2013 (11) TMI 1597 - AT - Income Tax

Addition u/s 40A - Held that - Provision of section 40A(2) did not apply to the facts of the present case in as much as the trade discount is not an expenditure which is incurred or with respect to which a payment is made.

Summary

Issues:
Request for recalling Tribunal order due to errors.

Analysis:
The assessee filed a Miscellaneous Application seeking to recall the order passed by the ITAT Bench in a specific case for the assessment year 2005-06. The counsel for the assessee argued that errors had crept into the Tribunal's order, necessitating rectification. The counsel highlighted that the Tribunal's order incorrectly distinguished the application of section 40A(2)(b) for the assessment year 2005-06 from previous years. The counsel pointed out that the AO had invoked the same section in the assessment for the year 2003-04 as well. The Tribunal's observation regarding the decision of the CIT(A) based on a sanction letter was also challenged as erroneous. Furthermore, the counsel contested the disallowance made by the AO under section 40A(2)(b) concerning excess discount allowed to a sister-concern, citing relevant case laws. The Revenue argued against reviewing the entire order, claiming no apparent errors existed.

Upon hearing the submissions and examining the records, the Tribunal acknowledged the errors in its previous order. Considering the grounds of the Department's appeal related to the disallowance under section 40A(2)(b), the Tribunal referred to judgments by the Delhi High Court and a Coordinate Bench to support its decision. It was noted that the trade discount was not considered an expenditure under section 40A(2), as established by the case laws cited. Consequently, the Tribunal found the non-consideration of these precedents amounted to a mistake apparent from the record. Therefore, the Tribunal decided to recall the order dated 06/08/2013 and directed the Registry to re-fix the appeal for fresh adjudication, issuing notices to the concerned parties accordingly. The miscellaneous application filed by the assessee was allowed, and the order was pronounced in court.

This detailed analysis of the judgment showcases the legal arguments presented, the errors identified, and the Tribunal's decision to recall the order based on the legal principles and precedents cited during the proceedings.