2013 (6) TMI 573 - AT - Income Tax

Rectification of mistake - as per assessee Tribunal had not considered submission of assessee that AO misdirected himself in law in attributing the entire expenditure against the so-called exempt income and assessing interest income on gross basis without deduction of any expenditure that provisions of section 14A required and laid down specific method of attributing and disallowing the expenses in relation to an exempt income - Held that - Considering assessee s submission and DR statement section 14A was not applicable Tribunal s conclusion to restore the matter back to the file of the AO for deciding upon mutual as well as non-mutual activities cannot be termed mistake apparent from record. It is not the case of the assessee that any judgment delivered by the Hon ble jurisdictional High Court or Supreme Court relied by the assessee have not been considered. By a long drawn process of reasoning assessee wants to review the order of 16th November, 2012 which is not permissible as per the provisions of section 254(2). Rectification available to the Tribunal u/s.254(2) cannot be exercised on failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion because it is an error of judgment and not an error apparent on the record. See CIT Versus Ramesh Electric And Trading Co. 1992 (11) TMI 32 - BOMBAY High Court & CIT Versus EARNEST EXPORTS LTD. 2010 (2) TMI 261 - BOMBAY HIGH COURT . Against assessee.

Summary

Issues involved:
1. Rectification of order under section 254(2) of the Income-tax Act, 1961 regarding computation of income/loss by the Assessing Officer.
2. Alleged mistakes in the Tribunal's order related to the application of Section 14A and the set-off of losses.

Detailed Analysis:
Issue 1:
The assessee filed an application seeking rectification under section 254(2) of the Income-tax Act, 1961, claiming mistakes apparent from the Tribunal's order. The assessee argued that the computation of income/loss by the Assessing Officer was contrary to the provisions of the Income-tax Act. It was contended that the AO misdirected himself in attributing the entire expenditure against the exempt income without deducting any expenses, which was required under section 14A. The Tribunal had sent back the matter to the AO for deciding on mutual and non-mutual activities, and the issue of set-off of losses did not survive due to the exemption of income being sent back for fresh decision. The Authorized Representative argued that the Tribunal erred by not remanding ground no.2 to the AO and failing to mention Section 14A in its order. The Departmental Representative contended that there was no mistake in the Tribunal's order.

Issue 2:
The Tribunal examined the submissions made by the assessee and the Departmental Representative regarding Section 14A of the Act. After considering the arguments, the Tribunal concluded that no mistake was apparent from the record as envisaged by section 254(2) of the Act. The Tribunal emphasized that for an error to be rectified under section 254(2), it must be patent, manifest, and self-evident, not requiring elaborate discussion or traveling beyond the record to establish. The Tribunal clarified that it did not have the power to review its orders and rectification under section 254(2) could not be based on the failure to consider arguments or give reasons for the conclusion. Citing precedents, the Tribunal held that the Miscellaneous Application filed by the assessee lacked merit and was liable to be dismissed as it did not disclose any apparent error in the Tribunal's order.

In conclusion, the Tribunal dismissed the Miscellaneous Application filed by the assessee, stating that it did not reveal any apparent error in the Tribunal's order. The judgment highlighted the limitations of rectification under section 254(2) and emphasized that the Tribunal did not possess the power to review its orders based on arguments not considered during the original proceedings.