2020 (12) TMI 844 - AT - Income Tax

Rectification of mistake - TP adjustment made in respect of interest on loan advanced by the assessee - DRP had directed the A.O. to compute interest at LIBOR rate 500 basis point AND Tribunal directed the A.O. to determine 12 months LIBOR 300 basis point - plea of the assessee that the assessee had sought for LIBOR rate 150 basis point and hence the order passed by the ITAT in directing the A.O. to adopt 12 months LIBOR 300 basis point is mistake apparent from record - HELD THAT - We notice that the Tribunal has taken a view on this issue i.e. as against the DRP s direction to adopt interest rate of LIBOR 500 basis point, the Tribunal has directed the A.O. to adopt 12 months LIBOR 300 basis point. Non-acceptance of the plea of the assessee does not amount to a mistake apparent from record. There should not be any dispute that the scope of power of rectification of mistake given to the Tribunal u/s 254(2) of the Act is limited and it is well settled proposition of law that the Tribunal is not entitled to review its order under the garb of rectification of mistake apparent from record. The decision taken by the Tribunal in respect of the rate of interest to be adopted is a conscious decision taken by the Tribunal. Since the Tribunal has taken a view on this matter, the same does not constitute mistake apparent from record within the meaning of sec. 254(2). Tribunal has not adjudicated ground No.3 relating to mistake in computing the TP adjustment after the directions given by Ld. DRP - We notice that ground no.3 is a without prejudice ground relating to transfer pricing adjustment pertaining to loans advanced to the AE. In ground no.3, the assessee is pointing out an arithmetic error committed by A.O./TPO while giving effect to the direction given by Ld DRP. In fact, this ground does not require separate adjudication, since the Tribunal has already modified the directions given by Ld DRP. Hence the ground no.3 urged by the assessee shall become infructuous, while giving effect to the order passed by the Tribunal.Accordingly, the decision rendered by the Tribunal on ground no.2 urged by the assessee would take care of ground no.3 also. Disallowance made u/s 35(2AB) - Tribunal, after considering the facts relating to the issue, has restored the same to the file of the A.O for examining it afresh in the light of order passed by Hon ble Karnataka High Court, i.e., the AO should take into account the observations made by the Hon ble Karnataka High Court while examining the issue of deduction u/s 35(2AB) of the Act. Thus, we notice that the Tribunal has taken a conscious view on this matter. Hence we find that the plea made by the assessee by expressing that this issue cannot be restored to the file of AO for fresh examination sounds strange. In any case, we are of the view that such a plea cannot be made in the miscellaneous petition filed u/s 254(2) of the Act. Accordingly, we do not find any mistake apparent from record in respect of this issue as alleged by the assessee. Disallowance of deduction claimed by the assessee u/s 35(1)(i) - Tribunal has restored the issue relating to deduction u/s 35(1)(i) of the Act to the file of the A.O. for examining it afresh in the light of decision rendered by the coordinate bench 2015 (3) TMI 535 - ITAT BANGALORE relating to assessment year 2008-09, meaning thereby, the A.O. is required to follow the decision rendered by the coordinate bench (referred above), if there is parity of facts on this issue. Thus, we notice that the Tribunal has taken a view on this matter also and hence, we are of the view that the order passed by Tribunal on this issue also does not suffer from any mistake apparent from record. Accordingly, we reject this plea of the assessee. Miscellaneous application filed by the assessee is dismissed.

Summary

Issues:
1. Transfer pricing adjustment on interest rate calculation.
2. Adjudication of ground No.3 regarding TP adjustment.
3. Disallowance under section 35(2AB) of the Act.
4. Remand of the issue to the assessing officer.
5. Disallowance of deduction under section 35(1)(i) of the Act.

Transfer Pricing Adjustment on Interest Rate Calculation:
The assessee claimed a mistake in the interest rate calculation in the order passed by the Tribunal. The Tribunal directed the adoption of 12 months LIBOR + 300 basis points, differing from the DRP's direction. The assessee argued for LIBOR rate + 150 basis points. The Tribunal held that the decision on interest rate was a conscious one and not a mistake apparent from the record. The power of rectification under section 254(2) is limited, and the Tribunal cannot review its order based on rectification. Thus, the plea of the assessee was rejected.

Adjudication of Ground No.3 Regarding TP Adjustment:
The Tribunal did not adjudicate ground No.3, which related to an arithmetic error in TP adjustment after DRP's directions. However, since the Tribunal had already modified the DRP's directions, ground No.3 became infructuous. The decision on another ground covered the issues raised in ground No.3. Consequently, the plea of the assessee was rejected.

Disallowance under Section 35(2AB) of the Act:
The Tribunal remanded the issue of disallowance under section 35(2AB) to the assessing officer after the High Court quashed the assessment order. The assessee contended that the Tribunal erred in remanding the matter. The Tribunal explained that the issue required fresh examination based on the High Court's order. The Tribunal's decision to remand the issue did not constitute a mistake apparent from the record. The plea of the assessee was rejected.

Remand of the Issue to the Assessing Officer:
Regarding the remand of the issue of deduction claimed under section 35(1)(i) of the Act, the Tribunal directed the assessing officer to re-examine the matter in light of previous decisions. The assessee claimed a mistake in remitting the issue to the assessing officer. The Tribunal's decision to remand the issue did not amount to a mistake apparent from the record. The plea of the assessee was rejected.

Disallowance of Deduction under Section 35(1)(i) of the Act:
The Tribunal remitted the issue of deduction under section 35(1)(i) to the assessing officer for re-examination based on previous decisions. The assessee argued that this remittance was a mistake. The Tribunal's decision was based on the need for a fresh examination in line with previous decisions. The Tribunal's order did not reveal a mistake apparent from the record. Consequently, the plea of the assessee was rejected.

In conclusion, the Appellate Tribunal dismissed the miscellaneous application filed by the assessee after detailed analysis and rejection of the alleged mistakes in the original order. The Tribunal's decisions were based on legal principles and the specific circumstances of each issue, leading to the rejection of the pleas made by the assessee.