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TMI Blog2008 (5) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. 3. First that the Tribunal has stood to support its conclusion with reference to the decision of the apex Court in the case of Transmission Corporation of A.P. Ltd. vs. CIT (l999) 155 CTR (SC) 489 : (l999) 239 ITR 587 (SC) which has been referred to in extenso in the order of the Tribunal vide para No. 27. The ratio of the decision of the apex Court has not been correctly applied by the Bench while coming to the conclusion in para No. 27 of the order that the requirement to deduct tax at source is absolute because on reading page No. 594 of the judgment it would become clear that even as per the aforesaid decision, the requirement of deduction of tax at source under s. 195 was only in respect of sum which is chargeable to tax in India and could be assessed to tax under the Act. In other words, the application to deduct tax at source under the said section is qualified by the other requirement that the sum should be liable to tax inIndiain the hands of the non-resident recipient. 4. Second, in support of the contention that there is no obligation to deduct tax at source under s. 195 of the Act whether the payment is not chargeable to tax in the hands of non-resident recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration of the same constitutes mistake apparent from record. 8. Fifth, the Tribunal has not dealt with the assessee's submissions regarding non applicability of provisions of s. 40(a)(i) of the Act in view of the non-discrimination provision contained in art. 24 of the Indo-Netherlands Double Taxation Avoidance Treaty which overrides the provisions of the Act to the extent more beneficial to the non-resident assessee. The Tribunal has not considered the decision of the Delhi Bench of the Tribunal in the case of Herbalife International India (P) Ltd. vs. Asstt. CIT (2006) 103 TTJ (Del) 78 : (2006) 101 ITD 450 (Del) which squarely supports the aforesaid contention. Hence, in view of this decision of the Tribunal the disallowance under s. 40(a)(i) of the Act was not called for. Hence non-consideration of the aforesaid decision constitutes mistake apparent from record which has vitiated the conclusion arrived at by the Tribunal. Thereafter, the assessee has requested for rectification of the order of the Tribunal by asking the same for consideration afresh. 9. In support of his contentions the learned Authorised Representative for the assessee placed reliance on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR (Del) 361 : (2002) 253 ITR 131 (Del) their Lordships of Hon'ble jurisdictional High Court of Delhi, held as under: "The scope and ambit of application of s. 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record. We shall first deal with the question of the power of the Tribunal to recall an order in its entirety. Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under s. 254(1) is the effective order so far as the appeal is concerned. Any order passed under s. 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under s. 254(1). That is the final order in the appeal. An order under s. 254(2) does not have existence de hors the order under s. 254(1). Recalling of the order is not permissible under s. 254(2). Recalling of an order automatically necessitates rehearing and readjudication of the entire subject-matter of appeal. The dispute no longer remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided ex parte. What is significant is that the section envisages amendment of the original order of the Tribunal and not a total substitution thereof. The order passed by the Tribunal under s. 254(1) is the effective order so far as the appeal is concerned. Any order passed under s. 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under s. 254(1). That is the final order in the appeal. An order under s. 254(2) does not have existence de hors the order under s. 254(1)." Thereafter, their Lordships held as under: "Held, allowing the petition, that the Tribunal was not justified in recalling the order passed by it in toto and setting the matter down for a fresh hearing. Just because a pronouncement made on the subject either by the Tribunal or by any other Court was not noticed by the Tribunal while taking a particular view on the merits of the controversy may constitute an error that would call for correction in an appropriate appeal against the order. Any such error may, however, fall short of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 254(2) of IT Act can be summarized as under: First, the scope and ambit of application of s. 254(2) of IT Act is restricted to rectification of the mistakes apparent from the record. Second, that no party appearing before the Tribunal should suffer on account of any mistake committed by the Tribunal and if the prejudice has resulted to the party, which prejudice is attributable to the Tribunal's mistake/error or omission, and which an error is a manifest error, then the Tribunal would be justified in rectifying its mistake. The "rule of precedent" is an important aspect of legal certainty in the rule of law and that principle is not obliterated by s. 254(2) of the Act and non-consideration of precedent by the Tribunal causes a prejudice to the assessee. Third, power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Fourth, under s. 254(2) an oversight of a fact cannot constitute an apparent mistake rectifiable under the section. Fifth, failure on the part of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on record, although it may be an error of jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al which calls for rectification. 15. In this regard, we would like to mention that in the order the Tribunal first meticulously mentioned the arguments of learned Authorised Representative for the assessee, the points raised by him, then the relevant; case law relied upon by learned Authorised Representative for the assessee in para Nos. 7 to 17 of the order. Thereafter, the Tribunal, while discussing all the arguments raised by the parties and after considering the same and by recording reasons for arriving at the conclusions, from paras 18 to 28 of the order, summed up by deciding the appeal of the assessee in para Nos. 29 to 33 of the order and the same is reproduced herein under for ready reference: "29. To sum up, we may mention that neither it is the duty nor it is desirable from the payer/assessee to examine whether any tax is deductible at source from the payments made to the non-resident. In case it feels that the tax is required to be deducted at source or required to be deducted at a lower rate then it is required to obtain such certificate under s. 195(2) from ITO or for non-deduction of tax at source. This is a safeguard provided under ss. 195(2), 195(3) and 197 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made to non-resident nor are required to look into whether such payments are income or part of the income in the hands of recipient non-resident taxable in India and many other relevant factors relating to taxability of the payments in the hands of recipient non-resident as its income in India. That having held so the detailed arguments of both the parties on the question of the nature of the payments made by the payer to the payee non-resident and the taxability of such payment as income in the hands of recipient non-resident is thus beyond the scope of provisions of s. 40 (a)(i) where we are only required to consider the deduction of such payments claimed by the payer/assessee to the non-resident in case of non-compliance of provisions of s. 195 of IT Act i.e. non-deduction of tax at source for the payments made to non-resident." 16. The Tribunal while passing the order mainly made critical analysis of the relevant provisions of IT Act by considering the ratio of the recent decision of the apex Court in the case of Transmission Corporation of A.P. Ltd. Anr. vs. CIT while considering the allowability of deduction under s. 40(a)(i) claimed by the assessee. The decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that the Tribunal has not considered the case law cited by the learned Authorised Representative for the assessee as alleged in the miscellaneous application, on the contrary, the Tribunal in the order after taking note of the case law relied upon by learned Authorised Representative for the assessee gave reasoning why it was not relevant to consider the same. Hence, the ratio of the decision of the apex Court in the case of Honda Siel Power Products Ltd. wherein their Lordships held that non consideration of a decision cited by the parties is a mistake apparent from records is not applicable to the facts of the instant case because in the order the Tribunal considered the case law cited by the learned Authorised Representative for the assessee and then in view of the finding recorded observed that it was not relevant for the Tribunal to consider the same in view of the detailed reasoning given in the order. Similarly, the other contentions of the assessee raised in the miscellaneous application since relate to the issues of merits i.e. the nature of such payments made by the assessee to the non-resident i.e. whether such payments are income or part of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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