2020 (12) TMI 22 - HC - Income Tax

Rectification u/s 254 - Deduction u/s 10A - income from human resource services - Whether tribunal was correct in recalling the order dated 25-05-2012 u/s 254(2) wherein it was held that income from manpower supply was income from other sources and therefore does not qualify for deduction under Section 10A? - HELD THAT - From perusal of the submissions recorded by the tribunal in the order dated 25.05.2012 it is evident that no such alternative submission as recorded in paragraph 29 was made by the assessee. However the tribunal has not adjudicated the issues on merits and has recorded the alternative contention which was not taken by the assessee. Therefore the tribunal has rightly invoked the powers under Section 254(2) of the Act as the order passed by the tribunal suffers from the mistake apparent on the face of the record. Substantial question of law framed in these appeals are answered against the revenue.

Summary

Issues:
1. Whether the Tribunal was correct in recalling the order dated 25-05-2012 under Section 254(2) of the Income Tax Act, 1961?
2. Whether there was a mistake apparent from the record justifying the recall of the order dated 25-05-2012 by the Tribunal?
3. Whether the order of the Tribunal recalling the earlier order is justified under Section 254(2) of the Act?

Analysis:

Issue 1:
The appeal pertains to the Assessment Year 2007-08, where the Tribunal recalled its order dated 25-05-2012, which held that income from manpower supply did not qualify for deduction under Section 10A of the Act. The Tribunal recalled the order based on the grounds that the issues were not properly adjudicated and facts were not properly appreciated. The revenue contended that the recall tantamounts to a review beyond the scope of Section 254(2) and would defeat the purpose of the Act. However, the Tribunal's decision to recall the order was upheld, considering the mistake apparent on the face of the record.

Issue 2:
The assessee filed a petition under Section 254(2) seeking rectification of the mistake in the order dated 25-05-2012. The Tribunal, in its order dated 01.03.2013, found the earlier order to be erroneous and recalled it. The revenue argued that there was no mistake apparent on the record justifying the recall. On the contrary, the assessee maintained that the order suffered from an error as certain grounds were not adjudicated, and an alternative plea not raised by the assessee was considered. The Tribunal's decision to recall the order was deemed justified under Section 254(2) due to the mistake apparent on the face of the record.

Issue 3:
The Tribunal's decision to recall the order was challenged by the revenue, claiming that the tribunal exceeded its jurisdiction by reviewing the order. However, the Tribunal's reasoning for the recall, based on the failure to properly adjudicate issues and appreciate facts, was considered valid. The Tribunal correctly invoked its powers under Section 254(2) to rectify the mistake apparent on the face of the record. Consequently, the substantial questions of law were answered against the revenue, leading to the dismissal of the appeal in favor of the assessee.