2020 (1) TMI 1612 - AT - Income Tax

Rectification of mistake u/s 254 - Addition u/s 40(a)(ia) - time limit for passing an order under Sec.201 - TDS on service coupons - HELD THAT - As the Tribunal 2019 (8) TMI 230 - ITAT MUMBAI had principally found favour with the aforesaid claim of the assessee, therefore, it had restored the matter to the file of the A.O, with a direction that in case the assessee satisfied the conditions in sub-section (1) of Sec.201, then it is not to be treated as an assessee in default, and resultantly as per the second proviso of Sec.40(a)(ia) no disallowance under the said statutory provision would be called for in its hands. Admittedly, the aforesaid two aspects on the basis of which the validity of the disallowance under Sec.40(a)(ia) was inter alia assailed before us by the assessee had advertently remained omitted to be adjudicated upon while disposing off the appeal. As we have already restored the matter to the file of the A.O, therefore, in all fairness we direct him to also consider the aforesaid claims of the assessee in the course of the set aside proceedings. viz. (i) that, no disallowance under Sec.40(a)(ia) could be made after the expiry of the time for passing of order under Sec. 201 of the Act; and (ii) that, in case the disallowance is sustained, the same is liable to be restricted to the extent of 30% of the total amount of service coupons. On the basis of the aforesaid observations our order passed while disposing off the appeal of the assessee i.e Mahindra Mahindra Ltd. Vs. DCIT, Range 2(2), Mumbai 2019 (8) TMI 230 - ITAT MUMBAI is modified to the said extent.

Summary

Issues:
Failure to adjudicate specific claims raised by the assessee in the appeal regarding disallowance under Sec.40(a)(ia) of the Act.

Analysis:
The present miscellaneous application arose from an order passed by the Tribunal in a specific case. The authorized representative for the assessee contended that the Tribunal's order suffered from two mistakes: first, the claim that no disallowance was warranted under Sec.40(a)(ia) due to the expired time limit for passing an order under Sec.201, and second, the alternative claim that any disallowance should be restricted to 30% of the total amount of service coupons. The authorized representative argued that these issues were raised during the appeal but were not adjudicated upon by the Tribunal, making the order amenable for rectification under Sec.254(2) of the Act.

The Departmental Representative objected to the contentions raised by the assessee, stating that no discernible mistake existed in the Tribunal's order, and thus, the application did not merit acceptance. Upon hearing both parties and examining the records, it was found that the assessee had indeed challenged the validity of the disallowance under Sec.40(a)(ia) on the grounds mentioned earlier. The Tribunal had favored the assessee's claim regarding the tax liability of payees and directed the matter to be reconsidered by the Assessing Officer. However, the specific claims regarding the time limit for passing an order under Sec.201 and the restriction of disallowance to 30% of service coupons were inadvertently omitted from the final decision. Consequently, the Tribunal modified its order to include these aspects and directed the Assessing Officer to consider these claims during the 'set aside' proceedings, providing the assessee with an opportunity to present fresh evidence.

In conclusion, the miscellaneous application filed by the assessee was allowed for statistical purposes based on the observations made, and the Tribunal's original order was modified to address the specific claims raised by the assessee regarding the disallowance under Sec.40(a)(ia) of the Act.