AI Drafter 
TaxTMI 
TaxTMI 
2015 (8) TMI 909
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....is Miscellaneous Application requests the Tribunal to rectify certain apparent mistakes which have crept in the order of the Tribunal requiring rectification u/s.254(2) of the I.T. Act. 3. The Ld. Counsel for the assessee referring to the Miscellaneous Application submitted that the Assessing Officer in the assessment order has disallowed an amount of Rs. 17,99,74,343/- on account of marketing expenses incurred by the assessee for various reasons which was restricted to Rs. 10 crores by the Ld.CIT(A). While sustaining the above addition the CIT(A) at Para 7.17 of his order has given the break- up of the same which are as under : "7.17 In the light of these facts, the disallowances made under the head 'marketing expenses' by the assessing officer is sustained at Rs. 10 crores in this particular assessment year as the appellant was engaged in the manufacture of beverages in Ahmedabad and Pune as well. The above disallowance sustained at Rs. 10 crores is made up of four components viz- (i) Rs. 4,42,81,637/- because of external inquiries and as admitted by the appellant in view of its inability to give evidence in support of its claim. (ii) Rs. 2 crores - Adhoc disall....
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....tained by the CIT(A), in respect of 'Marketing Expenses' is reduced to Rs. 4,42,81,637/- (Rs.4,11,61,718 + Rs. 31,19,319). In other words, the assessee gets relief of Rs. 5,37,18,863/- (Rs.2,00,00,000 + Rs. 3,37,18,863). . . . He accordingly submitted that the balancing figure of Rs. 3,37,18,863/- as mentioned by the Tribunal should be substituted to Rs. 3,57,18,363/- which is the balancing figure and the correct figure. Since this is a mistake apparent from record the Ld. Counsel for the assessee submitted that the order of the Tribunal to this extent be modified. 4. The Ld. Special counsel for the Revenue while opposing the Miscellaneous Application supported the order of the Tribunal. 5. We have considered the rival arguments made by both the sides. We find the Ld.CIT(A) while sustaining the disallowance of Rs. 10 crores out of disallowance of Rs. 17,99,74,343/- made under the head marketing expenses by the Assessing Officer had categorised the disallowance on account of 4 items. While he had disallowed an amount of Rs. 4,42,81,637/- and Rs. 2,00,00,000/- under 2 specific heads he did not give the bifurcation for the balance amount under the remaining 2 heads being capi....
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.... Sr. No. Amount (In Rs.) Reasons of disallowance i) 44,28,16,371/- Because of external enquiries and as admitted by the appellant in view of its inability to give evidences in support of its claim. ii) 2,00,00,000/- Adhoc disallowance as the appellant has not been able to submit full and complete details during the assessment proceedings and appellate proceedings. iii) On account of capital expenditure in form of production of TV, Cinema, Radio and posters development and. iv) Disallowance on account of whole expenditure on marketing expenses being partly towards building the equity and goodwill of TCCC Brands etc. 10,00,00,000/- Total While confirming disallowance of above expenses the CIT(A) in his order at Para 7.3 stated that the assessee has admitted several differences between the claims of marketing expenses by the assessee and found not verifiable by A.O. These admissions of assessee are contained in information supplied by the assessee available as Annexure-2 to the order of the CIT(A) dated 14.08.2003. The actual figures of expenses fit for disallowance admitted by the ass....
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....iew of the above it is requested for the rectification of the Hon'ble ITAT's order ITA No. 1257/PN/03 order dated 30.06.2008 in the light of the above stated facts." He accordingly submitted that the order of the Tribunal be recalled or rectification may be made to the order passed by the Tribunal in ITA No.1257/PN/2003. 7. The Ld. Senior Counsel for the assessee on the other hand strongly opposed the Miscellaneous Application filed by the Revenue. He submitted that the mistake in the instant case has been committed by the CIT(A) in his order dated 14-03-2003 and the order of the Tribunal was passed on 13-06- 2008. He submitted that any mistake apparent from record can be rectified within a period of 4 years u/s.154 of the I.T. Act. However, the Revenue instead of filing rectification petition before the Ld.CIT(A) has filed application u/s.254(2) before the Tribunal on 02-12-2010. Referring to the order of the Tribunal at Para 36.2 the Ld. Senior Counsel for the assessee submitted that the Tribunal had given a categorical observation that during the hearing the Departmental Representative did not make any particular submission to support the figure of Rs. 5,76,75,624/....
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....e there is a clear cut admission by the assessee before the CIT(A), therefore, the income has to be correctly assessed. He submitted that it is not known as to what prevented the assessee to keep quiet or not bringing the facts to the notice of the Tribunal. He accordingly submitted that since the order of the Tribunal contains an apparent mistake, therefore, the same should be rectified and necessary orders be passed. 9. We have considered the rival arguments made by both the sides. We find merit in the submission of the Ld. Senior counsel for the assessee that the mistake was in the order of the CIT(A) and the proper course of action should have been through rectification petition before the CIT(A). No other mistake has been pointed out by the Revenue against the order of the Tribunal. No affidavit was filed before us by the Revenue stating that they had infact argued to support the figure of Rs. 5,76,75,624/- in place of Rs. 4,11,61,718/- and the Tribunal has not considered the same. Therefore, we find no apparent mistake in the order of the Tribunal. We accordingly dismiss the Miscellaneous Application filed by the Revenue being devoid of any merit. 10. The Miscellaneous ....
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.... an apparent mistake in its order even during the pendency of an appeal before the Hon'ble High Court. 11.3 Referring to the decision of the Hon'ble Bombay High Court in the case of Accra Investment Pvt. Ltd. Vs. ITO vide ITA No.953/PN/2012 order dated 15-01-2013 (a copy of which was filed during the course of hearing) the Ld. Senior counsel for the assessee submitted that in that case the Miscellaneous Application u/s.254(2) was filed before the Tribunal on 30-08-2012. The assessee has also filed an appeal u/s.260A before the Hon'ble High Court which was admitted on 25-09-2012. When the High Court took up the matter for final hearing it observed that some of the alleged mistakes pointed out in the Miscellaneous Application go to the root of the matter and are crucial to determine the issues arising in the appeal. Accordingly, it was held that it would be in the interest of justice for the proper disposal of the appeal, the Miscellaneous Application should be first disposed of by the Tribunal. He submitted that the High Court would not have directed the Tribunal to dispose of the Miscellaneous Application even after the admission of the appeal by the High Court if it was contrar....
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....4(2) of the Act is maintainable and the Tribunal has the jurisdiction and the duty to rectify the mistakes pointed out by the assessee. 13. We have considered the rival arguments made by both the sides. Both the sides fairly conceded that the appeals filed by them before the Hon'ble High Court against the order of the Tribunal are yet to be admitted. Therefore, we do not find any merit in the submission of the Ld. Special counsel for the Revenue that in view of the decision of the Special Bench of the Tribunal in the case of Tata Communications (Supra), once an appeal is filed before the High Court the Tribunal becomes "Functus Officio" and has no jurisdiction to decide the Miscellaneous Application. 13.1 We find the Chandigarh Bench of the Tribunal in the case of Vesta Investment and Trading Company Pvt. Ltd. (Supra) has held that there is no bar to exercise jurisdiction u/s.254(2) when the party has approached the High Court u/s.260A against the order of the Tribunal in an appeal on a substantial question of law yet to be admitted. 13.2 Similarly, we find the Hon'ble jurisdictional High Court in the case Accra Investment Pvt. Ltd.(Supra) has directed the Tribunal to disp....
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....nsel for the parties are at liberty to mention the Misc. Application before the Tribunal and have the matter placed for hearing before the Tribunal on a date earlier to 22-03- 2012 subject to the convenience of the Tribunal. 4. As we are of the view that the Misc. Application must be disposed of first before the appeal can be heard on merits, it would be appropriate that the revenue not commerce any recovery proceeding consequent to the impugned order till the Misc. Application has been disposed and for a period of three weeks thereafter, if the order is adverse to the respondent. Accordingly, we dispose of the notice of motion by the above directions. Notice of Motion is disposed of accordingly". In view of the decisions cited above, we are of the considered opinion that the Miscellaneous Application filed by the assessee is maintainable. Accordingly, the preliminary objection raised by the Special counsel for the department is dismissed. 14. The first issue raised by the assessee through this Miscellaneous Application is regarding the order of the Tribunal in restoring the issue to the file of the Assessing Officer to decide the issue afresh regarding service charges.....
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....nous box files of vouchers before the Assessing Officer himself. However, the Tribunal has proceeded on a total misconception by proceeding on the basis that for A.Y. 1999-2000 to 2004- 05 no vouchers were produced before the Assessing Officer. He submitted that the ground of appeal raised by the assessee before the Tribunal was whether the CIT(A) was justified in disallowing the expenditure on the ground that some benefit had also accrued to the bottlers and TCCC. However, the Tribunal in the order dated 31-03-2010 has restored the issue to the Assessing Officer on the basis that as the vouchers were not produced before the Assessing Officer for A.Y. 1998-99 the assessee has not proved the genuineness of the expenditure. In doing so, the Tribunal has lost sight of the fact that the vouchers were produced before the CIT(A) who had called for a remand report from the Assessing Officer and the issue of genuineness of the expenditure was never in dispute before the lower authorities. It was also not the grievance of the Revenue that the vouchers were not produced. Therefore, instead of following the order of the Tribunal for A.Y. 1997-98 under similar facts the Tribunal has committed ....
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....gly submitted that the Tribunal should withdraw the directions in Para 76 (Page 62 & 63 of the order) for A.Y. 1998-99 which has been followed in subsequent years and following the order for the Tribunal for A.Y. 1997-98 should allow the assessee's appeal for A.Y. 1998-99 to 2004-05. 16. The Ld. Special counsel for the Revenue on the other hand heavily opposed the Miscellaneous Application filed by the assessee. He submitted that there is no apparent mistake in the order of the Tribunal and the assessee through this Miscellaneous Application requests the Tribunal to rectify its order which amounts to review of its own order which is not permissible in law. He accordingly submitted that the 1^st ground raised by the assessee in the Miscellaneous Application should be dismissed. 17. We have considered the rival submissions. We find after thoroughly discussing the issue the Tribunal had held that the reasons given by the Ld. DR not to follow the order of the Tribunal for A.Y. 1997-98 are not at all convincing in view of the point-wise counter reply given by the Ld. Counsel for the assessee to prove that those objections have already been considered by the Tribunal. Accordingly, ....
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....in assessee's own case for the immediately preceding assessment year, we are of the opinion that the marketing expenses claimed by the assessee has to be allowed. However, as regard service charges, undoubtedly the assessee has not furnished the full details before the Assessing Officer except the copy of the service agreement and the debit notes. It is the settled proposition of law that for claiming any expenditure, the onus is always on the assessee to satisfy the Assessing Officer with documentary evidence regarding the genuineness and allowability of the expenditure. The assessee in the instant case has failed to discharge the onus. Further, the Ld. CIT(A) has given a finding at Para 8.1 of his order that the claim of the assessee in various submissions that all expenses as incurred by CCI Inc. would have to be incurred by assessee company in running the business is not entirely correct as has been separately brought out at different places of the appeal orders. We, therefore, in the interest of justice, deem it proper to restore the issue relating to "service charges" to the file of the Assessing Officer with a direction to decide the issue afresh after giving an opportunity ....
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....he Tribunal while adjudicating the issue failed to take note of clause (6) of the agreement which read as under : "In consideration of the services provided by CCI, CCIL shall reimburse the out of pocket expenses incurred in rendering the services on production of supporting. In addition, CCIL shall pay to CCI a fee on the basis of actual costs incurred by CCI under Expense heads listed in Exhibit A, in providing such services plus a markup of 5% on such actual costs." 18.1 He submitted that Exhibit A sets out only four items of expenses being expenses on 'Salaries and allowances, Moving and Relocation, Service Charges for use of assets and Staff Welfare Expenses". Travelling expenses are not listed here and are incurred in the course of rendering services to the appellant and accordingly reimbursed without a markup as per the clause 6 of the service agreement dated 9th May 2000. Indeed for the A.Y. 1997-98 to 1999-00 the travel expenses were allowed as a part of the Service Charges and 5% mark-up was made. For A.Y. 2000-01 to 2004-05 also the travel expenses were reimbursed as in the earlier years but without a mark-up. 18.2 He submitted that since by restoring the ....
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....decision of Hon'ble Bombay High Court in the case of Richardson Hindustan Ltd. Vs. CIT reported in 169 ITR 516 was relied upon to the proposition that taking premises on lease does not amount to acquisition of capital asset nor advantage of an enduring nature and that the expenditure incurred in connection with the lease (included was write-off of security deposit) was allowable as Revenue expenditure. However, the Tribunal while adjudicating the issue has not considered the above decision and lost sight of the said judgment of the jurisdictional High Court. Therefore, the decision of the Tribunal being inconsistent with the law laid down by the jurisdictional High Court constitutes mistake apparent from record which requires rectification. He accordingly submitted that the order of the Tribunal on this issue be recalled or necessary order may be passed rectifying apparent mistake. 22. The Ld. Special counsel for the Revenue on the other hand heavily relied on the order of the Tribunal and submitted that there is no apparent mistake and therefore this ground in the Miscellaneous Application should be dismissed. 23. After hearing both the sides, we find the Tribunal while deci....
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....s must be owned by the assessee and must be used for business purposes. Although the coolers in the instant case have been owned by the assessee but the fact remains that these are used by the vendors / bottlers who sold the beverages manufactured by concerns other than the assessee. Therefore we do not find any infirmity in the order of the CIT (A) and accordingly uphold the same." 24.1 He submitted that it was not the submission that user of the coolers for beverages is user for the concentrate but that user of the coolers at the retail outlets increases the consumption of the beverages and consequently the sales of the applicant's concentrate. This view has been followed in the assessment years 2001-02 to 2004-05. Referring to the written synopsis he drew the attention of the Bench to the following and submitted that there are two mistakes apparent in the said conclusion : "(i) First, the Hon'ble Tribunal appears to have lost sight of its own finding in AY 1997-98 in the context of service expenses that "It is an admitted fact that the bottlers manufacture beverages from the 'concentrates' purchased from the assessee company. An increase in the volume....
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....pplied to the entire block and not to individual asset. The High Court approved the said view of the Tribunal vide its order dated 29th July 2009 in ITA no 598 of 2009. (vii) Attention was invited to the definition of the term "block of assets" in section 2(11) of the Act and to 32(1)(i)(ii) which provides that depreciation shall be allowed at the prescribed percentage on the written down value of the block of assets. The result is that the individual assets lose their identity once they enter the block of assets." He accordingly submitted that the order of the Tribunal on this issue be recalled or necessary order modifying the order of the Tribunal be passed. 25. The Ld. Special counsel for the Revenue on the other hand strongly opposed this ground and submitted that the Tribunal had consciously taken a view and there is no mistake apparent from record which requires rectification. 26. We have considered the rival arguments and find some force in the argument of the Ld. Counsel for the assessee. It was urged at the time of hearing by the Ld. Counsel for the assessee that once an asset is part of the block, the user of the block has to be seen and not that of indi....