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TMI Blog2020 (8) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... n lost sight of. No argument has been lost sight of. A perusal of the above facts clearly indicate that the applicant has not pointed out any mistake apparent from the record. A mistake apparent on the record must be an obvious mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. See T.S. Balaram, ITO v. Volkart Bros. [ 1971 (8) TMI 3 - SUPREME COURT ] . In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. The Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [ 1970 (3) TMI 163 - SUPREME COURT ] that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infra . Elaborating further, it is stated that the Tribunal, in para 7.7 (page 21) of the ITAT order, has further observed that an examination of working of total estimated loss on the project S.S. House as worked out by the assessee clearly indicates that it suffers from basic deficiencies viz. (i) total cost incurred till 31.03.2014 ₹ 91,07,85,390/- or ₹ 97,88,86,048/- is not a reliable one, as the assessee is sticking to two figures without supporting computation and (ii) total estimated loss of ₹ 3,95,51,736/- or ₹ 10,84,31,736/- is not a reliable one, as the assessee is sticking to two figures, without supporting computation. The Ld. counsel submits that the above finding has been arrived at without considering the explanation of the assessee that the difference of ₹ 6.81 crores is nothing but profit offered by the assessee in earlier years and not considering the submission made during the course of hearing constitutes mistake apparent from record . It is further submitted that the Tribunal has recorded a finding in respect of reasons for cost escalation due to delay and disputes, in para 7.4.1 (page 18) of the impugned order by observing but no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar to revenue recognition, has a balance sheet effect and in this view, expense recognition is simultaneous with a decrease in an asset or an increase in a liability. Thus it is stated by him that in the present case, the reversal of profits declared in the earlier years on account of estimated loss of ₹ 6,81,13,166/- in WIP for the impugned assessment years by the assessee has dislocated the mercantile system of accounting, the matching principle. In view of the above, the Ld. DR submits that there is no mistake apparent from record in the impugned order passed by the Tribunal. He submits that the Tribunal has no power to review its order in the garb of section 254(2) of the Act. III 4. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In the instant case, it was the contentions of the Ld. counsel during the hearing on 01.08.2019 that the assessee-firm was undertaking the construction of its commercial project known as S.S. House , which was complete to the extent of approx 90%. The assessee has regularly and consistently followed the method of percentage completion, all over the years, to recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Guidance Note. Thus it was explained that the AO has failed to read that the said Guidance Note which mentions that an enterprise may choose to apply this Guidance Note from an earlier date provided it applies this Guidance Note to all transactions which commenced or were entered into on or after such earlier date . Thus the Ld. counsel submitted that as the Guidance Note issued by the ICAI is applicable to the instant case, the assessee has rightly followed the same and therefore, the order passed by the Ld. CIT(A) be affirmed. 4.1 In the reasons for the decision, we have mentioned in the impugned order that in CIT v. A. Gajapathy Naidu , (1964) 53 ITR 114 (SC), it is held that income is taxable when it accrues or is earned, if the assessee s accounts are maintained on the mercantile basis. A profit can be said to have accrued or a liability or loss can be said to have been incurred only when the profit is either actually due or the liability becomes enforeceable. Further, it is held in CIT v. Associated Commercial Corporation , (1963) 48 ITR 1 (Bom) that a mere claim to a profit or to a liability is not sufficient to make the profit to accrue or the liability to be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal project costs will exceed total eligible project revenues, the expected loss should be recognized as an expense immediately. The amount of such a loss is determined irrespective of: (a) commencement of project work; or (b) the stage of completion of project activity. 5.8 The percentage of completion method is applied on a cumulative basis in each reporting period to the current estimates of project revenues and project costs. Therefore, the effect of a change in the estimate of project costs, or the effect of a change in the estimate of the outcome of a project, is accounted for as a change in accounting estimate. The changed estimates are used in determination of the amount of revenue and expenses recognized in the statement of profit and loss in the period in which the change is made and in subsequent periods. 5.9 The changes to estimates referred to in paragraph 5.8 above also include changes arising out of cancellation of contracts and cases where the property or part thereof is subsequently earmarked for own use or for rental purposes, in such cases any revenues attributable to such contracts previously recognized should be reversed and the costs in relation thereto shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is not present in the instant case, we came to a finding that the reversal of profits in the earlier years on account of estimated loss expected of ₹ 6,81,13,166/- in WIP for the impugned assessment year by the assessee dislocates the mercantile system of accounting, the matching principles and AS-7-Revised. In view of the above, we set aside the order of the Ld. CIT(A) and restored the order passed by the AO. 4.2 In the instant case, as mentioned above, the explanations given by the assessee have been duly considered. In the impugned order all the submissions and explanations by the assessee have been summarized and then a finding has been arrived at. The issue has been decided after considering the facts in entirety available on record. In fact full opportunity had been given to the assessee to make submissions. Therefore, the present case is distinguishable from the decision in Manu P. Vyas (supra) and Rajendra N. Vyas (supra) relied on by the Ld. counsel. 4.3 In Honda Siel Power Products Ltd . (supra), the Hon ble Supreme Court held that non-consideration of a decision of co-ordinate Bench placed before the Tribunal amounts to mistake apparent from record within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel. 4.4 For guidance, we may refer here to the decision in CIT v. Ramesh Electric Trading Co. (1993) 203 ITR 497 (Bom), wherein their Lordships of the Hon ble Bombay High Court have held: Under s. 254(2) of the IT Act, 1961, the Tribunal may, with a view to rectifying any mistake apparent from the record , amend any order passed by it under subs (1) within the time prescribed therein. It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the IT Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. In the present case, in the first order, there is no mistake which is apparent from the record at all. The Tribunal was required to decide whether the commission payment of ₹ 54,000 was deductible under s. 37. After examining the circumstances, the Tribunal came to a conclusion that it was not so deductible. The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or not. An error apparent on the face of the record means an error which strikes on mere looking and does not need long drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record. If the view accepted by the Court in the original judgment is one of the possible views, the case cannot be said to be covered by an error apparent on the face of the record. 4.6 In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. The Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [AIR 1970 SC 1273] that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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