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2020 (4) TMI 815 - AT - Income TaxRectification u/s 254 - non adjudication of grounds of appeal and additional grounds of appeal filed before the Tribunal - HELD THAT - On perusal of the impugned order, it is clear that above grounds of appeal and additional grounds of appeal filed before the Tribunal were not adjudicated by this Tribunal. It is settled proposition of law that non adjudication of grounds of appeal and additional grounds of appeal filed before the Tribunal constitute mistake apparent from the records capable of being rectified in exercise of the powers vested with Tribunal u/s.254 (2) of the Income Tax Act, 1961. Thus, we recall the appeals for limited purpose for adjudicating the mentioned grounds of appeal and additional grounds.
Issues:
1. Disallowance of expenses under section 40(a)(i) for non-deduction of TDS. 2. Applicability of DTAA provisions. 3. Disallowance of provision for retirement benefits. Issue 1: Disallowance of expenses under section 40(a)(i) for non-deduction of TDS: The assessee filed Miscellaneous Petitions seeking the recall of a consolidated order passed by the Tribunal for two assessment years. The Tribunal had failed to adjudicate certain grounds of appeal and additional grounds related to disallowance of expenses under section 40(a)(i) for non-deduction of TDS. The appellant contended that the payments made were not subject to tax in India, citing relevant legal provisions and court decisions. The appellant argued that the disallowance under section 40(a)(i) should only apply to amounts outstanding and payable as of a specific date. Additionally, the appellant raised concerns regarding double taxation and the recoverability of TDS once the payee has paid the tax. The Tribunal allowed the Miscellaneous Petitions for the limited purpose of adjudicating the grounds of appeal and additional grounds. Issue 2: Applicability of DTAA provisions: The appellant also raised issues related to the applicability of Double Taxation Avoidance Agreement (DTAA) provisions between India and USA, UK, and Japan. The appellant argued that only the profit accruing to the non-resident entities on the sale of crude oil should be taxable in India, not the entire payment. The appellant highlighted the need for determining the income chargeable to tax under the Indian Income Tax Act before disallowing expenses under section 40(a)(i). The Tribunal acknowledged the need to consider DTAA provisions and directed the appeals to be reheard for further adjudication. Issue 3: Disallowance of provision for retirement benefits: Another issue raised by the appellant was the disallowance of a provision made for retirement benefits. The appellant contended that the provision was in line with Department of Public Enterprises guidelines and constituted a business liability to be discharged in the future. The appellant argued that the provision should be allowed as an ascertained liability since the appellant was certain of incurring the liability and had made a reasonable estimation. The Tribunal allowed the Miscellaneous Petitions for the specified purpose of adjudicating the grounds related to this issue. In conclusion, the Tribunal recalled the appeals for the limited purpose of adjudicating the grounds of appeal and additional grounds related to the disallowance of expenses under section 40(a)(i) and the provision for retirement benefits. The issues of applicability of DTAA provisions and the correctness of the disallowances were to be reexamined in light of the arguments presented by the appellant.
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