2015 (9) TMI 426 - AT - Income Tax

Rectification of mistake - Non-reduction of the management fees offered to tax - CIT(A) directing AO to reduce the management fee offered to tax by the Appellant in its return of income in respect of direct sales by the Head Office - Held that - As per Para 42 of the order the fact which remains uncontroverted by the revenue authorities and the DR are that the assessee in the year under consideration was covered under the TP regulations and in those proceedings, the factum of management fee has dealt with extensively and in the process, the TPO found the receipt of management fee by the India Branch from SJMH related to services provided to both SJMI & SJMH. It is evident from the accounts submitted before the AO, because in the Profit & Loss Account submitted, it showed the receipt of ₹ 9,60,57,310/- which included ₹ 79,20,240/- under the head management fee for marketing support at ₹ 79,20,240/-. Para 44 of the order read as - 44. We, therefore, are of the opinion, that all the requisite details were placed before the AO, along with the return on income, which based the computation of returned income on receipts related to services provided to both SJMH and SJMI Since the absence of the missing words would affect the basic structure of the order, wherein, we had deleted the addition of ₹ 1,76,87,465/-, we accept that the above pointed inadvertent mistakes are patent and qualify to be rectified.

Summary

Issues:
Rectification of order concerning missing words from CIT(A) order.

Analysis:
The judgment revolves around the rectification of an order by the Appellate Tribunal ITAT Mumbai due to missing words in the CIT(A) order. The miscellaneous applications (MAs) were filed by the assessee to rectify the order, specifically addressing the missing words that were inadvertently left out from the CIT(A) order. The extracted portion of the CIT(A) order highlighted the issue of management fee concerning the Hongkong and US companies managed by the branch in India. The AR argued that the management fee issue applied to SJMH and SJMI as per the CIT(A) order, which was undisputedly sustained. The AR further emphasized that the management fee received included operations for both SJMI and SJMH, as evidenced by the accounts submitted before the revenue authorities and the TP report. The TPO had accepted the correctness of the management fee related to services provided to both SJMI and SJMH. The Tribunal acknowledged that the absence of the missing words would impact the basic structure of the order, leading to the deletion of an addition made earlier. Consequently, the Tribunal rectified the order as requested by the assessee, resulting in the allowance of the miscellaneous applications.

This judgment underscores the importance of accurately reflecting all relevant details in legal orders to maintain the integrity and coherence of the decision-making process. It also highlights the significance of rectification procedures in addressing inadvertent errors or omissions that could impact the substantive outcome of a case.