Income Tax Appellate Tribunal - Mumbai
B4U Broadbank India Private Limited, ... vs Assistant Commissioner Of Income Tax ... on 4 May, 2018
आयकर अपील य अ धकरण, मुंबई यायपीठ, बी, मुंबई ।
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES "B", MUMBAI ी जो ग दर संह, या यक सद य एवं ी एन. के. धान, लेखा सद य, के सम Before Shri Joginder Singh, Judicial Member, and Shri N.K. Pradhan, Accountant Member M.A. No.149 & 150/Mum/2017 (Arising out of ITA NO.5664 & 5665/Mum/2012) Assessment Year: 2010-11 & 2011-12 M/s. B4U Broadbank ACIT (TDS)-1(1), India Pvt. Ltd., 45, Marol बनाम/ Room No. 804, K.G. Mittal Cooperative Industrial Hospital Building, Vs. Estate Ltd., Andheri Kurla Charni Road, Mumbai - 02 Road, Andheri (East) Mumbai - 09 ( नधा"#रती /Assessee) (राज व /Revenue) P.A. No. AABCB 5210 F नधा"#रती क ओर से / Assessee by Shri Vijay Mehta राज व क ओर से / Revenue by Shri Saurabh Kumar Rai - DR ु वाई क( तार)ख / Date of Hearing :
सन 04/05/2018
आदे श क( तार)ख /Date of Order: 04/05/2018
2
MA No.149 & 150/Mum/2017
M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 &
5665/Mum/2012)
आदे श / O R D E R
Per Joginder Singh (Judicial Member)
These two miscellaneous applications are by the assessee seeking recalling of the order of the Tribunal dated 07/11/2016 (ITA no.5664 & 5665/Mum./2012) for assessment years 2010-11 & 2011-12 passed by this Tribunal due to the non-consideration of order of the Hon'ble High Court/Tribunal.
2. During hearing the Ld. counsel for the assessee, Shri Vijay Mehta contended that due to inadvertent mistake, some of the orders including from Hon'ble High Court/Tribunal, filed by the assessee, could not be considered, resulting into miscarriage of justice. The ld. counsel contended that in view of the decision from Hon'ble Apex Court in Honda Siel Power Product Ltd. vs CIT 295 ITR 466(Supreme Court), it is a mistake apparent from record, therefore, the order may be recalled. On the other hand, the Ld. DR, Shri Saurabh Kumar Rai, contended that a well reasoned order has been passed by the Tribunal, therefore, it may not be recalled.
3MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) 2.1. We have considered the rival submissions and perused the material available on record. We find that the assessee placed on record certain decisions, which could not be considered like CIT vs Prasar Bharti Broadcasting Corporation of India 292 ITR 580 (Del.), Kurukshetra Darpans P. Ltd. vs CIT (169 taxman 344)(P & H), Income Tax Officer vs M/s Times Global Broadcasting Company Ltd. (ITA NO.669/Mum/2012) and another two decisions of the Tribunal. These decisions could not be considered inadvertently. The Hon'ble Apex Court in Honda Siel Power Product Ltd. vs CIT, vide order dated 26/11/2007, while discussing the powers of the Tribunal with respect to rectification of mistake on record held that failure to consider decision of the Co-ordinate Bench, cited by the assessee, is a mistake, which requires rectification. The relevant portion of the order is reproduced hereunder:-
"A short question which arises for determination in this civil appeal filed by the assessee concerns the application of section 154 of the Income-tax Act, 1961 ("1961 Act") which provides for rectification of any mistake apparent from the record by any Income-tax authority. It may be mentioned at this stage that the words "rectification of any mistake apparent from the record" find place in section 254(2) of the said 1961 Act.4
MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) Facts
3. The assessee-company is engaged in the manufacture of portable generator sets in technical collaboration with Honda Motor Company, Japan. In this civil appeal, we are concerned with the assessment year 1991-92. On December 30, 1991, a return of income was filed by the assessee declaring nil income. During the relevant year, the assessee had taken a term loan in foreign exchange for the import of machinery. On account of fluctuation in the foreign exchange rate, the liability of the assessee to repay the loan in terms of rupees went up by Rs. 7,10,910. By referring to the provisions of section 43A, the assessee enhanced the figure of WDV (written down value) of the block of assets and claimed depreciation accordingly. The Assessing Officer came to the conclusion that such revision in the actual cost was not admissible as section 43A refers to adjustment qua the actual cost of the machinery on account of increase or decrease in the liability of unpaid loans utilized for the purchase of machinery.
4. Aggrieved by the said decision, the matter was carried in appeal by the assessee before the Commissioner of Income-tax (Appeals) who took the view that the claim of the assessee was admissible in view of the fact that in the year preceding the assessment year 1991-92 increased depreciation was given to the assessee.
5. On this aspect, therefore, the Department carried the matter in appeal to the Income-tax Appellate Tribunal ("the Tribunal") for both the assessment years 1990-91 and 1991-92. By the judgment and order dated April 2, 2002, the Tribunal held that the Commissioner of Income-tax (Appeals) had erred in allowing the enhanced depreciation as under section 43A actual payment was a condition precedent for availing of the benefit under that section. According to the Tribunal, if actual payment was not made after fluctuation then the value of the asset cannot be increased by adding the increase on account of fluctuation. On the facts, the Tribunal found that, in the present case, there was no actual payment after the fluctuation and, therefore, the assessee was not entitled to claim the benefit under section 43A.
6. On December 9, 2002, the assessee moved the Tribunal for rectification of mistake apparent from the order dated April 2, 2002. That application was made under section 254(2) which reads as under :
"Before the Income-tax Appellate Tribunal :
Delhi Benches Hon'ble "A" Bench (Hon'ble Vice President Sh. R. M. Mehta & Hon'ble Sh. Y. K. Kapor) In the matter of : M/s Shriram Honda Power Equipments Ltd. I. T. A. Nos. : 5413 & 5414/D/96(A) 5 MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) 5544 & 5545/D/96(D) Assessment years : 1990-91 & 1991-92 Sub: Application under section 254(2) for rectification of mistakes in the order dated April 2, 2002 May it please your honour
1. By the captioned order, cross appeals for the assessment years 1990-91 and 1991-92 were disposed of. The aforesaid appeals were heard on February 4, 2002. After the hearing, the hon'ble Bench on the request made, permitted the assessee to file written submissions in respect of cross appeals for the assessment year 1991-92. The sub missions were duly filed on February 7, 2002. The order was passed by the hon'ble Tribunal on April 2, 2002.
2. That ground No. 2 of the Departmental appeal for the assess ment year 1990-91 (I. T. A. No. 5544/D/96) and ground No. 3 of Departmental appeal for the assessment year 1991-92 (I. T. A. No. 5545/D/96) were against the allowance of depreciation on exchange rate fluctuation which had not been paid by the assessee. This issue was decided by the Commissioner of Income-tax (Appeals) in favour of the assessee by relying upon his order in the case of Samtel Color Ltd. It was submitted during the course of hearing as also in the writ ten propositions that the Departmental appeal in the case of Samtel Color Ltd. was decided by the "E" Bench of the Tribunal vide order dated December 10, 2001, wherein, the view of the Commissioner of Income-tax (Appeals) was upheld. A copy of the order was placed at pages 48 to 52 of the paper book.
2.1 That, in deciding the aforesaid ground against the assessee, the hon'ble Bench inadvertently has not referred to the decision of Samtel Color Ltd. Since, the order of co-ordinate Bench of the Tribunal which was relied upon was not considered, and that in forming another view, the view taken by different Benches of the Tribunal was not distinguished, therefore, a mistake apparent from record has crept in. The issue could not be decided without being referred to a Special Bench to reconcile the difference, if at all, between two views. Reference in this regard is invited to the decisions of the hon'ble Supreme Court in the case of Sundarjas Kanyalal Bhatija v. Collector, Thane [1990] 183 ITR 130 and UOI v.
Paras Laminates P. Ltd. [1990] 186 ITR 722 . It is, therefore, submitted that the order may be rectified.
3. Disallowance under rule 6D covered by ground Nos. 3 and 2 for the assessment years 1990-91 and 1991-92 respectively were decided against for the reason that requisite details were not furnished before the authorities below. In respect of the assessment year 1991-92 details of amount disallowable under rule 6D were furnished before the Com missioner of Income-tax (Appeals) but the same were not admitted. These very papers were filed at pages 5 to 26 of the paper book filed before this hon'ble Tribunal. Papers at pages 5 to 7 which included working details of disallowance under 6 MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) rule 6D were filed before the Assessing Officer. Similarly papers at pages 8 to 12 are details of pro fessional fee and the same were also filed before the Assessing Officer. Explanation with reference to each of expenditure was also furnished. The hon'ble Bench in deciding the issue inadvertently did not consider the submission made and as such, a mistake has crept in.
4. Ground No. 4 of appeal for the assessment year 1991-92 which was against disallowance of Rs. 16,011 out of sales conference expenses has not been disposed of.
In view of the factual position explained above, it is submitted that order may be rectified accordingly.
Yours faithfully, For Shriram Honda Power Equipments Limited (Sd.) . . . . . . .
(Authorized Signatory) Dated : December 9, 2002"
7. In the rectification application, the assessee pointed out the earlier judgment of the co-ordinate Bench of the Tribunal dated December 10, 2001, in the case of Deputy CIT v. Samtel Color Limited in which it was held that enhanced depreciation was allowable even on notional increase in the cost of the asset on account of exchange rate fluctuation and despite the fact that the additional liability resulting from the said fluctuation had not been paid by the assessee. It was held that the word "paid" in section 43(2) meant amount actually paid or incurred according to the method of accounting. In this connection, reliance was also placed by the Tribunal on circular No. 5-P of the Central Board of Direct Taxes dated October 9, 1967.
8. Vide order dated September 10, 2003, the Tribunal, in the present case, allowed the rectification application filed by the assessee stating that the judgment of the co-ordinate Bench in Samtel Color Limited (supra) had escaped its attention.
9. Against the order dated September 10, 2003, the Department carried the matter in appeal to the High Court vide I. T. A. No. 735/04. By the impugned judgment dated October 11, 2006*, the High Court came to the conclusion, relying on its earlier decisions, that the power to rectify any mistake was not equivalent to a power to review or recall the order sought to be rectified. By the impugned judgment, the High Court came to the conclusion that vide order dated September 10, 2003, in the guise of rectification, the Tribunal had, in fact, reviewed its earlier order which fell outside the scope of section 254(2) of the 1961 Act and, consequently, the High Court set aside the order of the Tribunal dated September 10, 2003. Hence, this appeal.7
MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) An aside
10. To complete the chronology of events, we may state that vide judgment dated April 30, 2007, in the case of CIT v. Woodward Governor India (P) Ltd. reported in [2007] 162 Taxmann 60** delivered by the Delhi High Court under section 43A, as it stood prior to April 1, 2003, came to be delivered.
*CIT v.Honda Siel Power Products Ltd. [2007] 293 ITR 132 (Delhi) **[2007] 294 ITR 451 By the said judgment, it was held that section 43A was prospective and not clarificatory as contended by the Department. It was further held that in cases where the assessee followed the mercantile system of accounting in terms of section 145 of the 1961 Act, the assessee was bound to abide by the accounting standards laid down by the Institute of Chartered Accountants of India ("the ICAI"). It was further held that, under the accounting standards, the liability stood revised in the year in which the fluctuation of foreign exchange took place in order to reflect the true state of affairs regarding the business of the assessee and accordingly, the word "paid" in section 43(2) should be read in the light of the accounting standards. It was further held that under section 209(3) of the Companies Act, it was mandatory for companies to keep accounts on accrual basis only.
11. Suffice it to state that, in view of the said judgment of the Delhi High Court in the case of Woodward Governor India (P) Ltd.*, the view of the co-ordinate Bench of the Tribunal on section 43A in Samtel Color Ltd. (supra) stood confirmed. We do not wish to express any opinion on the judgment of the High Court in Woodward Governor India1 except to say that judgment of the co-ordinated Bench of the Income-tax Appellate Tribunal has been confirmed which circumstance is relevant in deciding the rectification application.
Scope of the power of rectification
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 the Tribunal for 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 co-ordinate 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 record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. In our view, the High Court was 8 MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) 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.
Conclusion
14. For the aforestated reasons, the impugned judgment of the High Court is set aside and the order passed by the Tribunal allowing the rectification application filed by the assessee is restored. Consequently, the appeal is allowed with no order as to costs.
2.2. In the light of the above order, we find that the Hon'ble Delhi High Court in CIT vs Prasar Bharti 292 ITR 580 (Del.), while adjudicating the issue on applicability of section 194C and 194J upheld the order of the Tribunal by holding that once there is specific provision introduced by way of an explanation to section 194C of the Act to bring within its ambit, the contractual work concerning 'broadcasting and telecasting', the Revenue cannot resort to section 194J which is in more general terms. Thus, we find there is an inadvertent mistake in the order of the Tribunal in not considering the decisions cited by the assessee. Respectfully, following the decision cited by the assessee and the ratio laid down by Hon'ble Apex Court in the case of Honda Siel Power Products Ltd., we are of the view that there is merit in the contention of 9 MA No.149 & 150/Mum/2017 M/s. B4U Broadband India Pvt. Ltd.
(Arising out of ITA Nos.5664 & 5665/Mum/2012) the assessee, therefore, we recall the order of the Tribunal dated 07/11/2016. The Registry is directed to fix the appeals of the Revenue for fresh hearing at an early convenient date.
The miscellaneous applications of the assessee are, thus, allowed.
Finally, the miscellaneous applications are allowed.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 04/05/2018.
Sd/- Sd/-
(N.K. Pradhan) (Joginder Singh)
लेखा सद#य / ACCOUNTANT MEMBER या$यक सद#य / JUDICIAL MEMBER
मब
ुं ई Mumbai; *दनांक Dated : 04/05/2018
f{x~{tÜ? P.S/. न.स.,
आदे श क %$त'ल(प अ)े(षत/Copy of the Order forwarded to :
1. अपीलाथ. / The Appellant
2. /यथ. / The Respondent.
3. आयकर आय1 ु त,(अपील) / The CIT, Mumbai.
4. आयकर आय1 ु त / CIT(A)- , Mumbai
5. 3वभागीय त न ध, आयकर अपील)य अ धकरण, मब ुं ई / DR, ITAT, Mumbai
6. गाड" फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मब ुं ई / ITAT, Mumbai