2019 (3) TMI 490 - AT - Income Tax

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

M/s. Jacob Engineering India Pvt. Ltd. Versus ACIT-10 (2) (1), Mumbai

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 ... Rectification of mistake u/s 254(2) - mistake of making an incorrect statement before this Tribunal at the time of hearing of the main appeal which was apparently made by him without the benefit of workings of Arm’s Length Price pursuant to exclusion of comparables which are Government Companies - Order of tribunal was passed relying statement - order of the Tribunal erroneous warranting rectification - HELD THAT:- We find that it is admitted fact that the mistake was committed only by the Ld. AR at the time of hearing of the main appeal by making certain statements. Hence there cannot be any mistake that could be attributed in the order of this Tribunal within the meaning of Section 254(2) of the Act warranting rectification. In the instant case, it is the AR who had admitted by making certain statements at the time of hearing of the main appeal which was accepted and followed by Tribunal while disposing off the main appeal. We are afraid that if the argument of the Ld. AR is appreciated that it would be against the proposition of binding nature of ‘Law of Contracts’, in as much as the counsel has been appointed by the assessee by giving proper Vakalatnama in the name of the counsel and the statement and argument advanced by said counsel are to be construed to have been made on behalf of assessee and shall bind the assessee. We are not inclined to open up a Pandora box by agreeing to the proposition advanced by the Ld. AR before us in the miscellaneous application proceeding. With these observations, we do not deem it fit to recall the order passed by this Tribunal. - Decided against assessee. 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 OrderThe 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 ComparablesDuring 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 ComparablesThe 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 ActThe 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.