2013 (11) TMI 681 - AT - Income Tax

Tribunal upholds order on TDS deduction for managerial services

M/s. Karvy Computer-Share Pvt. Ltd. Versus The Asst. CIT Circle-2 (1) Hyderabad

The Tribunal dismissed the Miscellaneous Application seeking the recall of the Tribunal order under section 254 of the Income-tax Act, 1961 for A.Y. ... Rectification of order u/s 254 [2013 (6) TMI 352 - ITAT Hyderabad] - Deduction of TDS u/s 194J of the Income tax Act - Payment to NSDL/CDSL is in the nature of professional services, the provisions of sec. 194J are attracted and tax was deductible at source – Held that:- Reliance has been placed on the judgment in the case of CIT vs. Kotak Securities Ltd. [2011 (10) TMI 24 - Bombay High Court] - In the present case, while adjudicating the issue, the Tribunal considered the entire facts of the case and observed, that the assessee has availed managerial services from NSDL/CDSL for which the assessee has paid the fees. Taking support from the judgement of Bombay High Court, it was held by the Tribunal that the assessee is liable to deduct TDS on the impugned payment. Power of Tribunal u/s 254(2) of the Income Tax Act – Held that:- Reliance has been placed on the judgment in the case of CIT vs. Pearl Woollen Mills [2009 (11) TMI 48 - PUNJAB AND HARYANA HIGH COURT], wherein it was held that Tribunal could not re-adjudicate the matter under section 254(2). It is well settled that a statutory authority cannot exercise power of review unless such power is expressly conferred. There was no express power of review conferred on the Tribunal. Even otherwise, the scope of review did not extent to rehearing a case on the merits. Scope and ambit of application of section 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record - Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under s. 254(1) is the effective order so far as the appeal is concerned. Any order passed under s. 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. In the instant case, the Tribunal while deciding the appeal of the assessee vide order dated 28th March, 2013 not only considered the elaborate arguments advanced by the Authorised Representatives of both the parties but also took into consideration the written synopsis filed by the AR for assessee before it. Generally the main purpose of the Tribunal for calling for written synopsis from the parties is that nothing is ignored or any point in issue which was raised during the course of arguments or which could not properly be noted by the Members in the log book while hearing the arguments of the parties, is left unconsidered – Decided against the Assessee. Issues:1. Recall of Tribunal order for rectification of mistake apparent from record under section 254 of Income-tax Act, 1961.2. Errors in Tribunal order regarding applicability of section 194J of the Act and nature of payments made by the assessee.3. Scope of Tribunal's power to recall an order under section 254(2) and limitations on rectification of mistakes apparent from the record.Detailed Analysis:Issue 1: Recall of Tribunal OrderThe Miscellaneous Application sought the recall of the Tribunal order in ITA No. 328/Hyd/2012 for A.Y. 2008-09 to rectify a mistake apparent from the record under section 254 of the Income-tax Act, 1961.Issue 2: Errors in Tribunal OrderThe learned AR highlighted errors in the Tribunal order related to the applicability of section 194J of the Act and the nature of payments made by the assessee. The AR argued that the impugned payment was not for professional or technical services but a reimbursement of expenditure. The Tribunal considered the entire facts of the case and held that the assessee is liable to deduct TDS on the payment made to NSDL/CDSL for managerial services, contrary to the AR's arguments.Issue 3: Scope of Tribunal's PowerThe Tribunal discussed the limited scope of its power under section 254(2) for rectification of mistakes apparent from the record. It emphasized that the power to rectify a mistake does not extend to recalling the entire order and passing a fresh decision. The Tribunal cited precedents to clarify that rectification is not equivalent to a power to review or recall the order sought to be rectified. The Tribunal also outlined the parameters for the application of section 254(2), emphasizing that an oversight of a fact or failure to consider an argument does not constitute an error apparent on record.In conclusion, the Tribunal dismissed the Miscellaneous Application filed by the assessee, acknowledging a possible error of judgment in applying the Bombay High Court judgment but stating that the assessee is free to explore other legal remedies available. The Tribunal upheld the original order pronounced on 8th November 2013, emphasizing the importance of considering all arguments and written synopses submitted by the parties before passing a decision.