Tribunal Corrects Disallowance Order, Aligns with Mahindra Precedent for Judicial Consistency in Tax Application.

The ITAT Mumbai addressed a Miscellaneous Application by the assessee seeking to recall an order regarding disallowance under Section 40(a)(ia) of the Act. The Tribunal acknowledged a mistake apparent on record by not considering the precedent set in the Mahindra and Mahindra case. Recognizing the need for judicial consistency, the Tribunal modified its order to align with the Mahindra and Mahindra decision, directing the Assessing Officer to delete the disallowance for the assessee. The Tribunal's decision, pronounced on 05/01/2021, allowed the assessee's application and emphasized adherence to precedent judgments.

---

---

Issues involved:
Recall of order on disallowance u/s.40(a)(ia) based on non-following of precedent judgment.

Analysis:
The judgment by Appellate Tribunal ITAT Mumbai deals with a Miscellaneous Application filed by the assessee seeking to recall the order on a specific issue regarding the disallowance made u/s.40(a)(ia) of the Act. The assessee contended that the Tribunal had not considered a previous decision in the case of Mahindra and Mahindra Ltd., which was in favor of the assessee. The Tribunal acknowledged that the decision in Mahindra and Mahindra case was on record and had not been considered while rendering the decision. It was observed that a contrary view had been taken in the present case compared to the Mahindra and Mahindra case, leading to a mistake apparent on record under Section 254(2) of the Act.

The Tribunal recognized the need for judicial consistency and decided to modify the order to align with the decision in the Mahindra and Mahindra case. The Tribunal referred to specific paragraphs from the Mahindra and Mahindra case where the disallowance u/s.40(a)(ia) was deleted based on detailed analysis. It was noted that the assessee had submitted a break-up of the year-end provision for expenses, which was considered valid and not adhoc. The Tribunal, following the precedent, directed the Assessing Officer to delete the disallowance u/s.40(a)(ia) for the assessee in the current case.

Consequently, the Tribunal modified the relevant paragraphs of the order dated 10/09/2020 to reflect the decision in line with the Mahindra and Mahindra case. The other contents of the order remained unchanged, and the Miscellaneous Application of the assessee was allowed. The judgment was pronounced on 05/01/2021, emphasizing the importance of adhering to precedent judgments for maintaining judicial consistency.

---