TaxTMI 
TaxTMI 
2006 (10) TMI 125
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....that these were contractual payments warranting TDS in terms of Section 194-C of the Act at 2 per cent. The AO held that "the composite arrangement is in essence an arrangement for taking the premises on rent. Hence, the payment is covered under Section 1941 and tax needs to be deducted from the payment thereof as per Section 1941." The AO determined the amount of short deduction of tax as well as interest payable thereon under Section 201(1A). The appeal of the assessed on this aspect was partly allowed by the CIT (Appeals) on 15.1.2002 and its appeal before the ITAT was dismissed on 12.7.2002. The further appeal of the assessed was dismissed by this Court on 21.5.2004. 3. Thereafter nearly two years after the ITAT's order dated 12.7.2002, the respondent assessed filed an application under Section 254(2) of the Act for rectification of the order of the ITAT on the ground that an alternate plea raised by it in Ground 7 of the memo of appeal had not been considered by the ITAT. The rectification application came to be allowed by the ITAT by the impugned order dated 13.9.2004 holding that: This plea of the assessed appears to have been missed by the Tribunal while dis....
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.... in the absence of any tax liability of the payee, the differential TDS cannot be realised once again from the payer even though the appellants have submitted documents evidencing refund claims made by the service provider. 7. In its first order dated 2.7.2002 a Bench of the ITAT comprising its Vice-President, Shri R.M. Mehta and Ms. Diva Singh, Judicial Member noted the contentions of the counsel for the assessed. No specific contention appears to have been urged to the effect that even if the assessed was liable to pay penalty and interest it could not be asked to pay the tax short deducted. However, the following contention urged by the assessed was noted by the ITAT in its first order dated 12.7.2002: That the recipient, namely, Shri J.P. Gupta the proprietor of M/s. Pradeep Oil Corporation had certified that during the relevant periods he had claimed a substantial amount of "refund" on account of TDS and the plea in this connection was that as far as the Govt. was concerned it had recovered its tax dues and it was immaterial whether these were in the form of TDS deducted by the assessed or these were in the form of payments by M/s. Pradeep Oil Corporation in its re....
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.... recipient is not relevant since the duty to deduct tax is absolute unless the recipient filed the requisite declaration or certificate to show that its/his income is below the taxable limit. This is supported by the judgment of the Hon'ble Madras High Court in the case of CIT v. Ramesh Enterprises (supra). This in fact was a judgment where the TDS pertained to payment of interest and which was a known and quantified amount. Another decision relied upon by the learned Departmental Representative was in the case of Income Tax Officer v. Sreenivasa Trading Co. and Anr. [2001] 252 ITR 133(Mad) where Their Lordships of the Hon'ble Madras High Court took the view that two excuses put forward by the assessed for not complying with the TDS provisions could not be treated as an excuse in the eyes of law to avoid the liability. These were: (i)The firm had been incurring losses; & (ii)The amount deducted had been refunded to the depositors. 9. In the first place, we do not agree that there is no decision of the ITAT in respect of ground No. 7 raised in memorandum of grounds of appeal. The extracted paragraphs of the first order clearly indicate that the ITAT did ....
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....tail the cases cited by the counsel for the assessed. We may nevertheless refer to the decision rendered by us today in CIT v. Honda Siel Power Products Ltd. (Judgment dated 11.10.2006 in ITA No. 735/2004) where we have given detailed reasons explaining the narrow scope of the power of rectification under Section 254(2). There we have discussed the decisions handed down by this Court in K.L. Bhatia, Deeksha Suri v. ITAT [1998] 232 ITR 395(Delhi), Commissioner of Income Tax v. Vichtra Construction (P.) Ltd. [2004] 269 ITR 371(Delhi) , J.N. Sahni v. Income Tax Appellate Tribunal [2002] 257 ITR 16(Delhi) and Commissioner of Income Tax v. Income Tax Appellate Tribunal [2006] 155 Taxman 378 (Del) and taken the view that: It is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the pre-requisite for exercise of either power may be similar (a mistake apparent from the record), by its very nature the power to rectify a mistake cannot result in the recall and review of the order sought to be rectified. Otherwise, what can....