2011 (11) TMI 468 - AT - Income Tax

Rectification u/s 254 - mismatch between the commission income offered and TDS credit taken by the appellant - issue decided in favor of assessee in view of the decision in case of Smt. Varsha G Salunke v. DCIT 2005 (9) TMI 226 - ITAT BOMBAY-F Held that - When this appeal had come up for hearing, it was an agreed position between the parties that so far as the addition in respect of commission is concerned, the said issue is covered by Smt. Varsha G. Salunke decision (supra). DR does not dispute that fact even today, but submits that this stand of the then DR, in accepting so, was not correct. That is a very unusual situation. Learned DR first concedes an issue as covered matter, and his successor is now in rectification petition and submits that his predecessor s stand was incorrect. The facts of the case in Smt. Varsha G. Salunke s case (supra) are indeed different but then the proposition of law which has been so laid down by the learned Third Member is of application in all situations dealing with this issue and not essentially confined to the situations in which timing dispute is the issue. A judicial precedent may lay down propositions which may have application in the same set of facts, or even the propositions which travel much beyond those facts and are of somewhat general applications. To the extent by no stretch of logic it can be concluded that holding that Varsha Salunke decision applies to the facts of this case constitute a mistake apparent on record & was certainly not a mistake on which no two views are possible, which is glaring and self-evident and which can, therefore, be covered by inherently limited scope of Section 254(2). Thus no merits in this rectification petition - Decided against the Revenue.

Summary

Issues:
1. Whether the order passed by the Tribunal is vitiated by an error apparent on record.
2. Whether the addition made by the Assessing Officer on account of commission should be deleted.
3. Whether the issue raised in the appeal is covered by a previous decision.
4. Whether the rectification petition should be allowed.

Analysis:

Issue 1:
The Assessing Officer filed a rectification petition pointing out an error in the Tribunal's order, claiming that the issue raised in the appeal was not covered by a previous decision. The Tribunal considered the facts and legal position, noting that the issue was indeed covered by the previous decision and dismissed the rectification petition. The Tribunal emphasized that the error alleged was not a mistake on which no two views are possible, making it outside the scope of rectification under Section 254(2) of the Act.

Issue 2:
The Assessing Officer had added back a commission amount as income of the assessee, which was disputed by the appellant before the CIT(A). The CIT(A) upheld the appellant's contentions, stating that the disallowance was not warranted as the appellant could be taxed on real income only. The Tribunal, after considering the arguments, found in favor of the assessee, relying on the Third Member decision in a previous case. Consequently, the Tribunal dismissed the grounds raised by the Assessing Officer.

Issue 3:
The Assessing Officer contended in the appeal that the income corresponding to TDS had to be offered to tax in the relevant assessment year as per Section 199 of the Income Tax Act. However, the CIT(A) and the Tribunal held that the credit notes for rebate were genuine, and there was no mismatch between the income offered and the TDS credit taken by the appellant. The Tribunal found that the issue was covered by a previous decision and upheld the CIT(A)'s decision to delete the addition made by the Assessing Officer.

Issue 4:
The rectification petition was filed by the Assessing Officer challenging the Tribunal's decision based on the contention that the previous decision did not cover the controversy in the present case. The Tribunal, after detailed analysis, rejected the rectification petition, emphasizing that the issue was covered by the previous decision and that the alleged error did not fall within the scope of rectification under Section 254(2) of the Act. Consequently, the rectification petition was dismissed.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's reasoning in arriving at its decision on each issue.