Tribunal dismisses application to modify order, upholds exclusion of Government Companies

The miscellaneous application seeking modification of the Tribunal's order in ITA No.3700/M/2016 for the A.Y.2010-11 was dismissed. The Tribunal held that the exclusion of Government Companies as comparables and the inclusion of M.N. Dastur and Company Pvt. Ltd. were not valid grounds for rectification under section 254(2) of the Act. The mistake leading to the erroneous order was solely attributed to the Ld. AR, and therefore, the order passed by the Tribunal stood without modification.

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Issues involved:
1. Modification of the order passed by the Tribunal in ITA No.3700/M/2016 for the A.Y.2010-11.
2. Exclusion of comparables which are Government Companies for benchmarking international transactions.
3. Inclusion of M.N. Dastur and Company Pvt. Ltd. as comparables.
4. Rectification under section 254(2) of the Act based on a mistake made during the main appeal hearing.

Issue 1: Modification of Tribunal Order
The assessee sought to modify the Tribunal's order in ITA No.3700/M/2016 for the A.Y.2010-11. The Ld. AR argued that if Government Companies comparables were excluded, the international transactions would fall within the +/- 5% range, warranting no adjustment to Arm's Length Price (ALP). The Tribunal had previously held that Government Companies should not be considered as comparables. Therefore, other grounds raised by both the assessee and the revenue were not adjudicated based on this exclusion.

Issue 2: Exclusion of Government Companies as Comparables
During the miscellaneous application proceeding, the Ld. AR admitted to making an incorrect statement during the main appeal hearing, leading to an erroneous order by the Tribunal. The Ld. AR acknowledged that the inclusion of M.N. Dastur and Company Pvt. Ltd. as comparables, decided by the Ld. CIT(A), impacted the margin falling within the specified range. The Ld. DR contended that there was no error in the Tribunal's order and strongly relied on it. The Tribunal found that the mistake was solely made by the Ld. AR during the main appeal hearing, and rectification under section 254(2) of the Act was not warranted.

Issue 3: Inclusion of M.N. Dastur and Company Pvt. Ltd. as Comparables
The Ld. AR argued that the inclusion of M.N. Dastur and Company Pvt. Ltd. as comparables by the Ld. CIT(A) affected the margin falling within the acceptable range. The Ld. DR opposed this, stating that the Tribunal's order was correct. The Tribunal determined that the mistake leading to the erroneous order was solely attributable to the Ld. AR and did not warrant rectification under section 254(2) of the Act.

Issue 4: Rectification under Section 254(2) of the Act
The Ld. AR cited the decision of the Hon'ble Supreme Court regarding rectification under section 254(2) of the Act. However, the Tribunal found that the mistake was made by the Ld. AR during the main appeal hearing, and it could not be considered a valid ground for rectification. The Tribunal highlighted that the Ld. AR's statements during the hearing were binding on the assessee, and therefore, the order passed by the Tribunal should not be recalled.

In conclusion, the miscellaneous application filed by the assessee seeking modification of the Tribunal's order was dismissed, as the mistake leading to the erroneous order was attributed to the Ld. AR and did not meet the criteria for rectification under section 254(2) of the Act.

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