2013 (4) TMI 88 - AT - Income Tax

Rectification of mistakes - according to applicant in the order the original certificate from Poland certifying the assessee to be top official in managerial position was not considered - also no discussion about Section 90(2) in the order and Circular No. 333 and Circular No. 621 issued by CBDT were not considered while passing the order - Held that - Non-consideration of original certificate from Polan was because it was an additional evidence which was not furnished before the lower authorities and secondly, the additional evidence in the form of certificate was scanned copy without any date of issuance of certificate. Thus the certificate was not considered and not taken on record as the date of issuance is crucial for a certificate on this point, therefore, reject the submission made by the A.R. on this point. Deduction of TDS - Net Income or Gross income - Held that - On perusal of the assessment order, it is found that the AO has taxed the gross income including the tax deducted by Poland Govt. Relying on the aforesaid decisions of CIT vs. Yawar Rashid & Others 1995 (12) TMI 68 - MADHYA PRADESH HIGH COURT the assessee is liable to tax with respect to net income i.e. the net income which it has received after deduction of tax from the Poland Company . Therefore, remit this issue to the file of A.O. for a limited purpose of examining the amount received by the assessee and the tax deducted by the Poland Company with a direction to him to consider only the income received after payment of tax as income as the taxable income of the assessee. Other mistakes like incorrect interpretation and non-considering of Circular and discussion about Section 90(2), the assessee has not been in a position to convincely demonstrate that how these are mistakes apparent from record. Power u/s 254(2) cannot be exercised unless and until grave error on facts/law from the record is pointed out which is apparent on its face causing apparent injustice to the assessee. The entire order cannot be recalled but only the typographical mistakes cited be corrected as stated hereinabove. Thus, this M.A. is partly allowed.

Issues:
1. Consideration of alleged mistakes in the order
2. Non-consideration of original certificate from Poland
3. Typographical errors in the order
4. Interpretation of taxable income and applicability of real income concept
5. Consideration of Circulars and Section 90(2)
6. Exercise of power u/s 254(2) for rectification of mistakes

Detailed Analysis:
1. The appellant moved applications under section 254(2) pointing out alleged mistakes in the order for assessment years 2005-06 and 2006-07. The mistakes included non-consideration of the original certificate from Poland, lack of discussion on Section 90(2) and Circulars issued by CBDT, and misinterpretation of Article 17(2) of DTAA between India and Poland. The appellant also highlighted typographical errors in the order.

2. The non-consideration of the original certificate from Poland was disputed by the appellant, arguing that the absence of the date on the certificate was due to an oversight by the Poland Company. However, the tribunal rejected this argument, emphasizing the importance of the issuance date for such certificates. The tribunal upheld the decision not to consider the certificate due to the lack of crucial information.

3. Typographical errors in the order were acknowledged, such as the incorrect mention of "Top Legal Managerial Position" instead of "Top Level Managerial Position." The tribunal recognized and rectified these typographical errors to ensure accuracy in the order.

4. The issue of taxable income and the real income concept was deliberated upon. The appellant contended that only the net income should be considered as taxable, citing relevant case laws. The tribunal agreed with the appellant's argument and remitted the issue to the assessing officer to consider only the net income received after deduction of tax from the Poland Company as taxable income.

5. The consideration of Circulars and Section 90(2) was also raised by the appellant. However, the tribunal found that the appellant failed to convincingly demonstrate how these aspects constituted mistakes apparent from the record. Therefore, the tribunal did not find grounds to recall the order based on these issues.

6. The exercise of power under section 254(2) for rectification of mistakes was discussed, emphasizing that such power should only be used in cases of grave errors on facts or law causing apparent injustice to the assessee. Citing relevant case laws, the tribunal clarified that the power under section 254(2) is limited to rectifying mistakes apparent from the record and not for rehearing or reversing findings based on arguments presented.

In conclusion, the tribunal partly allowed the appellant's applications, correcting typographical errors and directing the assessing officer to consider only the net income received after deduction of tax as taxable income. The tribunal's decision for assessment year 2005-06 was applied to assessment year 2006-07 due to similar facts and findings.

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