2019 (6) TMI 590

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....disposed off by the Honorable Tribunal, by its combined order dated 231d February 2018 and the said order was received by us on 17th May 2018. 2) Inasmuch as in the opinion of the applicant-assessee the said order suffers from certain mistakes that are apparent from the record the Applicant-assessee hereby prays for rectification thereof. 3) The appellant being aggrieved by the order of the Commissioner of Income Tax (Appeals)-4 had filed an appeal with the Honorable Tribunal (ITA 7539/M/2013) raising the following grounds: 1. The learned CIT(A) erred in not directing the Assessing Officer to allow deduction in respect of financial charges of lNr 4,89,55, 754 entirely under section 36(1)(iii) or Sect/on 37(l) of the Act. 2. The learned C/T(A) erred in directing the Assessing Officer to allow deduction under Section 57(1/i) of the Act by making pro-rata disallowance of financial charges incurred on the investments in equity shares on which no dividends were received by the appellant during the assessment year under consideration. 4) Thus the basic issue before Your Honors was the allowability of financial charges u/s 36(1)(iii) of the Act, the business of appellant being t....

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....s incidental or ancillary for the attainment main object do not specifically encompass the activity of the acquisition of shares or controlling interest." 8) The Logbook of Your Honours would show that during the appellate proceedings, the assessee had relied on the decision of the Third Member of the Delhi Tribunal in the case of Poysha Oxygen (P) Ltd. (ITA No 3457 of 2004) in support of its contention that activity carried out by assessee which was beyond the Objects clause of its Memorandum of Association can still amount to business within the meaning of the income Tax Act. in particular, Your Honors attention was drawn to the relevant portion on pages 7 and 8 of the said decision wherein the Honorable Third Member has relied upon several decisions of the Supreme Court while arriving at this conclusion. 9) The first mistake that is therefore apparent from the record is that Your Honors have not considered and therefore not distinguished this decision of the Third Member, the view taken by which on this legal aspect is contrary to the conclusion arrived at by Your Honors. 10) It is respectfully submitted that non-consideration of a decision cited during the course of the h....

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....e case of Vodafone was also cited. 14) The mistake that is apparent from the record is that there is no reference in the order to these substantial investments, which per the decisions cited above, are the source of the controlling interest which the appellant claimed it had in all these companies. 15) Without reference to these facts the applicability of two decisions cited above remained untested, which also constitutes a mistake apparent from the record. 16) Further during the course of the hearing Your Honor's attention was also drawn to the decision of the Mumbai ITAT in the case of Tata Industries Ltd and copies of extracts from the said decision were also furnished. 17) In particular attention was invited to Para 12 thereof in which the decision of the jurisdictional High Court in the case of Phil Corporation Limited has been applied, where in it was held that, where, investment in shares of sister/subsidiary company is made to have control over that company and further that such an investment was accordingly part of the business of the assessee, the assessee was entitled to deduction of interest u/s 36(1)(iii). 18) The mistake that is apparent from the record ....

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.... for acquiring controlling interest is in the nature of business activity. The Ld. AR further submitted that the assessee has relied upon the decision of ITAT, Mumbai, Bench in the case of Tata Industries Ltd., where the Tribunal after considering the ratio of Hon'ble Bombay High Court in the case of Phill Corporation Ltd. (2011) 202 taxman 0368 (Bom.) held that where investment in shares of sister/subsidiary company is made to have control over that company and further that such investment was accordingly part of business of the assessee, assessee was entitled to deduction u/s 36(1)(iii) of the Act. The assessee has also relied upon the decision of ITAT, Delhi & Mumbai, in the case of Poysha Oxygen (P) Ltd. (ITA No.3457/Del./2004) (Del. Trib. (TM)) and Pistabai Rikhabchand Kothari (ITA No.4649/Mum/2008)(Bom. Trib.) where similar issue has been decided. Although, all the above decision were referred at the time of hearing, the Tribunal has failed to consider the ratio of the above judgments before arrive at a conclusion, therefore, the said observation of the Tribunal constitutes mistake apparent on record which could be rectified u/s 254(2) of the Act. In this regard, he relied u....