2009 (7) TMI 169 - AT - Income Tax

Rectification u/s. 254(2) - whether Mistake Apparent from record alleged to have crept in the order of the Tribunal? - difference of opinion by member of two benches - order delivered by a three Member Special Bench of this Tribunal - Mistakes are said to be two-fold-first that the third part of the order, i.e., concurring note by the second AM Pramod Kumar, ought to have contained detailed and specific reasons of his conclusions; and second, that the order ought to have been passed jointly after discussions and joint conference - The mistake so pointed out by the assessee proceeds on the assumption that the second AM did not sign and agree with the original order proposed by Dr. O.K. Naraynan. HELD THAT - The majority view is evident from the fact that the draft order proposed by Dr. Naraynan is signed and approved by two of the Members on the Bench, i.e., Dr. O.K Narayanan and Pramod Kumar. The fact that one of the Members, i.e., Pramod Kumar, decided to make some observations on the separate order proposed by Shri Singhal cannot, and does not, obliterate the fact that he had signed and 'concurred' with the order proposed by Dr. Narayanan. The confusion has arisen because of omission of words my concurring note attached , as also by omission of the fact that Pramod Kumar signed the original order proposed for the Bench by Dr. Narayanan, in the copy of the order sighted before us. The original records are now inspected by the assessee, and the assessee does not dispute that these words as also the signatures of Pramod Kumar are placed on the original order proposed by Dr. Narayanan. Even otherwise the second AM is disassociating with the order proposed by Shri K.C. Singhal and that he has signed the original order proposed by Dr. O.K. Narayanan is clear from record. There is thus a clear majority view with reasoning on all issues. In this view of the matter, the mistake, as alleged to have crept in the third part of the order, did not exist at all. The other procedural mistake is on account of not holding the joint conference and discussions before the order is passed - The differences were in the process of reasoning as one of us, i.e., learned JM Shri K.C. Singhal, did not agree with the majority view. Merely because one Member has a different reasoning, it cannot be inferred that there was no joint conference and discussion at all. A lot of emphasis has been placed by the assessee on lone and tenor of third part of the order, which is concurring note of the second AM. Even by assessee's admission thus, it is no more than an inference drawn by the assessee from the wordings of the concurring note authored by the second AM. This inference is a matter of perception and the perceptions can always vary. The matter being capable of two views being taken, it is, for this short reason alone, outside the ambit of limited scope of 'mistake apparent from record' under s. 254(2) of the Act. Therefore, on merits as also on limited scope of rectification proceedings that we are currently in seisin of, the grievance of the assessee is devoid of any legally sustainable basis. As essentially a decision of the Members constituting the Special Bench as to whether or not joint conference is necessary before draft can be finalized. In the present case, order was finalized after the joint conference but, after the draft order was proposed, reservations, though only in reasoning aspect, of one of the Members cropped up. These peculiar facts of the case should not, therefore, be construed to mean that the Special Bench order was passed without the benefit of joint conference and discussions. We are of the considered view that the order passed by the Tribunal did not suffer from neither of the two procedural mistakes, which are alleged to be apparent from records, as pointed out by the assessee. We see no such mistakes in the impugned order, leave aside mistakes apparent from record which can be rectified u/s. 254(2) As regards the grievance against non adjudication on the judicial precedents and the Board circular, we are unable to see much merits in the same. The order passed by the Tribunal has adequately and comprehensively dealt with all the relevant aspects of the matter and merely because there is no specific mention of each argument, the order cannot be said to be vitiated by mistake apparent from record and particularly as all the relevant aspects have been dealt with anyway. Deduction u/s 80IA - whether the assessee was entitled to relief under the above provision? - assessee's contention that it was not required to satisfy the condition regarding rendering eligible telecommunication services because no such objection was raised by the Departmental Representative, and as it was not raised by the AO in the assessment order, is devoid of any merit - Once a legal claim was before the Tribunal, it was duty bound to consider and examine that all the conditions are satisfied before relief is allowed. This is precisely what the Tribunal has done and assessee is not justified in contending that question of basic or cellular services could not have been examined by the Tribunal. In the above background, we do not see any error in the order of the Tribunal which could be said to have materially affected the decision of the Tribunal. Therefore, a stray observation in the first order of the AM cannot be made basis for claiming relief u/s 254(2) of the IT Act. The contention has to be rejected. As further be pointed out that legal question relating to entitlement of the assessee to deduction u/s 80-IA has already been admitted by the Hon'ble Bombay High Court - Whether on the facts and in the circumstances of the case, the appellant is entitled to a deduction under s. 80-IA of the IT Act, 1961 (hereinafter referred to as 'the Act') in respect of the two earth stations set up at Halisahar (Calcutta) and Korattur (Madras) during the relevant assessment year? We are of the opinion that when question is pending before the Hon'ble Bombay High Court, it is not right for the assessee to agitate same or part of the question before the Tribunal. The assessee has now to show the Hon'ble High Court that the conditions of s. 80-IA are satisfied on the facts and in the circumstances of the case and that he is entitled to relief under the above section. As far as Tribunal is concerned, question has already been decided and the Tribunal is now functus officio, so far as deduction of eligibility of s. 80-IA is concerned. It is for their Lordships of Hon'ble Bombay High Court to adjudicate on the correctness or otherwise of the decision of the Tribunal. In this view of the matter, as also bearing in mind the entirety of the case and the preceding discussions, we are of the considered view that the rectification petition filed by the assessee under s. 254(2) of the Act must fail. No interference is thus called for.

Summary

Issues Involved:
1. Procedural Mistakes in the Tribunal's Order
2. Merits of the Tribunal's Order

Issue-Wise Detailed Analysis:

1. Procedural Mistakes in the Tribunal's Order:

Alleged Mistake in the Third Part of the Order:
The assessee argued that the third part of the order, i.e., the concurring note by the second AM, should have contained detailed and specific reasons for the conclusions. They contended that the lack of detailed reasoning made it impossible to discern the majority view on the merits, thus frustrating the purpose of the Special Bench. However, the Tribunal clarified that the second AM, Pramod Kumar, had signed and agreed with the original order proposed by Dr. O.K. Naraynan and added a concurring note only to disassociate himself from the separate order proposed by Shri Singhal. Therefore, it was not necessary for the second AM to record separate reasons for dismissing the appeal, and the alleged mistake did not exist.

Lack of Joint Conference and Discussion:
The assessee claimed that the orders were passed without a joint conference and discussion among the Members, which is essential for a collective decision-making process. The Tribunal refuted this claim, stating that a detailed discussion took place immediately after the hearing concluded, and a broad consensus was reached on the outcome of the appeal. The Tribunal emphasized that the reasoning for the decision could differ among Members, but that does not imply the absence of a joint conference. Therefore, the procedural aspect of not holding a joint conference was also factually incorrect.

2. Merits of the Tribunal's Order:

Non-Adjudication of Specific Jurisdictional Objection:
The assessee contended that the Tribunal did not adjudicate a specific jurisdictional objection raised by them, i.e., that the IT Department cannot take a different stand before the Tribunal than the stand taken at the assessment stage. The Tribunal clarified that it was its duty to ensure that all conditions for claiming relief under Section 80-IA were satisfied, regardless of whether the AO had raised the issue. The Tribunal held that it was within its jurisdiction to examine all qualifying conditions, including whether the assessee rendered basic or cellular telecommunication services.

Wrong Finding on Basic Telecommunication Services:
The assessee argued that the Tribunal incorrectly found that "the assessing authority held that the services rendered by the assessee could not be construed as basic telecommunication services." The Tribunal explained that the AO had rejected the claim on the ground that the earth station was not an undertaking and did not go into other requirements of Section 80-IA. The Tribunal was required to examine all conditions for relief, including whether the assessee provided basic telecommunication services.

Non-Consideration of CBDT Circulars and Judicial Precedents:
The assessee claimed that certain CBDT circulars and judicial precedents relied upon by them were not considered by the Tribunal. The Tribunal responded that the order had adequately and comprehensively dealt with all relevant aspects of the matter, and the absence of specific mention of each argument did not vitiate the order.

Adverse Position Due to New Points Raised by the Department:
The assessee argued that the Tribunal should not have allowed the Department to raise new points that were not disputed by the lower authorities, as it put the assessee in an adverse position. The Tribunal held that it was within its jurisdiction to examine all conditions for the claim, and the Department's new points were validly considered. The Tribunal emphasized that it was duty-bound to ensure compliance with all statutory requirements before granting relief.

Pending Appeal Before the High Court:
The Tribunal noted that the legal question regarding the assessee's entitlement to deduction under Section 80-IA was already admitted by the Hon'ble Bombay High Court. Therefore, it was not appropriate for the assessee to agitate the same or part of the question before the Tribunal.

Conclusion:
The Tribunal concluded that the order did not suffer from any procedural mistakes or errors on merits that could be rectified under Section 254(2) of the IT Act. The miscellaneous application filed by the assessee was dismissed.