2020 (1) TMI 573 - AT - Income Tax

Rectification u/s 254 - reference to non-taxability of the amount as equipment royalty although the same is referred to in the extracted order of the earlier year - HELD THAT - After the rectification, the relevant para No. 9 of the order shall now be read as under - As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal in assessee‟s own case, we do not find any merit in the action of the lower authorities for treating the receipt as fees for technical services despite the concept of make available‟ clause contained in article 13(4)(c) of the treaty or as equipment royalty. Accordingly, the A.O. is directed to delete the addition so made and Ground No. 5, 6 and 7 of the appeals are allowed. Except the above, there is no change in the Tribunal order.

Summary

Issues Involved:
1. Rectification of typographical error in the Tribunal order regarding the taxability of the amount as equipment royalty.

Analysis:

1. The judgment by the Appellate Tribunal ITAT MUMBAI involved a correction in the order dated 24/10/2018. The original order contained a typographical error in paragraph No.9, which was rectified under section 254(2) of the Income Tax Act, 1961. The corrected paragraph clarified that the receipt should not be treated as fees for technical services but could be considered as equipment royalty. The Tribunal directed the Assessing Officer (A.O.) to delete the addition made and allowed Ground No. 5, 6, and 7 of the appeals.

2. The correction made by the Tribunal was crucial as it addressed the inadvertent error in the original order. By rectifying the paragraph, the Tribunal ensured that the tax treatment of the receipt was accurately reflected. The reference to the "make available" clause in article 13(4)(c) of the treaty was significant in determining the nature of the receipt. The Tribunal's decision to allow the appeals based on the rectification highlighted the importance of proper interpretation and application of tax laws.

3. It is noteworthy that apart from the rectification in paragraph No.9, there were no other changes made to the Tribunal order. This indicates that the correction was specific to the issue of taxability of the receipt as equipment royalty and did not impact the overall decision rendered in the original order. The Tribunal's attention to detail in rectifying the error demonstrated the commitment to ensuring the accuracy and consistency of its judgments.