2022 (6) TMI 1391 - AT - Income Tax

Rectification of mistake u/s 254 - AO made disallowance on account of application of section 14A r.w.r. 8D(2)(iii) and charged interest u/s 234A and 234B - Misc. application seeking rectification of order of the Tribunal stating that the Tribunal has wrongly presumed that in any case where there is an addition of more than Rs. 10 lakhs in a case selected under CASS prior written approval is needed from concerned CIT- HELD THAT - Revenue by filing this Misc. application desires this Tribunal to review its own order, which in our considered opinion, the Tribunal does not have any power u/s 254(2) of the Act to review its order. The power vested with the Tribunal relates to the mistake apparent from record only. Tribunal after considering the grounds raised in the appeal decided the appeal and passed the order. If the Revenue has any grievance against the order of the Tribunal, the Revenue can go before the Hon ble High Court by filing appeal u/s 260A of the Act. The Tribunal cannot review its own order in the garb of power vested u/s 254(2) of the Act. Review of the order will tantamount to rehearing of the appeal which power is not vested with the Tribunal. The Tribunal after considering the submissions of both the parties has passed the order discussing the provisions of the law. In our opinion, there is no mistake much less apparent from record in the order of the Tribunal. In the instant case the Tribunal has already given precise findings on law and facts as per all the materials / documents / evidences placed before it. Such finality of order cannot be disturbed u/s 254(2) of the Act petition in absence of any mistake apparent from record. Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric Trading Company 1992 (11) TMI 32 - BOMBAY HIGH COURT has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment - Misc. application filed by the Revenue is dismissed.

Summary

Issues Involved:
1. Disallowance under Section 14A of the Income Tax Act, 1961.
2. Computation of interest under Sections 234A and 234B of the Income Tax Act, 1961.
3. Rectification of the Tribunal's order under Section 254(2) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Disallowance under Section 14A of the Income Tax Act, 1961:
The first issue pertains to the confirmation of disallowance under Section 14A. The assessee, engaged in real estate development, did not offer any disallowance under Section 14A despite earning exempt income. The Assessing Officer (AO) computed the disallowance at Rs. 30,35,585/- under Rule 8D(2)(iii), being 0.5% of the average value of investments. The assessee argued that only common expenses should be considered, excluding those incurred exclusively for taxable income. The CIT(A) not only upheld the AO's disallowance but also enhanced it by Rs. 13,297/-. The Tribunal found this issue similar to the previous assessment year (A.Y. 2010-11) and directed to delete the enhancement made by the CIT(A), restricting the disallowance to common expenses incurred by the assessee, amounting to Rs. 71,818/- (Rs. 13,297 + Rs. 58,521).

2. Computation of interest under Sections 234A and 234B of the Income Tax Act, 1961:
The second issue involves the computation of interest under Sections 234A and 234B. The assessee filed the return beyond the due date under Section 139(1). The AO determined the interest under Section 234A at Rs. 25,97,300/-. The assessee contended that the self-assessment tax paid before filing the return should reduce the interest calculation. The CIT(A) directed the AO to follow CBDT Circular No. 2/2015, which states that no interest under Section 234A is chargeable on the self-assessment tax paid before the due date of filing the return. The Tribunal agreed with the assessee's argument that self-assessment tax paid after the due date but before filing the return should also reduce the interest calculation. The Tribunal remitted the matter to the AO for fresh calculation, considering date-wise payments of self-assessment tax.

3. Rectification of the Tribunal's order under Section 254(2) of the Income Tax Act, 1961:
The Revenue filed a Miscellaneous Application seeking rectification of the Tribunal's order, claiming an error regarding the need for prior written approval from the concerned CIT for additions over Rs. 10 lakhs in cases selected under CASS. The Tribunal found no apparent mistake in its order and stated that it does not have the power to review its own order under Section 254(2). The Tribunal emphasized that rectification is limited to correcting obvious and patent mistakes apparent from the record, not errors requiring extensive arguments or reasoning. The Tribunal cited several judicial pronouncements, including the Hon'ble Supreme Court's decision in ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., which clarified the scope of Section 254(2). The Tribunal concluded that the Revenue's application was an attempt to seek a review, which is not permissible, and dismissed the application.

Conclusion:
The appeal was partly allowed in favor of the assessee regarding the disallowance under Section 14A and the computation of interest under Sections 234A and 234B. The Tribunal dismissed the Revenue's Miscellaneous Application for rectification under Section 254(2), affirming that no apparent mistake existed in its original order.