TaxTMI 
TaxTMI 
2016 (11) TMI 1467
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....Mum/2007, 4901/Mum/2007, 4672/Mum/2007, 4278/Mum/2008, 4279/Mum/2008, 4284/Mum/2008, 5373/Mum/2007, 4246/Mum/2008, 4282/Mum/2008, 5477lMum/2008, 4252/Mum/2008, 4917/Mum/2007, 4674/Mum/2007, 4875/Mum/2007, 4873/Mum/2007, 4285/Mum/2008, 4251/Mum/2008, 4286/Mum/2008, 5076/Mum/2008, 5082/Mum/2008, 5075/Mum/2008, 5084/Mum/2008, 4918/Mum/2007, 5468/Mum/2008, 5472/Mum/2008, 5473/Mum/2008, 5471/Mum/2008, 4501/Mum/2009, 730/Mum/2009, 5093/Mum/2008, 5094/Mum/2008, 5095/Mum/2008, 5096/Mum/2008 For The Assessee : Shri Yogesh Thar a/w Shri Deepak Jain and Shri Manthan Shah For The Revene : Shri Parag Vyas ORDER PER BENCH: These bunch of miscellaneous applications have been filed by different assessees viz., Reliance Communications Ltd., (formerly known as Reliance Infocom Ltd.), Reliance Communications Infrastructure Ltd., Reliance BPO Pvt. Ltd. (formerly known as Reliance Infostream Pvt. Ltd.) and Reliance Telecom Ltd., seeking rectification of mistake apparent on record in the order dated 6th September 2013, passed by the Tribunal while disposing off a bunch of appeals filed by the Department in relation to these assessees. 2. Brief facts leading to the filing of aforesaid appl....
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.... 4. Brief submissions of the learned Counsel, as summarised in the written note dated 30th May 2016, a copy of which is placed on record, are as under:- "1. Submissions made by the Applicant lost sight of and decision rendered based on submissions made by Lucent's Counsel: a. It was pointed out by the Applicant before the CIT(A) that the Applicant's case was that of software is specific to telecom hardware (Pg. 9 and 10 of the Tribunal's order); b. Para 13 Pg. 26 and 27 of the Tribunal's order records the Applicant's submissions that the transactions under consideration is not a case of shrink wrapped software and this software is specific to the machinery on which it works; c. Para 16 Pg. 28 of the Tribunal's order states the argument of the Applicant's Counsel distinguishing the decision of the Hon'ble Karnataka High Court in Samsung (supra) and thereby stating that it was not a case of purchase of shrink wrapped software; d. Para 39 Pg. 91 of the Tribunal's order states that "in the cases before us, the learned Counsel for Lucent fairly admitted that the issue is to be decided in the light of the judgme....
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....39;s mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake. The same thing had been done in the instant case. [Para 13] " Further, the Hon'ble Mumbai Tribunal in the case of Shri Prerak Goel v. ACIT (MA No. 325/Mum/2010) has held as under: "4. It is the contention of the assessee that the above said case of Mrs. Bakhtawar Dubhash B. Dubhash in 2009-TIOL-288-ITAT- MUM was relied upon but the same was not discussed or distinguished. Since this Coordinate Bench decision has a bearing on the issue the Tribunal ought to have considered the same and not considering the same would he considered as a mistake apparent from record on various principles on this issue. 5. As seen from the record the above said decision was placed before the Bench but inadvertently the same was not discussed or distinguished. In view of this, we are of the opinion that the assessee should be given an opportunity to place the arguments in this regard and the Miscellaneous Application is to be allowed by recalling the order dated 10.08.2010. It is also necessary to examine whether the above Coordinate Benc....
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....ing, the Ld. A.R. of the assessee submitted that on going through the order passed by the Hon'ble Bench, it is noticed that there was a mistake in non-consideration of coordinate bench decision of ITA T, Visakhapatnam in the case of Dr. Ch. Sri Padmavati Vs. DCJT in ITA No.624/Vizag/2013 dated 4.7.2014, which is a mistake apparent from the records, it requires rectification u/s 254(2) of the Income-Tax Act, 1961 (hereinafter called as the Act ). 4. We have heard both the parties, perused the materials available on record. On verification of the order passed by this bench, in JTA No. 1861Vizag/201 1 dated 11.12.2015, we find that the bench, by oversight has not given any findings on the coordinate bench decision cited by the assessee. Therefore, we are of the opinion that it is a mistake apparent from the records which needs to be rectified u/s 254(2) of the Act. Hence, by exercising the powers vested with the Tribunal u/s 254(2) of the Act and also by relied upon the judgement of Hon 'ble Supreme Court of India, in the case of Honda Siel Power Products Ltd. Vs. CIT (2007) 295 ITR 466, the order passed by this Tribunal in ITA No.1861Vizag/2011 dated 11.12.2015 has b....
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....e Tribunal or participating in the hearing, but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the courts or the Tribunals and not reached objectively on the basis of the facts placed before the authorities. If a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion that will be destructive of the institutional integrity itself That is the reason why in a High Court, if single judge takes a view different from the one taken by another judge on a question of law, he does not finally pronounce his view and the matter i....
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....nd, therefore, in breach of principles of natural justice. In the above view, the substantial question of law is answered in the affirmative i.e. in favour of the appellant assessee and against the revenue. However, the issue of applicability of Rule 8D of the Rules or otherwise has yet to be determined by the Tribunal. In these circumstances, we set aside the impugned order dated 10th July, 2013 passed by the Tribunal and restore the entire appeal to the Tribunal for fresh disposal in accordance with law. All contentions of both sides left open." (d). Further, the Hon'ble Mumbai Tribunal in a subsequent decision in the case of Solid Works Corporation v. ADIT (ITA No. 8721/Mum/2010) has once again reiterated the settled proposition that when no decision of the Jurisdictional High Court is available on a particular issue and when there are contrary decisions of other High Courts, the view favourable to the assessee ought to be adopted. 3. Payees held as not chargeable to tax by various Benches of the Tribunal and in some cases even by High Courts: a. The Applicant, during the course of the present proceedings, has furnished a chart which had 21 appeals where it wa....
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....ist of 21 appeals provided to the Tribunal during the course of the present proceedings, the Applicant had mentioned a decision of the Hon'ble Delhi High Court in the case of DIT v. Ericsson A.B., New Delhi (16 taxmann.com 371). Ericsson was one of the payee of the Applicant. The said decision was also forming part of Pgs. 94 to 117 of the Legal Paper Book filed by the Applicant during the course of original hearing. Thus, the Applicant submits that even at the time of original hearing, the Tribunal had an occasion to consider that since the income of the payee has been held to be not chargeable to tax, there cannot be any liability of the payer to deduct tax at source on the said payment. Thus, the Tribunal, by taking a contrary view has committed a mistake apparent from records which needs to be rectified. f. Further, the Applicant submits that at the time of hearing of the original appeals, the Ld. DR had argued only for the appeal relating to ITA No. 837/Mum12007 and the Applicant had also given a rejoinder for the Ld. DR's arguments. All the appeals being that of the Department, in the absence of any arguments by the Ld. DR for any other appeal, the Applicant ....
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....heory not argued by the Ld. DR: a. At the time of the original hearing, the only argument put forth by the Ld. DR was on the issue that the payment made to Lucent was "for the use of, or the right to use, any copyright" and there was no argument put forth by the Ld. DR whether the software was "embedded" in the hardware or not. The Ld. DR tried to distinguish the Hon'ble Delhi High Court's decision in Ericsson (supra) on the footing that the said decision was concerned with licensing of software along with sale of substantial hardware and was not restricted to cases of licensing of only software. b. As is evident from Para 12 Pg. 26 of the Tribunal's order which records the arguments of the Ld. DR, the "embedded" theory was never argued by the Ld. DR. c. The CIT(A)'s order which has been reproduced by the Tribunal at Para 10 shows at Pg. 9 and 10 of the Tribunal's order that the Applicant had submitted that software is specific to telecom hardware and the simultaneous purchase orders of software and hardware, wherever applicable. d. As stated in Para 13 Pg. 26 and 27 of the Tribunal's order, the Counsel for the Applicant h....
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.... the Applicant) also states that the ratio laid down by the Delhi High Court in the case of Ericsson (supra) would also apply when shrink wrapped software is sold. Thus, the Applicant submits that the Tribunal has completely misread the decision of the Delhi High Court in Ericsson's case. e. A subsequent decision of the Hon'ble Delhi High Court in the case of DIT v. Infrasoft Ltd. (220 Taxman 273) has held that the findings of Ericsson (supra) would hold good even in the case of shrink wrapped software. f. For the proposition that misreading of a decision amounts to mistake apparent from record, the Applicant relies on a decision of the Hon'ble Allahabad High Court in the case of CIT v. Quality Steel Tubes Ltd. (253 CTR 298) wherein it has been held as under: "11. In the present case though the Tribunal had referred to the judgment in Swadeshi Cotton Mills Co. Ltd. (supra), but later on, on the application given by the assessee that it wrongly applied the principle of law in Swadeshi Cotton Mills Co. Ltd. (supra) to the present case, found that there is difference between hypothecation and pledge of the stock. The hypothecation of the .goods c....
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....committed in the process of reasoning, on which no two views are possible, it will indeed be unreasonable to suggest that only because this mistake is committed after application of mind on a situation, this is not a mistake apparent from record. It cannot be termed as an error of judgment, but it has to be termed as a mistake apparent from record resulting in a vitiated Judgment. The difference between an error of judgment vis-a-vis an error apparent from record leading to an erroneous judgment may be thin but is too subtle to be ignored by a judicial body. The question of error of judgment can only arise when two views are possible and one of the views is adopted. That was not in the instant case. It was a simple case of omission to take note of the context in which the Supreme Court made certain observations and then interpreting those observations as complete exposition of law on that subject.... In view of the above, the Tribunal did commit an error, which was apparent from record, in holding that the assessee's dividend income could be taxed under the head income from business'. Merely because the exercise of powers under section 254(2) in the instant case wa....
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.... this matter which cannot be subject to rectification u/s 254(2) of the Act. The Ld D.R further submitted that the Tribunal has taken note of the decision rendered by the Co-ordinate bench in the case of Solid Works at page 28, but preferred to follow the decision rendered by Hon'ble Karnataka High Court in the case of Lucent Technologies 348 ITR 1, noted in paragraph 37 & 38 of the order. By placing reliance on the decision rendered by Hon'ble Supreme Court in the case of State of Gujarat Vs. Mirzapur Moti Kureshi Kassad Jamat and Ors (Civil appeal Nos. 4397 - 4940 and 4941-44 of 1998 dated 26-10-2005), the Ld D.R submitted that the Hon'ble Supreme Court has observed that, in the case of modern economic issues which are posed for resolution in advancing society or developing country, the court cannot afford to be static by simplistically taking shelter behind principles such as stare decisis and refuse to examine the issues in the light of present facts and circumstances... The doctrine of Stare decisis is generally to be adhered to because of well settled principles of law... yet the demands of changed facts and circumstances supported by logic, amply justify the need for a fresh....
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.... software and therefore there is no mistake apparent from record as contemplated u/s 254(2) of the Act. 7. During the course of hearing, the assessees filed affidavits to support their contentions that the Tribunal has proceeded to decide the appeals on the basis of concession given by the Counsel of other four appeals filed by M/s Lucent Technologies GRL LLC, USA. It was further submitted in the affidavit that the assessees herein had sought opportunity to be heard in respect of arguments advanced by the counsel of M/s Lucent, but the Tribunal has proceeded to decide the appeals without affording opportunity to the assessees. It was further submitted that the assessee's counsel was not present when the appeals of M/s Lucent were heard by the bench. The affidavit further states that the observation made by the Tribunal in paragraph 47 (available at page 101 of the order) that "the assessees herein have admitted that there was supply of software without purchase of equipment/hardware either from the same party or from any other party" is an erroneous statement. In the rejoinder, the revenue has stated that certain representatives of M/s Reliance Communications were present at the....
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....ner (Appeals) has gone through all the agreements; v) Embedded theory not argued by the Revenue; vi) Misreading of decision of Ericson A.B; and vii) Proper opportunity not granted to the assessee. 10. The main contention of the assessees is that the Tribunal did not follow the co-ordinate bench decision rendered in the case of Solid Works Corporation (51 SOT 34) and the same has resulted in a mistake apparent from record. In this regard, the assessees have placed reliance on various decisions referred supra to support their contentions. It is an admitted fact that the decision rendered by co-ordinate bench has been relied upon by the counsel of the assessees and the Tribunal has also noted the same in page 28 of the order. In the case of Solid Works Corporation (supra), the co-ordinate bench of Tribunal has considered the issue, viz., whether the payment received by the assessee cited above from resellers in India on sale of computer software is royalty or not as per DTAA between India and USA. The co-ordinate bench of the Tribunal considered the decisions rendered by the Hon'ble Karnataka High Court in the case of Samsung Electronics Co. Ltd (2009)(185 Taxman 313) and ....
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.... in the case of Sind Co-op Hsg. Society (supra). When the assessee filed appeals before Hon'ble Bombay High Court, the Hon'ble High Court held as under:- "4. We find that the impugned order makes reference to the appellant's submission that the issue arising in the appeal before it is covered by the order of a Coordinate Bench of the Tribunal dated 24 June 2011 in its own case in respect of Assessment Years 2003-04 2004-05 and 2005-06. The order dated 24 June 2011 of the Tribunal was with regard to the two issues, which arose for consideration before the Tribunal in these six Assessment Years, namely, the application of principle of mutuality in respect of transfer fees and TDR premium received by the Assessee from its members. The order dated 24 June 2011 inter alia considered the decision of this Court in Sind Co. Op. Hsg. Society vs. ITO (2009) 317 ITR 47 (Bom.) before coming to the conclusion that transfer fees as well as TDR premium received from Cooperative Societies is covered by the principle of mutuality. 5. The impugned order of the Tribunal after making a note of its Coordinate Bench's order dated 24 June 2011 seeks to take a different view. This different view was....
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....n-consideration of a judgment cited before the Tribunal constitutes a mistake apparent from record. The effect of non-consideration of the decision of Tribunal cited before it was discussed by Hon'ble Jurisdictional Bombay High Court in the case of DSP Investment Pvt Ltd Vs. ACIT (ITA No.2432 of 2013), wherein it was held as under:- "6. In fact the impugned order of the Tribunal in paragraph 6 thereof does record the appellant's reliance upon the decision of the Court of its coordinate Bench in J.K.Investors (supra). However, thereafter the impugned order does not deal with the appellant's reliance upon the decision of the Tribunal in J.K. Investors (supra) while dismissing the appellant assessee's appeal before it. In fact the impugned order of the Tribunal ought to have dealt with its decision in J.K.Investors (supra) and considered its applicability to the present facts. 7. In view of the fact that impugned order of the Tribunal does not deal with its decision in J K Investors (supra) relied upon by the appellant assessee in support of its submissions as recorded in the impugned order itself makes the impugned order a non-speaking order and, therefore, in breach of princip....
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....espective of whether or not it was purchase of only software or software along with hardware, the Hon'ble High Court held the purchase of software not to be royalty." The Ld A.R stated that the Hon'ble Delhi High Court has amply clarified that the software would not be royalty even if was supplied separately. Accordingly it was submitted that the manner in which the Tribunal has sought to distinguish the decision rendered by Hon'ble Delhi High Court is contradictory to the observations made by Hon'ble Delhi High Court. On a perusal of submissions made by the assessees, which are extracted above, we find merit in the contentions of the assessee that the Tribunal has not properly read the decision rendered by the Hon'ble Delhi High Court. 16. The Ld A.R submitted that the Tribunal has committed error in appreciating the facts also. He submitted that the Tribunal has observed as under in paragraph 36 of the order:- "36. The principles laid down by the two judgements of the Hon'ble Karnataka High Court are applicable to the present cases as the fact of supply of software is similar." The Ld A.R submitted that the assessees have specifically argued that the software purc....
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....ribunal has not properly considered all the cases of software and decided the issue by generalizing the facts, which renders the order erroneous. 19. Under these set of facts, it was contended that misreading of a decision would amount to mistake apparent from record and for this proposition the assessees have placed reliance on the decision rendered by Hon'ble Allahabad High Court in the case of CIT Vs. Quality steel Tubes Ltd (253 CTR 298), wherein it was held as under:- "11. In the present case though the Tribunal had referred to the judgment in Swadeshi Cotton Mills Co. Ltd. (supra), but later on, on the application given by the assessee that it wrongly applied the principle of law in Swadeshi Cotton Mills Co. Ltd. (supra) to the present case, found that there is difference between hypothecation and pledge of the stock. The hypothecation of the goods could not be treated as same as in the case of pledge. The Tribunal realized its mistake in wrongly applying the principles laid down in Swadeshi Cotton Mills Co. Ltd. (supra), and rectified the mistake. In the absence of power of review, where the Tribunal finds that there was apparent mistake in its order, which has caused ....
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....med as an error of judgment, but it has to be termed as a mistake apparent from record resulting in a vitiated judgment. The difference between an error of judgment visavis an error apparent from record leading to an erroneous judgment may be thin but is too subtle to be ignored by a judicial body. The question of error of judgment can only arise when two views are possible and one of the views is adopted. That was not in the instant case. It was a simple case of omission to take note of the context in which the Supreme Court made certain observations and then interpreting those observations as complete exposition of law on that subject.... In view of the above, the Tribunal did commit an error, which was apparent from record, in holding that the assessee‟s dividend income could be taxed under the head „Income from business‟. Merely because the exercise of powers under section 254(2) in the instant case was close to a review of the Tribunal‟s order, negation of a remedy provided to the applicant under the scheme, could not be justified. There cannot conceivably be two opinions on the question as to under which head dividend income can be taxed. Treating t....
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....ly it was submitted that the Tribunal could not have taken a different view in the cases of the assessees, when it has been held in the hands of recipients that the payments received on supply of software are not in the nature of royalty. The Ld A.R fairly admitted that the assessees did not cite those decisions before the Tribunal at the time of hearing, but contended that the Tribunal is bound by the decision rendered by the co-ordinate benches, since they were available at that point of time itself. In our view, the Tribunal cannot be found fault for non-consideration of decisions which were not cited before it, though in principle there may be merit in the contentions of the assessees. Hence we are of the view that these contentions cannot be considered in the miscellaneous petitions filed u/s 254(2) of the Act. 23. The assessees have pointed that the Tribunal has not afforded an opportunity to the assessee to address the contentions raised by the counsel of M/s Lucent, in so far as they are against the case of the assessee. The Ld D.R also fairly conceded that the Ld A.R has sought such an opportunity before the bench. It was also submitted that the assessees have not made ....