TaxTMI 
TaxTMI 
2014 (11) TMI 216
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....Mum/2011), that the assessee Tribunal had held that facts of both the cases were different, that while arriving at the conclusion the Tribunal had completely ignored the clause 3. 4 of the CSA, that there was omission to deal with regard to said caluse, that not considering the clause was a mistake apparent from the record. 3. During the course of hearing before us, the Authorised Representative(AR)made the same submissions that are part of the application filed by the assessee. Departmental Representative (DR) stated that the assessee was asking for review of the order which was not permissible under the provisions of section 254(2)of the Act. We have heard the rival submissions and perused the material before us. In the case under consideration basic issue was applicability of the provisions of section 40(a)(ia)of the Act. While deciding the appeal the Tribunal had held as under: "2. 4. b. Now, we would like to take remaining two items i. e. Staff Cost and Advertising and Promotional Expenses. From the PB filed by the assessee, (Pg. 13-14) it is clear that said expenditure pertained to marketing and field-selling activities carried out during the year under consideration. But,....
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....determine the allowances, which are exempt from tax(2013-TIOL-720-HC-ALL-IT). On the same analogy an assessee is not competent to hold that whether any payment is purely reimbursement or not especially when it does not produce cogent and reliable documentary evidences at the first available opportunity. Hon'ble Apex Court, in the matter of Transmission Corporation of A. P. Ltd. (239ITR587), has held that if profit is embedded in a payment, tax has to be deducted at source. We are aware that the said judgment was delivered by the Court while deciding the provisions of section 195 of the Act and the present case deals with section 194C. But, the basic concept of deduction of tax at source remains same. In our opinion word 'embedded profit' is narrower than the word 'profit'. To find out embedding of profit one has to scrutinise the books of accounts and only then a final decision can be arrived at. The process and the material;which can prove the embedding of profit-element or otherwise;has to be brought on record by the AO or the assessee. As stated earlier, assessee had not produced any positive evidence that could prove that payment in question was not embedded with profit. Theref....
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....tional time, cost of the identified personnel, without any mark up, margin or addition". Similarly, clause 3. 4 of the second Agreement providing facilities to each other states that "The basis of cost sharing shall be an exact reimbursal of the proportional cost of the identified facilities, without any mark up, margin or addition". From the Profit and loss account of the assessee, it is seen under Schedule 18 that the assessee independently incurred various expenses such as Stores and spares consumed, Power and fuel, Freight, Rent, Repairs and Travelling, etc. , apart from paying Cost sharing expenses of Rs. 2. 96 crores. The P & L account of BCS is also available on record. It can be seen from it that the amount recovered by BCS from the assessee and other group companies towards cost sharing has been excluded from the expenditure incurred by it. The net effect of these transactions is that BCS provided its personnel and services to the assessee on cost to cost basis which the assessee included in its expenditure, whereas the BCS reduced the amount recovered from the assessee and other group concerns from its expenses. The contention that there was no profit element in such reim....
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.... that there was no profit element in such reimbursement of expenses was also raised before the AO, which remain uncontroverted. In our opinion, in the case under consideration, AO and FAA have given a clear finding of fact that payment made by the assessee was not in the nature of reimbursement. They have also stated that service tax was paid by the assessee. In the case of Bayer(supra) Tribunal has not mentioned anything about payment of service tax. Besides, in that matter it was also found by the Tribunal that amounts recovered from the assessee and other group companies towards cost sharing had been excluded from the expenditure incurred by it. FAA has mentioned that in the agreement there was a clause about not treating the agreement as service contract, that in spite of the said clause the real nature of the agreement was of the service-contract. We are also of the opinion that recitals of an agreement or the words used in it have to be interpreted only after the full agreement is considered in right perspective. As per the accepted principles of tax-jurisprudence entries in the books of accounts are not the conclusive proof of any transaction. Similarly, for understanding th....
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....ter the Hon'ble Court held that where an error was far from self evident, it ceased to be an apparent error, that the so called inaccuracies or wrong recording of facts as alleged were not patent mistakes which constituted the sine qua non for exercise of power under section 254(2) of the Act. Similarly, in the matter of Perfetti Van Melle India P. Ltd. (296ITR595)Hon'ble Delhi High Court has again held as follows: "Section 254(2) of the Income-tax Act, 1961, enables the concerned authorities to rectify any"mistake apparent from the record". An oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion, is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal has not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act. " Hon'ble Karnataka High Court had an occasion to deal with the same subject in the matter of Mcdowell and Company Ltd. (310. 215). In that case Tribunal had decided the appeal appeal of the....