2017 (12) TMI 1686 - AT - Income Tax

Rectification u/s 254 - Disallowance u/s 43B - assessee has collected the said Service Tax and neither included the same in its turnover nor paid it over to the government account as required - petitioner has placed his reliance the decision of Knight Frank (India) Private Limited 2016 (8) TMI 1096 - BOMBAY HIGH COURT but Hon ble Bench has not adjudicated upon the same - Revenue who opposed the assessee s M.P. and sought its rejection on the grounds that the Tribunal in its impugned order for Assessment Year 2014-15 had considered the assessee s submission and adjudicated all the grounds raised by the assessee HELD THAT - Formation of a conclusion on erroneous application of provisions of law to the facts of the case, etc cannot be held to be a mistake apparent from the record warranting rectification by the Tribunal in exercise of its power under Section 254(2). By reconsidering the application of principles laid down by superior Courts to the facts of the case or by reconsidering its findings recorded, or by reconsidering the application of the relevant provisions of law to the facts of the case, in a miscellaneous petition under Section 254(2), the Tribunal would be exercising power of review of its earlier order on merits but not rectification of mistake apparent from the record and such review would certainly be beyond the scope of section 254(2). In view of the aforesaid decision of MC DOWELL AND COMPANY LTD. 2008 (3) TMI 301 - KARNATAKA HIGH COURT which is the jurisdictional High Court and which is binding on us, we are of the view that through this miscellaneous petition the assessee is seeking a review of the earlier order of the Tribunal by reconsidering the application of principles laid down by superior Courts to the facts of the case or by reconsidering its findings recorded, or by reconsidering the application of the relevant provisions of law to the facts of the case. Such a course is not permissible under Section 254(2)

Summary

Issues:
1. Disallowance of service tax payable amount under section 43B of the Income Tax Act, 1961.
2. Consideration of judicial precedents and grounds by the Tribunal.

Analysis:
1. Disallowance of service tax payable amount under section 43B:
The Appellate Tribunal, in the case concerning Assessment Year 2014-15, addressed the issue of disallowance of service tax payable amount under section 43B of the Income Tax Act, 1961. The Tribunal noted that the Point of Taxation Rules, 2011 came into effect from 01/04/2011, and service tax is payable from the date of invoice issuance. The Tribunal found that the assessee had collected service tax but neither included it in turnover nor paid it to the government account, thus claiming an expenditure yet to be paid. The Tribunal rejected the assessee's reliance on judicial pronouncements predating the Point of Taxation Rules, 2011, and upheld the disallowance under section 43B.

2. Consideration of judicial precedents and grounds by the Tribunal:
The Tribunal addressed the contention raised by the assessee regarding the consideration of judicial precedents and grounds. It was argued that specific grounds were not adjudicated upon by the Tribunal in the initial order. However, upon review, the Tribunal found that the judicial pronouncements cited by the assessee were duly considered and factored into the decision-making process. The Tribunal clarified that the grounds raised by the assessee, including the non-adjudication of specific points, were indeed addressed in the impugned order. The Tribunal emphasized that seeking a review of the previous order through a Miscellaneous Petition was not permissible under Section 254(2) of the Income Tax Act, 1961, as it would amount to a review of the order on merits, which falls outside the scope of rectification of mistakes apparent from the record.

In conclusion, the Appellate Tribunal dismissed the Miscellaneous Petition filed by the assessee for Assessment Year 2014-15, maintaining the disallowance of the service tax payable amount under section 43B and upholding the decision based on the application of relevant legal provisions and judicial precedents.