Assistant Director of Income-tax, (IT-1), Pune V. M/s. Cummins Inc., Pune

MA 99/PUN/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4333 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 26-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Double taxation relief; Question of law
• Section: 254(2); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER M.A. No. 99/PUN/2021 Arising out of M.A. 47/PUN/2019 arising out of ITA No. 2181/PUN/2013 (A.Y. 2005-06) M.A. No. 115/PU/2021 Arisig out of M.A. No.46/PUN/2019 arising out of ITA No. 1163/PUN/2011 (A.Y. 2007-08) ) The J.t. C.I.T. (OSD) International Taxation, Cir. 1, Pune. Applicant Vs. Cummins Inc. C/o. Cummins India Ltd. Kothrud, Pune-38 PAN; AABCC6225D Respondent Applicant by : Shri Piyush kumar Singh Yadav Respondent by: Shri Rajan Vora Date of Hearing : 06-05-2022 Date of Pronouncement : 13-05-2022 ORDER PER PARTHA SARATHI CHAUDHURY, JM: These Miscellaneous Applications have been preferred by the Revenue u/s.254(2) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) with a prayer to recall the consolidated order of Tribunal dated 11-9-2019 passed in M.A. 46/PUN/2019 which in turn arises out of ITA No. 1663/PUN/1for A.Y. 2007-08 and M.A No. 47/PUN/2019 which in turn arises out of ITA No. 2181/PUN/2013 for A.Y. 2005-06. 2 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 2. In M.A. No. 115/PUN/2021 arising out of M.A. No. 46/PUN/2019 which in turn arises out of ITA No. 1163/PUN/2011 for A.Y. 2007-08, the Revenue has stated as under: “The Hon'ble ITAT had vide its order dated 20.02.2015 in ITA No. 1663 I PN I 2011 for the assessment year 2007-2008 in the case of Mis. Cummins Inc. held that the consideration received by the assessee for facilitating grant of user rights in software to Indian Entities was taxable as 'royalty' under the India US DTAA following its order dated 08.08.2013 in ITA No. 73 & 74 I PUN I 2011 for the A.Y.'s 2004-2005 & 2006-2007. It was stated by the Hon'ble ITAT in the said order that the assessee had filed an appeal before the Hon'ble Bombay High Court against the order dated 08.08.2013 and the Hon'ble Bombay High Court had vide order dated 29.01.2014 admitted the appeal and framed the substantial question of law. It was also stated by the Hon'ble ITA T that the assessee has filed an application u/s 158A for the A.Y. 2007-2008 pointing out that identical question of law is pending before the Hon'ble Bombay High Court for the A.Y.'s 2004-2005 & 2006-2007 and the final decision on the said issue be applied against which the assessee would not raise any question of law before the Hon'ble Bombay High Court or the Hon'ble Supreme Court for the said A. Y. 2007-2008. Hence the Hon'ble IT AT decided the issue against the assessee with a direction to the AO to apply the decision of the Hon'ble Bombay High Court and I or Hon'ble Supreme Court on the said issue being decided in the assessee's own case for the A. Y:s 2004-2005 & 2006-2007. Subsequently, the Hon’be ITT recalled its order dated 8-8-2013 in ITA No. 73 & 74/PUN/2011 for A.Y. 2004-05 & 2006-07 vide order dated 6-12-2017by relying on the order dated 8-8-2017 passed by the Hon’ble Bombay High Court in Writ Petition No. 708,1406,1431 & 1432mof 2017 in the case of M/s. Reliance Communications Ltd. The assessee M/s. Reliance Commuications Ltd. had filed a misc. application before the ITAT on the ground that the Tribunal while adjudicating batch of appeals had failed to consider the decision of the co-ordinate bench of the Tribunal in the case of Dy. Director of Income-tax (international Taxation) Vs. Solid Works corporation reported in 51 SOT 34 and the same has resulted in mistake apparent from record. The Hon'ble Tribunal accepted the miscellaneous applications filed by the assessee and recalled its earlier order vide order dated 18.11.2016. Thereafter, the Department challenged the order of Tribunal in Writ Petition before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court vide order dated 08.08.2017 dismissed the Writ Petition filed by the Department and approved the decision of the Hon'ble Tribunal in recalling its earlier order in proceeding u/s 254(2) of the Act. However while dismissing the writ filed by revenue, the Hon'ble Bombay High Court had observed that it was not the contention of the revenue that the Tribunal has become 'functus officio' after it delivered its order dated 06.09.2013 which has been recalled by order dated 18.11.2016. The Hon'ble Bombay High Court stated that if the Tribunal had to re-Iook or re-visit the order dated 06.09.2013, it must be for a limited purpose and permitted by Section 254(2) of the Income Tax Act, 1961. 3. At the time when the order dated 06.09.2013 was passed by the Hon'ble Tribunal in the case of Mis. Reliance Communications Ltd., the provisions of section 254(2) of the Income Tax Act, 1961 empowered the Tribunal to rectify any mistake apparent from record within four years from the date of the order passed by it u/s 254(1). The provisions of section 254(2) of the Income Tax Act, 1961 has been amended by the Finance Act, 2016 with effect from01.06.2016 and the Hon'ble Tribunal can rectify any mistake in its order passed u/s 254(1) at any time within six months from the end of the month in which the order was passed u/s 254(1). Hence, it is submitted that the Hon'ble Tribunal has erred in allowing the miscellaneous application filed by the assessee and passing the order dated 11.09.2019 after about 3 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 55 months from the end of the month in which the earlier order dated 20.02.2015 was passed. 4. In the light of the facts brought out in the preceding paragraphs, the order of the Hon'ble Tribunal dated 11.09.2019 in MA No. 46 I PUN I 2019 for the A.Y. 2007-2008 recalling its earlier order dated 20.02.2015 in ITA No. 1663 I PN I 2011 and now deciding the issue in favour of the assessee is not permitted by the provisions of section 254(2) of the Income Tax Act,1961. It is, therefore, requested that the Hon'ble Tribunal may recall its order dated 11.09.2019 in MA No. 46 I PUN I 2019 arising out of ITA No. 1663 I PUN I 2011 in the case of Mis. Cummins Inc. (PAN - AABCC6225D) and restore its earlier order dated 20.02.2015 for the A.Y. 2007-2008.” 3. Similarly, in M.A. 99/PUN/2021 arising out of M.A. 47/PUN/2019 which in turn arises out of ITA No. 2181/PUN/2013 for A.Y. 2005-06, the Revenue has stated as under: “The Hon'ble ITAT had vide its order dated 29.07.2016 in ITA No. 2181IPNI2013 for the assessment year 2005-2006 in the case of Mis. Cummins Inc. held that the consideration received by the assessee for facilitating grant of user rights in software to Indian Entities was taxable as 'royalty' under the India US DTAA following its order dated 08.08.2013 in ITA No. 73 & 74 I PUN I 2011 for the A.Y.'s 2004-2005 & 2006-2007. It was stated by the Hon'ble ITAT in the said order that the assessee had filed an appeal before the Hon'ble Bombay High Court against the order dated 08.08.2013 and the Hon'ble Bombay High Court had vide order dated 29.01.2014 admitted the appeal and framed the substantial question of law. It was also stated by the Hon'ble ITA T that the assessee has filed an application u/s 158A for the A.Y. 2007-2008 pointing out that identical question of law is pending before the Hon'ble Bombay High Court for the A.Y.'s 2004-2005 & 2006-2007 and the final decision on the said issue be applied against which the assessee would not raise any question of law before the Hon'ble Bombay High Court or the Hon'ble Supreme Court for the said A. Y. 2007- 2008. Hence the Hon'ble IT AT decided the issue against the assessee with a direction to the AO to apply the decision of the Hon'ble Bombay High Court and I or Hon'ble Supreme Court on the said issue being decided in the assessee's own case for the A. Y:s 2004-2005 & 2006-2007. Subsequently, the Hon’be ITT recalled its order dated 8-8-2013 in ITA No. 73 & 74/PUN/2011 for A.Y. 2004-05 & 2006-07 vide order dated 6-12-2017by relying on the order dated 8-8-2017 passed by the Hon’ble Bombay High Court in Writ Petition No. 708,1406,1431 & 1432mof 2017 in the case of M/s. Reliance Communications Ltd. The assessee M/s. Reliance Communications Ltd. had filed a misc. application before the ITAT on the ground that the Tribunal while adjudicating batch of appeals had failed to consider the decision of the co-ordinate bench of the Tribunal in the case of Dy. Director of Income-tax (International Taxation) Vs. Solid Works corporation reported in 51 SOT 34 and the same has resulted in mistake apparent from record. The Hon'ble Tribunal accepted the miscellaneous applications filed by the assessee and recalled its earlier order vide order dated 18.11.2016. Thereafter, the Department challenged the order of Tribunal in Writ Petition before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court vide order dated 08.08.2017 dismissed the Writ Petition filed by the Department and approved the decision of the Hon'ble Tribunal in recalling its earlier order in proceeding u/s 254(2) of the Act. However while dismissing the writ filed by revenue, the Hon'ble Bombay High Court had observed that it was not the contention of the revenue that the Tribunal has become 'functus officio' after it delivered its order dated 06.09.2013 which has been recalled by order dated 18.11.2016. The Hon'ble Bombay High Court stated that if the Tribunal had to re-Iook or re-visit the order dated 06.09.2013, it 4 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 must be for a limited purpose and permitted by Section 254(2) of the Income Tax Act, 1961. 3. At the time when the order dated 06.09.2013 was passed by the Hon'ble Tribunal in the case of Mis. Reliance Communications Ltd., the provisions of section 254(2) of the Income Tax Act, 1961 empowered the Tribunal to rectify any mistake apparent from record within four years from the date of the order passed by it u/s 254(1). The provisions of section 254(2) of the Income Tax Act, 1961 has been amended by the Finance Act, 2016 with effect from01.06.2016 and the Hon'ble Tribunal can rectify any mistake in its order passed u/s 254(1) at any time within six months from the end of the month in which the order was passed u/s 254(1). Hence, it is submitted that the Hon'ble Tribunal has erred in allowing the miscellaneous application filed by the assessee and passing the order dated 11.09.2019 after about 55 months from the end of the month in which the earlier order dated 20.02.2015 was passed. 4. In the light of the facts brought out in the preceding paragraphs, the order of the Hon'ble Tribunal dated 11.09.2019 in MA No. 47 I PUN I 2019 for the A.Y. 2005- 2006 recalling its earlier order dated 29-7-2016 in ITA No. 2181 I PN I 2013 and now deciding the issue in favour of the assessee is not permitted by the provisions of section 254(2) of the Income Tax Act,1961. It is, therefore, requested that the Hon'ble Tribunal may recall its order dated 11.09.2019 in MA No. 47 I PUN I 2019 arising out of ITA No. 2181 I PUN I 2011 in the case of Mis. Cummins Inc. (PAN - AABCC6225D) and restore its earlier order dated 29-07-2016. “ 4. In these Misc. applications filed by the Department, the department is actually agitating one miscellaneous application against another miscellaneous application. The Revenue has filed these misc. applications seeking recalling of the earlier M.A. passed in M.A. No. 46 and 47/PUN/2019 arising out of ITA No. 1163/PUN/2011 and 2181/PUN/2013 respectively, for A.Y. 2007-08 and 2005-06 on the ground of delay in disposal of such Misc. application. 5. We have heard the rival contentions and perused the order of the Tribunal dated 11-09-2019. There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two 5 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 opinions. For fortifying this view, we make reference to the decision of the Hon'ble jurisdictional High Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ld., 262 ITR 146 which has been upheld by the Hon'ble Supreme Court reported in 305 ITR 227. 6. The Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company reported as 203 ITR 497 has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: “The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself.” 6. We find that on identical facts and circumstances and issues, the Pune Tribunal in M.A. No. 18/PUN/2019 against M.A. No. 49/PUN/2016 arising out of I.T.A No. 1916/PUN/2014 for .A.Y. 2007-08 in the case of I.T.O. Vs. Mercedes Benz Education Academy, Pune, order dated 14-5-2019, has categorically held that there is no provision in the Act to allow filing of Misc. application against the order passed by the Tribunal in another Misc. application. The relevant para is extracted as follows: “The applicant-Revenue is aggrieved by the aforesaid directions of Tribunal in miscellaneous order that registration u/s 10(23C)(vi) of the Act was deemed to be granted w.e.f. 30-9-2006. The Misc. Application filed by applicant-Revenue is not maintainable as there is no provision in the Act to allow filing of Misc.. application against an order passed by the Tribunal in Misc. application filed by the assessee. Hence, Misc. application moved by the Revenue is dismissed.” 7. We also find that Delhi Special Bench decision in M.A. No. 57/Del/2010 (in MKA No. 402/Del/2009) (in M.A. No. 05/Del/2008 for A.Y. 1995-96 8i the case of Shri Padam Prakash (HUF) Meerut Vs. I.T.O. Ward 2(1), Meerut, held as follows: 6 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 9. We have carefully considered the rival submissions in the light of material placed before us. It is true that sub-section (2) of Section 254 can be invoked only in a situation if there is a mistake in the order passed by the Tribunal under sub- section (1) of Section 254. The impugned miscellaneous application filed by the assessee is against the order passed on 27.11.2009 which is an order passed u/s 254(2). Therefore, principally, the application filed by the assessee has to be rejected on this ground alone and for this purpose, reliance can be placed on the following decisions:- (i) CIT Vs. President, Income Tax Appellate Tribunal – 196 ITR 838 (Orissa) wherein it has been held that to attract applicability of Section 254(2), a mistake which is sought to be rectified must be apparent from record and the same must be in any order passed under sub-section (1) of Section 254. The order referred to in Section 254(1) is one relating to an appeal filed either by the assessee or by the Revenue. The “appeal” referred to in the provision is one filed u/s 253. Therefore, the order which can be rectified must be one which has been passed by the Tribunal in an appeal filed u/s 253. An order rejecting an application for rectification u/s 254(2) cannot be rectified u/s 254(2). The same may relate to an appeal but is not an order passed by the Tribunal under sub-section (1) of Section 254 and thus, it was held that subsequent application filed by the assessee was rightly rejected by the Tribunal. (ii) In the case of Mentha & Allied Products Co.Ltd. Vs. ITAT – 244 ITR 470 (Del), after referring to the provisions of Section 254(1) and (2), it was held as under:- “7. The relevant provisions of s. 254 read as under: “254. Orders of Appellate Tribunal. – (1) The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-s. (1) and shall make such amendment if the mistake is brought to its notice by the assessee or the AO;.......” The aforenoted provisions of law are clear and unambiguous. A bare reading whereof leaves no doubt in our mind that the Tribunal is competent to rectify a mistake apparent from the record and amend any order which has been passed under sub-s.(1). Admittedly, by the impugned order, the Tribunal has sought to rectify the order passed by it under s. 256(1) of the Act and not an order passed under s. 254(1). We have no hesitation in holding that the Tribunal is not clothed with an inherent power to rectify/recall an order passed under s. 256(1) of the Act by taking recourse to s. 254(2) of the Act and, therefore, the impugned order is illegal and invalid. The view taken by us finds support from a decision of this Court in CIT vs. Kabir Das Investment Ltd. (1995) 124 CTR (Del) 259 : (1994) 210 ITR 898 (Del) : TC 55R.777.” 10. In the case of CIT Vs. Aiswarya Trading Co. – 196 Taxman 385 (Ker.), it was held that the Tribunal was justified in refusing to entertain an application filed by the Revenue under Section 254(2) to rectify the order issued by the Tribunal in an earlier rectification application filed by the assessee, as the second application on the very same issue is not maintainable before the Tribunal. 11. In the case of Dr.S.Panneerselvam Vs. ACIT – 319 ITR 135, it was held that the Tribunal having allowed first rectification petition, second petition was not maintainable; remedy by way of appeal was the only course open. 12. If the application filed by the assessee is viewed in the light of aforementioned judicial pronouncements, then it will become clear that the relief which is being 7 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 sought by the assessee by way of impugned rectification application is not legally tenable for the reason that the Tribunal has no power to adjudicate upon subsequent application filed u/s 254(2). Here, it may be the case of the assessee that earlier order against which impugned rectification application is filed is also an order passed on subsequent application, then the only course permissible to the assessee is to file an appeal against that order and not to approach the Tribunal to contend that the said order was an invalid order, therefore it should be recalled.” 8. Therefore, the parameters of law has been clearly set out in the aforestated judicial pronouncements that Misc. application cannot be filed against another Misc. application and the Tribunal has no power to adjudicate upon subsequent application u/s 254(2) of the Act. In view of the aforestated discussion, we find no force in the Misc. applications filed by the Revenue which are rejected and dismissed. 9. In the result, both the Misc. applications filed by the Revenue are dismissed. Order pronounced on 13 th day of May 2022 Sd/- sd/- INTURI RAMA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 13 th day of May 2022 Ankam 8 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 Copy of the Order forwarded to 1. The Appellant. 2. The Respondent. 3. The CIT(Appeals)-IT/TP Pune. 4. The DIT (TP/IT) Pune 5. DR, ITAT, “B” Bench, Pune. 6. Guard File. BY ORDER, Private Secretary ITAT, Pune. 9 MA No.99& 115/PUN/2021 Cummins Inc. A.Y. 2005-06 and 2007-08 Date 1 Draft dictated on 06-05-2022 Sr.PS/PS 2 Draft placed before author 09-05-2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 13-05-2022 Sr.PS/PS 7 Date of uploading of order 13-05-2022 Sr.PS/PS 8 File sent to Bench Clerk 30-05-2022 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order