2015 (11) TMI 1202 - AT - Income Tax

Rectification of mistake - First mistake is that the amount of ₹ 60.20 lakh noted by the Tribunal in Para 6 of the Tribunal order is in fact not an investment for earning tax free income and therefore, this should not be considered as a basis for deciding the disallowance u/s 14A of the Act and in the same manner, the amount of investment of ₹ 340.80 lakh as on 31.03.2009 is also not an investment for earning tax free income and therefore, this should also not be considered for deciding the disallowance u/s 14A of the Act - Third mistake pointed out is about the amount of ₹ 709.93 lacs which should be ₹ 790.93 lacs. - Held that - Regarding both the aspects, we find force in the submissions of the Ld. AR of the assessee to the extent that these two investment amounts should not be taken into consideration for deciding the issue about disallowance u/s 14A. We agree about third mistake. It is seen that merely because some wrong figures as on 31.03.2008 and as on 31.03.2009 are noted by the Tribunal in Para 6 of the impugned tribunal order, it cannot be said that there is an apparent mistake in the Tribunal order which will result in the change in ultimate conclusion. We have seen that even after omitting these two figures of closing stock and adoption of a correct figure in place of wrong figure of income, the result and ultimate conclusion remain the same because these figures were not at all considered as a basis for coming to this conclusion that assessee is not dealer in shares. Hence, we have already rectified Para 6 of the Tribunal order by excluding the reference to these two figures of closing stock as on 31.03.2008 ₹ 60.20 lakh and as on 31.03.2009 ₹ 340.80 lakh and we have also rectified the mistake in income, which was noted at ₹ 709.93 lakh and the correct figure of ₹ 790.93 lakh is noted in the amended Para 6. Hence these two mistakes have been rectified. Regarding third alleged mistake that balance sheet as on 31.03.2008 and 31.03.2009 showing closing stock of shares at ₹ 2431 lakh and ₹ 795.36 lakh is not considered by tribunal is factually incorrect because both these figures are duly considered in Para 6.1 of the Tribunal order as reproduced above. Hence, the ultimate conclusion remains the same. Even if there is a mistake in the tribunal order in coming to this conclusion that the assessee is not a dealer in shares, such mistake, if any, is not an apparent mistake rectifiable u/s 254 (2). Accordingly, both the MAs of the assessee stand disposed of in the terms indicated above.

Issues Involved:
1. Applicability of Section 14A of the Income Tax Act.
2. Incorrect reading of the final accounts of the assessee.
3. Mistaken figures related to investments and income in the Tribunal order.
4. Consideration of balance sheet schedules.

Detailed Analysis:

1. Applicability of Section 14A of the Income Tax Act:
The primary issue before the Tribunal was the applicability of Section 14A, which pertains to the disallowance of expenditure incurred in relation to income not includible in total income. The Tribunal initially examined whether the assessee was a dealer in shares or an investor. The Tribunal concluded that the assessee was not a dealer in shares but an investor, based on the manner in which the income was reported.

2. Incorrect Reading of the Final Accounts of the Assessee:
The Tribunal noted errors in the reading of the final accounts. Specifically, an investment of Rs. 60.20 lakh was incorrectly considered relevant for Section 14A disallowance, though it represented land purchased by the assessee. Similarly, an investment of Rs. 340.80 lakh was related to equity shares of a foreign subsidiary and was not relevant for tax-free income disallowance under Section 14A.

3. Mistaken Figures Related to Investments and Income in the Tribunal Order:
The Tribunal acknowledged mistakes in the figures noted in its order. The amount of Rs. 709.93 lakh was corrected to Rs. 790.93 lakh. These corrections were necessary as the figures initially noted were incorrect. The Tribunal rectified these errors and amended the relevant paragraph to reflect the accurate amounts.

4. Consideration of Balance Sheet Schedules:
The Tribunal was pointed out that it omitted to consider certain schedules in the balance sheet. Upon review, the Tribunal found that the balance sheet as on 31.03.2008 showed inventories of shares of listed companies at Rs. 2431 lakh, and as on 31.03.2009, at Rs. 795.36 lakh. These figures were considered in the Tribunal's revised analysis.

Rectification and Conclusion:
The Tribunal rectified its order by excluding the incorrect references to the investment amounts of Rs. 60.20 lakh and Rs. 340.80 lakh and by correcting the income figure to Rs. 790.93 lakh. Despite these corrections, the Tribunal maintained its conclusion that the assessee was not dealing in shares but was an investor. The Tribunal emphasized that the basis of its decision was not solely the incorrect figures but also the manner in which the assessee reported its income and the lack of quantitative details for shares.

The Tribunal concluded that the mistakes identified did not alter the ultimate decision that the assessee was not a dealer in shares. Therefore, the Tribunal's decision to disallow the expenditure under Section 14A stood firm. The assessee's Miscellaneous Applications (MAs) were disposed of accordingly, with the Tribunal's order being rectified as per the corrections noted.

Final Order:
The Tribunal pronounced that both MAs of the assessee were disposed of in the terms indicated, with the order being pronounced in the open court.

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