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TMI Blog2012 (10) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the issue of disallowance u/s 14A of the IT Act. 3 We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. The assessee has raised ground no.2 of the appeal regarding the disallowance u/s 14A as under: "2, Disallowance u/s 14A of the I T Act, 1961. 2.1 The CITIA) erred in directing the Assessing Officer to make reasonable disallowance u/s 14A of the I T Act, 1961 in accordance with the decision of Bombay High Court in the case of Godrej & Boyce Manufacturing Co Ltd vs DCIT reported in (20120)43 DTR 177)." 3.1 After going through the impugned order, we find that this issue regarding the disallowance u/s 14A of the Act has been left un-adjudicated and therefore, there is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or u/s 10A. He has further submitted that during the hearing, the assessee has advanced the arguments that no adjustment was made by the TPO and the assessee made suo-moto adjustment; there is no enhancement in the income of the assessee and accordingly, proviso to sec. 92C(4) is not applicable in view of the decision of the Bangalore Bench of the Tribunal in the case of I Gate Global Solutions Ltd vs ACIT reported in 112 TTJ 1002 . He has further submitted that this Tribunal has decided the issue against the assessee by holding that the assessee does not fulfil the conditions of sec. 10A of the Act whereas this aspect of the matter was never mentioned/discussed nor put forth to the assessee by the Tribunal during the course of hearing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deduction u/s 10A. The relevant part of the order of the Assessing Officer is as under: "I have carefully, perused and considered the submissions made by the representative of the assessee. At the outset, it needs to be mentioned that the impugned addition made by the assessee in the computation of total income whether can be termed as income derived from the activity qualifying for deduction u/s 10A.In this regard, emphasis needs to be placed on the fact that this addition is an adhoc addition without any support from the books of account and audit report u/s 93A. The addition so made as a matter of act bears the character of an income which has no nexus with the software development activity assessee is engaged in. It is more analogou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 901A, 801B are to be allowed only on the profits and gains which have only the 'first degree' nexus with the business/undertakings. Tested on this parameter, the income in question here being merely the result of computation cannot be said to be within the first degree nexus with the appellant's business. In t this light, I find the Assessing Officer's decision logical." 6 Thus, it is clear that the disallowance made by the Assessing Officer and confirmed by the Commissioner of Income Tax(Appeals) was on the ground that the income resulting due to the adjustment made by the assessee in ALP has no first degree nexus with the business/undertaking of the assessee and therefore, the issue before the Tribunal was whether the conditions specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oftware, as the case may be, shall be allowed from the total income of the assessee: Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only far the unexpired period of the aforesaid ten consecutive assessment years: Provided further that where an undertaking initially located in any free trade zone or export processing zone is subsequently located in a special economic zone by reason of conversion of such free trade zone or export processing zone into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the Commissioner of Income Tax (Appeals) on the very same point. Accordingly, there is no apparent and patent mistake in the order of the Tribunal relating to the finding on the issue of disallowance of deduction u/s 10A, which can be rectified under the provisions of sec. 254(2). 9 Even other otherwise, the scope of sec 254(2) is very limited and circumscribed. For exercising the jurisdictional u/s 254(2), it is the mandatory condition that such mistake should be wide apparent, manifest and patent and not something which could be involved serious circumstances of disputes of question of facts or law and can be established by long drawn process and reasoning on the point to be rectified. A patent mistake as well as evident error, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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