1996 (9) TMI 616 - AT - Income Tax

Summary

Issues Involved: The issues involved in this judgment are the disallowance made under section 40A(8) of the Income-tax Act, the power of review of the Tribunal, and the nature of interest credited to the account of the creditor.

Disallowance under Section 40A(8): The assessee contended that interest periodically credited to the creditor's account should not be considered a 'deposit' for the purpose of disallowance under section 40A(8). The Tribunal rejected this contention, stating it was not a mistake apparent from the record and cited the decision in CIT v. Ramesh Electric & Trading Co. The assessee argued that the interest credited is not an inflow but an outgo, and therefore, the disallowance on the interest element should not be made.

Power of Review of the Tribunal: The assessee argued that the Tribunal has the power of review to rectify mistakes in its order, citing the decision in Shivdeo Singh v. State of Punjab. The Tribunal, however, held that it does not have the power to review its own order, as established in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji. The Tribunal emphasized that rectification under section 254(2) can only be done for obvious and patent mistakes, not for debatable issues.

Nature of Interest Credited: The Tribunal reiterated that the interest credited to the creditor's account was part of a deposit and upheld its decision on disallowance under section 40A(8). The Tribunal referenced the definition of 'deposit' and rejected the assessee's argument that the interest credited should not be considered a deposit. The Tribunal concluded that the application for review was not maintainable, as it rehashed arguments already considered during the appeal.

Conclusion: The Tribunal dismissed the application, stating that the contentions raised were already addressed during the appeal, and there was no apparent mistake requiring rectification. The Tribunal reiterated that it does not have the power to review its own order, as established by legal precedents, and emphasized that the application for review was not maintainable. The Tribunal found no merit in the application and consequently dismissed it.