2011 (1) TMI 54 - AT - Income Tax

Rectification of mistake - oversight of a fact - failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion, not an error apparent on the record, although it may be an error of judgment - mere fact that the Tribunal had not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act - no apparent mistake in the order therefore, application dismissed

Summary

Issues Involved:
1. Incorrect mention of the appeal status in the Tribunal's order.
2. Disallowance of interest claimed on the cost of shares including the non-compete fee.
3. Determination of the cost of acquisition of shares.

Detailed Analysis:

1. Incorrect Mention of Appeal Status:
The department sought rectification of the Tribunal's order dated 28.4.2009, specifically in para 3, where it was mentioned that the appeal of the Revenue is allowed for statistical purposes. The department argued that it should state "partly allowed for statistical purposes." The Tribunal agreed with the department's contention and rectified the order to read, "Appeal of the Revenue is partly allowed for statistical purposes."

2. Disallowance of Interest Claimed on Cost of Shares Including Non-Compete Fee:
The department contended that the interest claimed by the assessee on the total cost of shares, which included a non-compete fee of Rs. 24,24,50,000/-, should be disallowed. The ITAT had previously held that the non-compete fee would not form part of the cost of acquisition. The department argued that the interest related to this amount should also be disallowed. The Tribunal, however, found that the department's request for rectification on this point was beyond the scope of Section 254(2) of the I.T. Act, as it would amount to a review of the order rather than a rectification of an apparent mistake. The Tribunal emphasized that a "mistake apparent from the record" must be patent and obvious, not requiring elaborate arguments or investigations. Therefore, the Tribunal dismissed the second issue, stating that the department's request did not meet the criteria for rectification under Section 254(2).

3. Determination of Cost of Acquisition of Shares:
The department argued that the cost of acquisition of shares, excluding the non-compete fee, was still high compared to the cost of acquisition by The India Cements Ltd., and requested the Tribunal to set aside the issue for further consideration. The Tribunal noted that the department did not present any argument or apparent mistake in the order regarding this issue. Consequently, the Tribunal dismissed the third issue as well, finding no merit in the department's contention.

Conclusion:
The Tribunal partially accepted the department's application by rectifying the order to state that the appeal of the Revenue is "partly allowed for statistical purposes." However, it dismissed the department's requests for rectification on the second and third issues, emphasizing that these requests did not meet the criteria for rectification under Section 254(2) of the I.T. Act. The amendments made regarding the first issue were deemed effective from the date of the original order, i.e., 28.4.2009. The application of the Revenue was thus partly accepted.