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2022 (11) TMI 968 - AT - Income TaxRectification of mistake u/s 254 - TDS u/s 195 - Interest paid by PE to head office on money lent by head office to PE - DTAA between India and UK - HELD THAT - As decided in Reliance Telecom Ltd. 2021 (12) TMI 211 - SUPREME COURT Appellate Tribunal is not required to re-visit its earlier order and to go into details on merits. As held that the powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. It was also further held by the Apex court that even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers the Tribunal may pass order recalling its earlier order which is an erroneous order cannot be accepted. The Apex court further held that if the order passed by the Tribunal was erroneous on merits in that case the remedy available to the assessee was to prefer an appeal before the High Court. Thus there is no mistake on record in the order passed by the Tribunal - Misc. application is dismissed.
Issues Involved:
1. Request to recall the Tribunal's order dated 10.03.2017. 2. Alleged mistakes apparent on the face of the record concerning the deductibility of interest paid by the branch office to the head office. 3. Judicial propriety and adherence to precedents. 4. Scope of the Tribunal's power under Section 254(2) of the Income Tax Act, 1961. Detailed Analysis: 1. Request to Recall the Tribunal's Order: The assessee filed a Miscellaneous Application under Section 254(2) of the Income Tax Act, 1961, requesting to recall the Tribunal's order dated 10.03.2017 in ITA No. 3578/Del/2013. The application sought rectification of certain mistakes which were claimed to be apparent from the record. 2. Alleged Mistakes Apparent on the Face of the Record: The assessee contended that the Tribunal had erred in disposing of Grounds Nos. 4 and 5 related to the deductibility of interest paid by the branch office to the head office. The Tribunal had previously upheld the disallowance of this interest, referencing the case of ABN Amro Bank N.V. vs. CIT, which dealt with whether such interest payments were subject to TDS and thus not allowable under Section 40(a)(i) read with Section 195 of the Act. The assessee argued that the Kolkata High Court had reversed the Third Member Judgment in the case of ABN Amro Bank, allowing the interest payment as a deduction and stating that it did not attract withholding tax. 3. Judicial Propriety and Adherence to Precedents: The assessee argued that the Tribunal was bound by judicial propriety to follow the Kolkata High Court's judgment in the case of ABN Amro Bank, which had overruled the earlier Third Member Judgment. The assessee cited the principle that a subordinate court is bound by the precedent of a superior court and that non-consideration of a jurisdictional High Court decision constitutes a mistake apparent from the record. 4. Scope of the Tribunal's Power under Section 254(2): The Tribunal reviewed the submissions and found that the contentions raised suggested recalling and reviewing its earlier order on merits, which is beyond the scope of Section 254(2). The Tribunal referred to the Supreme Court's decision in CIT vs. Reliance Telecom Ltd., which held that the powers under Section 254(2) are limited to rectifying any mistake apparent from the record and do not extend to re-visiting or re-hearing the entire appeal on merits. The Supreme Court emphasized that if an order is erroneous on merits, the appropriate remedy is to appeal to the High Court, not to seek a review under Section 254(2). Conclusion: The Tribunal concluded that there was no mistake apparent on the record in its order dated 10.03.2017. It held that the powers under Section 254(2) are limited to rectifying mistakes apparent from the record and do not allow for a re-evaluation of the merits of the case. Consequently, the Miscellaneous Application filed by the assessee was dismissed. Order Pronounced: The Miscellaneous Application was dismissed, and the order was pronounced in the open court on 12/10/2022.
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