Shree Dinesh Mills Ltd., , Baroda vs Assessee

1. The present Miscellaneous Applications (M.As.) have been filed by the Assessee against the order of Tribunal in ITA No. 2369 & 2452/Ahd/2010 dated 29.04.2014 for A.Y. 2007-08.

2. With respect to M.A. No. 104/Ahd/2014, the ld. A.R. submitted that that the A.O had disallowed expenses u/s. 14A by applying the formula prescribed under Rule 8D and the same was confirmed by the Hon'ble Tribunal. The ld. A.R. submitted that provisions of Rule 8D of the Income Tax Rules were 2 M. A Nos. 104 & 105/Ahd/2014 (ITA Nos. 2369 & 2452/Ahd/2010) A.Y. 2007-08) .

notified with effect from 24.03.2008 and are therefore applicable with effect from A.Y. 08-09 and not to earlier years and therefore not to the year under appeal. He further submitted that the Hon'ble High Court in Assessee's own case for A.Y. 06-07 has held that Rule 8D is applicable from A.Y 08-09 and has no retrospective effect. He also placed on record the copy of the decision of Hon'ble High Court in Assessee's own case in Special Civil Application No. 15726 of 2010 order dated 28.02.2011. He therefore submitted that disallowance u/s. 14A made by the A.O and as confirmed by Tribunal thus goes against the aforesaid decision of Hon'ble High Court in Assessee's own case and thus there is an apparent error in the order of the Tribunal which requires to be modified.

3. With respect to M.A. NO. 105/AHD/2014 in connection with ITA No. 2452/AHD/2010, he submitted that while adjudicating the Department's appeal, the Hon'ble Bench overlooked the fact that out of the total investment in the subsidiary company of Rs. 7.86 crores, an amount of Rs. 2.91 crores were invested in earlier years and was not subjected to the disallowance in the past and an amount of Rs. 2.5 crores invested by Dinesh Plastchem Ltd. stood transferred to the company on amalgamation and therefore effectively only Rs. 2.46 crores was invested during the year in the shares of Dinesh Remedies Ltd. for which necessary cash flow from operating activities and funds in the form of Capital and Reserves were available without resorting to borrowed funds. He therefore submitted that by ignoring the aforesaid facts, the disallowance u/s. 36(1)(iii) has been confirmed which is a mistake apparent for record and therefore the same requires to be modified and therefore the order be recalled. The ld. D.R. on 3 M. A Nos. 104 & 105/Ahd/2014 (ITA Nos. 2369 & 2452/Ahd/2010) A.Y. 2007-08) .

the other hand supported the order of Tribunal and submitted that there is no mistake in the order of Tribunal and the Tribunal has no power to review.

4. We have heard the rival submissions and perused the material on record and have also gone through the Miscellaneous Application. With respect to disallowance u/s, 14A in ITA No. 2369/Ahd/2010, it is seen that for the year under consideration being A.Y. 2007-08, the disallowance u/s. 14A has been made by following the provisions of Rule 8D. We further find that Hon'ble Gujarat High Court in Assessee's own case is A.Y. 2006-07 while deciding the Special Civil Application No. 15726 of 2010, has held that provisions of Rule 8D are applicable from A.Y. 2008-09 and is not retrospective. Considering the aforesaid fact, we are of the view that there is an apparent mistake in the order of Tribunal and therefore recall the order in ITA No. 2369/Ahd/2010 for a limited purpose to decide the issue with respect to disallowance u/s. 14A of the Act. The Registry is directed to fix the hearing the appeal in due course.

5. With respect to disallowance made u/s. 36(1)(iii) of the Act while deciding the appeal in ITA No. 2452/Ahd/2010, we find that the submissions made by the learned AR have duly been considered by the Tribunal. It is also well settled/established law that the Tribunal is not bound to discuss each and every argument made at the time of hearing of the appeal and the conclusion arrived by the Tribunal may be an error of judgment but cannot be considered to be an error apparent on record rectifiable u/s. 254(2) of the Act. Further, the powers of the Tribunal under section 254(2) is very limited and the Tribunal has limited jurisdiction of rectification in its order if an error is crept therein which is apparent from the face of the record. Re-

4 M. A Nos. 104 & 105/Ahd/2014 (ITA Nos. 2369 & 2452/Ahd/2010) A.Y. 2007-08) .

appreciation of the evidence placed before the Tribunal during the course of hearing is not permissible to re-adjudicate the issue afresh under the garb of rectification. The power to review is not available to the Tribunal. If we accept this petition, then this may tantamount to review of an order of the Tribunal and the law is settled that we have no such power. Further, we also find support to our aforesaid view by the decision of Hon'ble Delhi High Court in the case of Perfetti Van Melle India (P) Ltd. vs. CIT reported in (2008) 296 ITR 595 (Del) wherein the Hon'ble High Court has concluded that Assessee cannot be allowed to reopen and reargue the whole matter in the garb of rectification under section 254(2). It has held as under:

"It is well settled that an oversight of a fact cannot constitute an apparent mistake rectifiable under s. 254(2). Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal has not allowed a deduction, even if the conclusion is wrong, that will be no ground for moving an application under s. 254(2). Further, in garb of application for rectification, the assessee cannot be allowed to be permitted to reopen and reargue the whole matter, which is beyond the scope of this section."

6. In view of the aforesaid facts and following the decision of Hon'ble High Court cited hereinabove, we are of the view that since the assessee has failed to point out any mistake apparent from record in the order, we are not inclined to recall the order of the Co-ordinate Bench in M.A. No. 105/A/2014 order dated 29.04.2014 with respect to disallowance u/s.

5 M. A Nos. 104 & 105/Ahd/2014 (ITA Nos. 2369 & 2452/Ahd/2010) A.Y. 2007-08) .

36(1)(iii) and thus the Miscellaneous Application bearing no. 105/A/2014 is hereby dismissed.

7. In the result, M.A. No. 104/Ahd/2014 is allowed and M.A. No. 105/Ahd/2014 is dismissed.

Order pronounced in Open Court on 10 - 06 - 2015.

Sd/- Sd/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad. TRUE COPY Rajesh

Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) - 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad