2013 (9) TMI 1084 - AT - Income Tax

No mistake apparent on the record rectifiable u/s 254(2)- In this case, we feel that the Revenue, in the garb of application for rectification, has sought to re-open and argue the matter which is beyond the scope of Sec. 254(2). The power u/s 254(2) does not contemplate re-hearing which would have the effect of re-writing the order affecting the merit of the case. If the power given u/s 254(2) is read in that manner, then, in our opinion, there will not be any difference between the power to review and the power to rectify the mistake. The legislature has not deliberately conferred the power of review on the Tribunal and the Tribunal cannot review its order under the garb of power given u/s 254(2).

Summary

Issues Involved:
1. Interpretation of the Supreme Court's decision in Chowgule & Company Pvt. Ltd. vs. UOI regarding "manufacturing."
2. Application of the Bombay High Court's decision in CIT vs. Sesa Goa Ltd. on mining activities.
3. Misinterpretation of the activities undertaken by the EOU units.
4. Erroneous presumption of dismantling of the old plant.
5. Application of open market rate of ROM for the purpose of Section 10B(7) r.w.s. 80IA(8).

Issue-wise Detailed Analysis:

1. Interpretation of the Supreme Court's Decision in Chowgule & Company Pvt. Ltd. vs. UOI Regarding "Manufacturing":
The Revenue contended that the ITAT misinterpreted the Supreme Court's decision in Chowgule & Company Pvt. Ltd. vs. UOI, which stated that blending different qualities of ore does not amount to manufacturing as it does not produce a commercially new and distinct commodity. The ITAT held that the assessee's processing activities resulted in a new article or thing, which was contrary to the Supreme Court's findings. The Tribunal concluded that the assessee is engaged in manufacturing based on the Supreme Court's decision, but the Revenue argued this was a misinterpretation requiring rectification.

2. Application of the Bombay High Court's Decision in CIT vs. Sesa Goa Ltd. on Mining Activities:
The Revenue argued that the ITAT's decision contradicted the Bombay High Court's ruling in CIT vs. Sesa Goa Ltd., which held that mining operations do not constitute manufacturing as no new article or thing is created. The ITAT's conclusion that the processing of iron ore amounts to manufacturing was deemed against the law established by the Bombay High Court. The Revenue asserted that the EOU units' activities do not fall under "production" as defined by judicial decisions, necessitating rectification.

3. Misinterpretation of the Activities Undertaken by the EOU Units:
The Revenue claimed there was no blending activity in the EOU units, which were only engaged in washing, screening, and dressing the ore. The ITAT erroneously presumed blending of various grades of iron ore in the EOU units and applied the ratios of Tata Tea & Madhu Jayanti cases incorrectly. The Tribunal's findings were based on incorrect assumptions about the EOU units' activities and required rectification.

4. Erroneous Presumption of Dismantling of the Old Plant:
The Revenue pointed out that the ITAT erroneously presumed the dismantling of the old plant, although no such claim was made before the lower authorities. This presumption was incorrect and required rectification.

5. Application of Open Market Rate of ROM for the Purpose of Section 10B(7) r.w.s. 80IA(8):
The Revenue argued that the ITAT restricted the AO to the assessee's average rate when applying the open market rate of ROM, despite some of the assessee's purchases not being at arm's length price. The Tribunal's findings on this matter were deemed incorrect and required rectification.

Tribunal's Decision:
The Tribunal considered the rival submissions and reviewed the matter on record. It noted that the Revenue had already filed an appeal before the Hon'ble High Court on the same issues raised in the Miscellaneous Application. Citing the Special Bench decision in Tata Communications Ltd. vs. JCIT, the Tribunal held that it could not interfere with its order when the same issues were pending before the High Court.

The Tribunal emphasized that it does not have the power to review its order under Section 254(2) of the Income Tax Act, which only allows for rectifying mistakes apparent on record. The Tribunal found that the Revenue's application sought to re-open and argue the matter beyond the scope of Section 254(2). The Tribunal concluded that there was no mistake apparent on record in its order and dismissed the Miscellaneous Application filed by the Revenue.

Conclusion:
The Tribunal dismissed the Revenue's Miscellaneous Application, maintaining that the issues raised were already pending before the High Court and did not constitute mistakes apparent on record that could be rectified under Section 254(2). The Tribunal's decision was based on the interpretation of case laws and appreciation of facts, and it did not have the jurisdiction to review its order.