2021 (1) TMI 166 - AT - Income Tax

Rectification u/s 254 - disallowance made u/s.40(a)(ia) - HELD THAT - We find that this Tribunal while disposing off the appeal for A.Y.2009-10 2020 (9) TMI 1100 - ITAT MUMBAI had rejected the contentions of the assessee and upheld the disallowance made u/s.40(a)(ia) of the Act. But we find that a contrary view has already been taken by this Tribunal in the case of Mahindra and Mahindra 2020 (6) TMI 564 - ITAT MUMBAI - Non-following of the said order constitute mistake apparent on record within the meaning of Section 254(2). We direct the ld. AO to delete the disallowance u/s.40(a)(ia) of the Act. Accordingly, the grounds taken by the assessee in this regard are allowed.

Summary

Issues involved:
Recall of order on disallowance u/s.40(a)(ia) based on non-following of precedent judgment.

Analysis:
The judgment by Appellate Tribunal ITAT Mumbai deals with a Miscellaneous Application filed by the assessee seeking to recall the order on a specific issue regarding the disallowance made u/s.40(a)(ia) of the Act. The assessee contended that the Tribunal had not considered a previous decision in the case of Mahindra and Mahindra Ltd., which was in favor of the assessee. The Tribunal acknowledged that the decision in Mahindra and Mahindra case was on record and had not been considered while rendering the decision. It was observed that a contrary view had been taken in the present case compared to the Mahindra and Mahindra case, leading to a mistake apparent on record under Section 254(2) of the Act.

The Tribunal recognized the need for judicial consistency and decided to modify the order to align with the decision in the Mahindra and Mahindra case. The Tribunal referred to specific paragraphs from the Mahindra and Mahindra case where the disallowance u/s.40(a)(ia) was deleted based on detailed analysis. It was noted that the assessee had submitted a break-up of the year-end provision for expenses, which was considered valid and not adhoc. The Tribunal, following the precedent, directed the Assessing Officer to delete the disallowance u/s.40(a)(ia) for the assessee in the current case.

Consequently, the Tribunal modified the relevant paragraphs of the order dated 10/09/2020 to reflect the decision in line with the Mahindra and Mahindra case. The other contents of the order remained unchanged, and the Miscellaneous Application of the assessee was allowed. The judgment was pronounced on 05/01/2021, emphasizing the importance of adhering to precedent judgments for maintaining judicial consistency.