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2018 (2) TMI 304 - AT - Income TaxRectification of mistake u/s 154 - assessment of income - Held that:- As far as the service charges paid to BTC is concerned this was never the subject matter of addition in the original order of assessment passed by the AO u/s 143(3) of the Act dated 20.12.2007. In the appeal by the assessee against the order of the AO the only issue was whether income declared by the assessee under the head ‘capital gain ‘ should be assessed under the said head or under the head ‘income from business’. CIT(A) held that income declared by the assessee under the head ‘capital gain ‘should be assessed under the head ‘capital gain'. If the AO was aggrieved by the absence of direction by CIT(A) in his order with regard to service charges paid to BTC, he ought to have filed either an appeal against the order of CIT(A) dated 31.03.2009 or an application u/s 154. The AO did not even bring to the notice of CIT(A) in the course of appellate proceedings the issue with regard to service charges paid to BTC. In these circumstances while giving effect to the directions of CIT(A) in his order dated 15.06.2009, the AO could not have disallowed the service charges paid to BTC. In the case of Bhgwandas Associates vs ITO (2007 (9) TMI 333 - ITAT PUNE-B) wherein it was held that when the AO in an order giving effect to the appellate order commits a mistake by travelling beyond the subject matter of the appeal before CIT(A) it gives rise to a mistake apparent on the face of the record which should be rectified u/s 154 of the Act. The aforesaid decision support the conclusion of CIT(A). Therefore we do not find merit in ground no.1 and 3 raised by the revenue. Disallowance u/s 14A - Held that:- This issue cannot be the subject matter of proceedings u/s 154 of the Act. The question whether the CIT(A) enhanced the disallowance u/s 14A of the Act without proper notice or any disallowance could at all be made u/s 14A of the Act cannot be subject matter of the order dated 15.06.2009 u/s 251 of the Act passed by the AO. If the assessee is aggrieved with the directions of CIT(A) he ought to have fled an appeal against such directions. Filing the application u/s 154 of the Act was not an appropriate remedy available to the assessee. The CIT(A) in our view erred in directing the AO to restrict the disallowance u/s 14A of the Act to 1% of the exempt income. To this extent we find merits in ground no.2 raised by the revenue.
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