the conclusions drawn by Hon'ble ITAT. In this regard, the undersigned filed various decisions including that of coordinate benches of ITAT and also Jurisdictional High Court, which clearly held that eve if the order of the ITAT is patenlty erroneous, the remedy does not lie in rectification when there is no mistake apparent from record. Therefore, the so called mistakes apparent from record relied upon by the assessee at paragraphs 7.19 to 7.24 of the decision of Hon'ble ITAT are nothing but own interpretations of the assessee of the facts and not any mistakes apparent from record. In fact through the MA, the assessee questioning the finding of facts by the Hon'ble ITAT and the conclusion drawn therein, which itself shows that there is no mistake apparent from record. 9. Also, the in the prayer, the assessee relies upon the decision of Hon'ble Supreme Court in Honda Siel, Hon'ble Delhi High Court in case of Lachman Das Bhatia Hingwala (P) Ltd which are not applicable to the present facts of the case. Also, the reliance of the assessee on the decision of Hon'ble Supreme Court in the case of Distributors (Baroda) P Ltd clearly indicates that the assessee is seeking review under the guise of rectification. Also, admittedly an appeal is filed before M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 24 -: Hon'ble High Court on these very issues stating that there are questions of law. Though, it is permissible to file MA and appeal, when there is not mistake apparent from record and when the issues are debatable and in the nature of questions of law (because only when there is a question of law appeal can lies), the assessee is resorting to forum shopping, which is not permissible. 10. It is also stated by the learned AR that by recalling the entire order, no prejudice is caused any of the parties. Such argument is fallacious because in the present case the rights and liabilities are determined by the Hon'ble ITAT with reference to both the parties by the order on which MA is filed and the vested rights of Revenue would be put to prejudice if the order is recalled. ln light of the above, the MA of the assessee may kindly be dismissed.” 4. We have considered the rival submissions and perused the material on record. Being a final fact finding authority, the Tribunal after considering the grounds raised in appeals, submissions made from both the sides and considering the facts and documents available on record as well as case law relied on by them, passed the order within the frame work as per law. The Tribunal cannot review its own order in the garb of power vested u/s 254(2) of the Act. Therefore, recalling of the order in this case as sought by the Authorized Representative will tantamount to review of the order which is not permitted under the law. This power is not vested with the Tribunal. For this proposition, we rely on the decision of the ITAT, Mumbai Benches in the case of Gateway Terminals India Pvt. Ltd. Vs. DCIT, [2021] 128 Taxmann.com 314 and the M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 25 -: latest the judgment of the Hon’ble Supreme Court in the case of CIT Vs. M/s Reliance Telecom Ltd., [2021] 133 taxmann.com 41 (SC), wherein the Hon’ble Apex Court has observed as under: “ 3. We have heard Shri Balbir Singh, learned Additional Solicitor General of India appearing on behalf of the Revenue and Shri Anuj Berry, learned Advocate appearing on behalf of the Resolution Professional of the respondent-company. At this stage, it is required to be noted that the respondent- company/companies - respective assessees currently are undergoing corporate insolvency resolution process and the Resolution Professional is appointed. We have heard learned counsel for the Resolution Professional of the respondent- assessee. 3.1 We have considered the order dated 18-11-2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under section 254(2) of the Act and recalling its earlier order dated 6-9-2013 as well as the original order passed by the ITAT dated 6-9-2013. 3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9- 2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 26 -: record. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 6-9-2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6- 9-2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 6-9-2013 which has been passed in exercise of powers under section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under section 254 (2) of the Act. Therefore, the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is unsustainable, which ought to have been set aside by the High Court. 5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 27 -: section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case. 7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 6-9- 2013 passed in the respective appeals preferred by the Revenue are hereby restored. 8. Considering the fact that the Assessee had earlier preferred appeal/s before the High Court challenging the original order passed by the ITAT dated 6-9-2013, which the Assessee withdrew in view of the subsequent order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013, we observe that if the Assessee/s prefers/prefer appeal/s before the High Court against the original order dated 6-9- 2013 within a period of six weeks from today, the same may be decided and disposed of in accordance with law and on its/their own merits and without raising any objection with respect to limitation. 9. Both the appeals are accordingly allowed in the aforesaid terms. However, there shall be no order as to costs.” 4.1 The ratio laid down by the Hon’ble Supreme Court in the above judgment squarely applicable to the present MA filed by the assessee and, therefore, relying on the above M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 28 -: judgment, we dismiss the MA filed by the assessee. The case law relied on by the ld. AR of the assessee are distinguishable on facts, hence, the same are not applicable to the case of the assessee. 6. In the result, MA filed by the assessee is dismissed in above terms. Pronounced in the open court on 16 th December, 2021. Sd/- Sd/- (S.S. GODARA) (LAXMI PRASAD SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 16 th December, 2021. kv copy to : 1 Signode India Ltd., 3 rd Floor, Jyothi Majestic, 8-2-120/84, Road No. 2, Banjara Hills, Hyderabad. 2 DCIT, Circle – 3(2), 7 th floor, Signature Towers, Kondapur, Hyderabad. 3 CIT(A) – 4, Hyderabad. 4 Pr. CIT - 4, Hyderabad 5 ITAT, DR, Hyderabad. 6 Guard File. M.A. No. 69 /Hyd/2021 S i g n o d e I n d i a L t d . , H y d . :- 29 -: S . N o . D e t a i l s D a t e 1 D r a f t d i c t a t e d o n 2 D r a f t p l a c e d b e f o r e a u t h o r 3 D r a f t p r o p o s e d & p l a c e d b e f o r e t h e S e c o n d M e m b e r 4 D r a f t d i s c u s s e d / a p p r o v e d b y S e c o n d M e m b e r 5 A p p r o v e d D r a f t c o m e s t o t h e S r . P S / P S 6 K e p t f o r p r o n o u n c e m e n t 7 F i l e s e n t t o B e n c h C l e r k 8 D a t e o n w h i c h t h e f i l e g o e s t o H e a d C l e r k 9 D a t e o n w h i c h f i l e g o e s t o A . R . 10 D a t e o f D i s p a t c h o f o r d e r