Mold-Tek Packaging Limited, Hyderabad, Hyderabad V. ACIT, Circle-16(2), Hyderabad, Hyderabad

MA 94/Hyd/2021

AI Insights

Mold-Tek Packaging Ltd filed a Miscellaneous Application seeking to recall or modify the Tribunal's earlier order which confirmed disallowances under sections 35D and 14A of the Income Tax Act. The application argued that the Tribunal's reliance on the Supreme Court's decision in Brooke Bond India Ltd was misplaced and that the facts presented during the original hearing were not accurately considered. The Tribunal, however, found that the original order was a detailed speaking order and that the application did not meet the criteria for a recall or modification as stipulated under section 254(2) of the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129919 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 23-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2021
• Other Referred Cases: CIT vs. Reliance Telecom, Brooke Bond India Ltd vs. Kind
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revenue expenditure
• Section: 14A; 254(2)

Judgement Text

MA 94 of 2021 MOLD-TEK PACKAGING LTD Page 1 of 6 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member MA No.94/Hyd/2021 (Arising out of ITA No.938/Hyd/2017) Assessment Year: 2012-13 Mold-Tek Packaging Ltd Hyderabad PAN:AABCT0845L Vs. Asstt. C. I. T. Circle 16(2) Hyderabad (Appellant) (Respondent) Assessee by : None Revenue by: Shri K.P.R.R. Murthy, Sr.DR Date of hearing: 24/02/2023 Date of pronouncement: 17/03/2023 ORDER Per R.K. Panda, A.M The assessee through this Miscellaneous Application requests the Tribunal to recall its order or pass appropriate order since certain apparent mistakes have crept in the order of the Tribunal. 2. The learned Counsel for the assessee referring to the contents of the MA drew the attention of the Bench to the same which read as under: “This miscellaneous application is with regard to the following two issues decided by the Hon'ble Tribunal in its order in ITA 938/Hyd/2017 dt 02.07.2021 1. Confirming disallowance of Rs 58,500 being 20% of the preliminary expenses claimed u/ss 35D MA 94 of 2021 MOLD-TEK PACKAGING LTD Page 2 of 6 2. Confirming the disallowance of Rs 3,64,004 u/s 14A In the course of hearing before The Hon'ble Tribunal, the appellant filed a detailed paper book Containing 408 pages. With respect to the first issue detailed submissions are at pages 5 to 9 of the said paper book and the submissions on second issue are at pages 144 to 161 1 Disallowance u/s 35D The Hon'ble Tribunal at para 4 observed that the expenditure in increase of share capital was claimed as revenue expenditure. The Hon'ble Tribunal at para 6 confirmed this disallowance stating that First Appellate Authority has rightly decided by relying on the decision of the Hon'ble Supreme court in the case of Brooke Bond India Ltd Kind attention in this regard is invited to the submissions at page 8 of the paper book. It was categorically stated that: a) Placing reliance on the decision of Brooke Bond is not correct since in the said case deduction for entire expenditure was claimed as revenue expenditure u/s 37, whereas the appellant claimed 20%of the total expenditure u/s 35D. b) It's further submitted that the claim was not made as revenue expenditure. The case laws related to the facts of the appellants case were also mentioned at pages 889 of the paper book and copies of the judgements were also enclosed, in the paper book. In the light of the above it is humbly submitted that, since the facts as observed and mentioned by the Hon'ble Tribunal in its order are at variance with the facts submitted by the appellant in the course hearing before the Tribunal, it is prayed that the Hon'ble Tribunal be pleased to recall its order and pass appropriate modification orders in this regard. 3 Disallowance under section 14A The Hon'ble Tribunal, with the observations at para 7, remanded this issue back to the files of the assessing officer for recalculating the disallowance. While doing so, The Hon'ble Tribunal observed at page 10 that the assessee is unable to demonstrate that on the date of investments he had sufficient own funds available. The Tribunal had also relied upon the decision of ITAT Hyderabad in the case of NSL Renewable Power private limited. In the course of hearing before The Hon'ble Tribunal, detailed submissions were filed at pages 145 to 161 of the paper book with regard to this issue. Kind attention is once again invited to page 154 wherein, with reference to the audited financial statements and MA 94 of 2021 MOLD-TEK PACKAGING LTD Page 3 of 6 rearranged cash flow statement, it was claimed that the assessee has not used any borrowed money for the subject investments. Hence it is humbly submitted that the observations of the Hon'ble Tribunal that the assessee could not demonstrate the availability of sufficient interest free funds is not correct on facts. Further in the case of NSL Renewable Power Ltd referred to by the Hon'ble Tribunal, sources for the investment are mixed funds i.e interest free funds and interest-bearing funds. In such circumstances the application of provisions of section 14A were held to be proper and justified. In the assessee's case, since it had demonstrated that on the date of investment it had sufficient interest free funds and that no interest-bearing funds were utilised for the purpose of investment earning tax free income, the disallowance u/s 14A is not justified. Since the facts as observed and stated by the Hon'ble Tribunal are at variance with facts brought on record, it is prayed that the Hon'ble Tribunal be pleased to recall its order and pass appropriate orders in this regard.” 3. He submitted that the assessee is not pressing the issue relating to disallowance u/s 14A, and the assessee is only arguing to recall the order of the Tribunal to the extent of disallowance u/s 35D of the I.T. Act. He submitted that the contents of the M.A on the issue of disallowance u/s 35D is self- explanatory and therefore, the Tribunal should recall its order on the said issue for fresh adjudication or pass appropriate order as per law. 4. The learned DR, on the other hand strongly opposed the M.A filed by the assessee. Referring to various decisions, he submitted that mere non-consideration of a judgment of a High Court cannot be considered as a mistake as contemplated u/s 254(2) of the I.T. Act. Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Telecom (2021) 133 Taxmann.com 41 (SC), he submitted that the Hon'ble Supreme Court in the said decision has held that the powers u/s are not to correct and or modify the mistake apparent from the record. It MA 94 of 2021 MOLD-TEK PACKAGING LTD Page 4 of 6 has been held that merely because the assessee might have filed detailed submission, it does not confer jurisdiction upon the ITAT to pass the order de hors section 254(2) of the I.T. Act. Further, it has also been held that any mistake either on fact or law has to be corrected by the Hon'ble High Court and the Tribunal has no power to rectify such mistake in a M.A. He submitted that since in the instant case, a detailed order has already been passed by the Tribunal, therefore, recalling of its earlier order or pass any other order on the basis of this M.A will amount to review of its own order by the Tribunal which is not permissible in law. He accordingly submitted that the M.A filed by the assessee has to be dismissed. 5. We have heard the rival arguments made by both the sides and perused the record. We find the only grievance of the assessee as per the M.A is that the Tribunal at Para 6 of the order has confirmed the disallowance u/s 35D by relying on the decision of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd which is contrary to facts and therefore, the order of the Tribunal should be recalled/modified. We do not find any force in the above argument of the learned Counsel for the assessee. We find the Tribunal in the instant case has passed a detailed speaking order by relying on the decision of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. The Hon'ble Supreme Court in the case of Reliance Telecom Ltd (Supra) has held that 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 that does not confer the jurisdiction upon the ITAT to pass order de hors section 254(2) of the I.T. Act. It has been held that the powers u/s 254(2) of the Act MA 94 of 2021 MOLD-TEK PACKAGING LTD Page 5 of 6 are only to correct and rectify a mistake apparent from the record and not beyond that. It has further been held that if the order passed by the Tribunal was erroneous on merit, in that case the remedy available to the assessee is to prefer an appeal before the Hon'ble High Court. We, therefore, do not find any force in the argument of the learned Counsel for the assessee to recall/rectify the order of the Tribunal u/s 35D of the I.T. Act. The M.A filed by the assessee is accordingly dismissed. 6. In the result, M.A filed by the assessee is dismissed. Order pronounced in the Open Court on 17 th March, 2023. Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (R.K. PANDA) ACCOUNTANT MEMBER Hyderabad, dated 17 th March, 2023. Vinodan/sps Copy to: S.No Addresses 1 M/s. Mold-tek Packaging Ltd, 700, Road No.36, Jubilee Hills, Near Peddamma Temple, Hyderabad 500003 2 ACIT, Circle 16(2) Hyderabad 3 CIT-11, Hyderabad 4 Pr. CIT-, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order MA 94 of 2021 MOLD-TEK PACKAGING LTD Page 6 of 6