TMI Blog2004 (5) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... Third Member, the Hon'ble President of I.T.A.T. constituted a Special Bench for the hearing and disposal of the present miscellaneous application and hence the said Special Bench has heard this miscellaneous application; 4. Before dealing with the pleas taken in the miscellaneous application and the arguments of the learned counsel for the applicant/assessee in support of such pleas, we consider it proper to narrate the relevant facts and background pertaining to this matter. These facts are as under:- 5. The applicant/assessee, a private limited company, was providing emergency and medical rescue services to foreign nationals coming toIndia. It had entered into agreements with foreign insurance companies and in pursuance of such agreements with them, it was also providing required information etc., to the concerned organizations abroad. During the assessment year under consideration, the assessee had received a sum of Rs. 16,95,775 as consultation charges from foreign parties. This amount was received inIndiain convertible foreign exchange. The assessee claimed deduction under section 80-O on this amount on the ground that assessee had provided professional services to the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber vide order dated13-3-2002decided the issue in favour of the Revenue by supporting the view taken by the learned Judicial Member. He has discussed the facts of the matter, the circulars on which reliance was placed by the assessee and by the Department, the case law and other material including the orders of the Members of the Division Bench. We consider it proper to reproduce the concluding paras i.e., paras 27 to 31 of his order which are as under:- "27.1 am not in agreement with the submissions of the learned counsel that the C.B.D.T. Circular does not apply as it pertains to the questions of approval or for that matter a particular judgment does not deal with the amended provisions. These have been relied upon by the learned Departmental Representative on behalf of the Department for projecting the objectives behind the introduction of section 80-O. In examining the C.B.D.T. circular as also perusing the judgments, one thing becomes quite clear and that is the transmitting of general information howsoever important it may be to the foreign enterprise is not at all a relevant factor since it has been seen that even collecting information/bio data of Indian citizens and tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out by the learned Department Representative the assessee has accepted at the assessment stage and which is not varied either before the Division Bench or before me in this reference that the transmission of this information to the foreign companies is only for the purpose of limiting their liability to their clients and nothing more. In other words, the foreign companies admittedly want to ensure that their clients do not present them any bills for reimbursement which are not genuine and which are inflated and do not represent the correct state of affairs. Reliance on behalf of the assessee on C.B.D.T. circular No. 700 dated 23rd March, 1995 is mis-conceived since it clarifies the following question only:- 'The matter has been considered by the Board. It is clarified that as long as the technical and professional services are rendered fromIndiaand are received by a foreign government or enterprise outsideIndia, deduction under section 80-O would be available to the person rendering the services even if the foreign recipient of the services utilizes the benefit of such services inIndia.' 30. The assessee, however, has to cross the first hurdle and which is whether it has pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was wholly influenced by the Circular of C.B.D.T. No. 253 dated 30-4-1979 which was not referred to by the ITO nor by the CIT(A) and the Department has also not brought this Circular to the notice of the learned members of the Division Bench. After pointing out this aspect of the matter, the learned counsel for the applicant/assessee went on to submit that the learned Third Member was not at all justified in placing reliance on the material which was not considered by the Division Bench. According to him, the order of the learned Third Member is based on the said Circular which was referred to by the Revenue for the first time before him and since the learned Third Member was fully guided by this Circular, he travelled beyond the limits of jurisdiction which was available to him for deciding the issue of difference between two Members. According to him this circular of the C.B.D.T. was neither relevant for deciding the controversy in the present matter nor was binding upon the Tribunal. 15. On the scope and object of the circular No. 253 dated 30-4-1979, the ld. counsel for the assessee submitted that it related to pre-amended provisions of section 80-O and the object of this cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member as the claim of the assessee has rightly been considered by him with reference to the entire material including the material submitted on behalf of the assessee. The ld. D.R. made reference to the order of the learned Judicial Member and also toPara29 of the order of the learned Third Member, which has been reproduced above. According to him, the assessee applicant wants to get the order of the learned Third Member reviewed which course is not available to the Tribunal while deciding the miscellaneous application. 17. We have carefully considered the entire material to which our attention was invited by the learned representatives of the parties including the orders of the two Members of the Division Bench and the order of the learned Third Member and the pleas raised during the hearing of this miscellaneous application and the case law referred to by them. 18. Firstly we have to examine as to whether the learned Third Member was influenced or guided only by the circular of C.B.D.T. No. 253 dated 30-4-1979 while deciding the claim for deduction under section 80-O or he has considered the entire relevant material which was considered by the learned two Members of the Div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on about the patient is prepared when his treatment is on inIndiaand its transmission to the foreign enterprise by any mode is not a separate and independent activity de hors the treatment." 22. On perusal of Para 29 of the order also, it is clear that the learned Third Member has duly considered the other aspect and admitted position of the assessee that the transmission of the information to the foreign company was only for the purpose of limiting their liability to their clients and nothing more. He has also reproduced the circular of the Board relied upon by the assessee and has observed that this circular gives answer to the question regarding services rendered fromIndia. InPara29, the learned Third Member has opined that reliance by the assessee on the circular of the Board dated23-3-1995is misconceived. After quoting the relevant part of this circular inPara29, he proceeded to observe that it is not necessary to examine assessee's case with reference to that circular. 23. It cannot, therefore, be said that he ignored the relevant material or erred in overlooking it. Besides, we cannot review the conclusions drawn by the learned Third Member on this aspect, as that course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the power of the learned Third Member but these cases are also not applicable. 29. In the case of Jan Mohammed v. CIT [1953] 23 ITR 15 (All.) there was difference of opinion between two Members of the Bench on the issue as to whether Bus was acquired by the assessee himself and it was benami in the name of his wife or not. In that case, the following points were referred to the opinion of the learned Third Member:- "(1) Whether in the circumstances of the case the presumption that the Bus belonged to the husband could be legally drawn or not, and (2) whether the income from the Bus was rightly added in the income of the assessee, was as follows:-xxxxxx" 30. The learned Third Member was of the view that in the circumstances the inference about Bus belonging to the appellant could not be legally drawn. After having recorded the finding, the learned Third Member formulated a new point by himself and held that the Bus must have been purchased from the assets transferred directly or indirectly to the wife by the husband. In deciding this point, he relied upon sub-section (3) of section 16 of the Income-tax Act, 1961. Since this point was not referred to the learned Third Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly the matter was referred to the President for constituting a Special Bench. The Special Bench, instead of confining itself to the special grounds, disposed of the case on other grounds as well as raised by the assessee in its appeal. 33. The order of the Special Bench was not found justified on the ground that the assessee had taken several grounds to challenge the validity of the assessment order and the Special Bench of the ITAT was justified in considering such grounds also. In support of the order of the Special Bench it was contended that when the Bench took the points besides the points referred, there was no objection. However, theHon'ble Courthas observed that the Special Bench of the Tribunal was constituted for deciding the point referred and in absence of such reference the Special Bench did not have jurisdiction to consider the point other than those referred. So far as the present case is concerned, to reiterate, the learned Third Member neither formulated any fresh point nor decided a fresh issue. He has wholly and solely confined to the issue which was about the allowability of deduction under section 80-O and in particular, in view of clause (Hi) attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them. The mere fact that the Circular of CBDT was cited by the D.R. in support of the stand of the Revenue and the view expressed by the Judicial Member does not amount consideration of a new point. It is a jettled law that a party, during the course of hearing of appeal, can supplement its stand or argument by making reference to a case law or a provision of law and such material cannot be treated to be irrelevant if the same is in support of the original arguments. Thus, reference to this circular letter of the CBDT, cannot vitiate the order of Third Member on this ground. 36. The learned counsel has supported the misc. application by submitting that there is a mistake, apparent in the order of the Third Member and the Tribunal has sufficient power to rectify such mistake. In support of his contention the learned counsel made reference to the decision of Hon'ble Supreme Court in the case of Hero Cycles (P.) Ltd. and in the case of Seth Madan Lai Modi. 37. The learned D.R., on the other hand, contended that there is no error or mistake apparent in the order of the Tribunal and if the order of the Third Member is recalled then the same would amount to the review of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a creature of the statute, its powers are circumscribed by the provisions of the Act. 42. In the case of M.S. Deeksha Suri v. ITAT [1998] 232 ITR 395 Hon'ble Delhi High Court, after making reference to the decision of Hon'ble Supreme Court in the case of Volkart Bros, and other decisions, held that the Tribunal could rectify mistakes in its order which are patent and obvious. 43. In the case of CIT v. Ram Bahadur Thakur Ltd. [1999] 237 ITR 217, the Hon'ble Kerala High Court has observed that the Tribunal cannot rectify every mistake. According toHon'ble Courtit can rectify only mistake, apparent from the record. 44. The Hon'ble Karnataka High Court has also considered the issue in the case of Diamond Glass Agencies v. CIT [2001] 247 ITR 277. In that case the issue related to rectification of the order passed by the CIT under section 273A. The CIT had rejected the application of the assessee for waiver of interest on the ground that though the returns of income had been filed voluntarily and the income disclosed in full, taxes on the returned income had not been fully paid. The assessee moved application under section 154 of the Act for rectification which was dismissed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g these aspects the Tribunal came to the conclusion that a case for rectification under section 254(2) was not made out. The order of the Tribunal, refusing to rectify its order, was challenged before the Hon'ble High Court. The Hon'ble High Court rejected the application filed by the assessee under section 256(2). 47. While considering the scope of section 254(2), the Hon'ble Court made reference to several cases including the decision of Hon'ble Supreme Court in the case of Volkart Bros; Master Construction Co. (P.) Ltd. v. State of Orissa [l966] 17 STC 360; Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137 and held that the decision on a debatable point of law or fact etc. etc., which remained to be investigated cannot be corrected by way of rectification. TheHon'ble Courthas also made following observation while deciding the scope of section 254(2): "A bare look at section 254(2) of the Act makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of the company's business. The Assessing Officer, however, on the basis of Article 111 held that the remuneration had accrued to the assessee on month to month basis. He, therefore, calculated the assessee's share of remuneration at Rs. 34,016 and brought the same to tax. The AAC, on appeal, accepted the argument of the assessee that its accounts were closed on28-2-1973and before that date the Directors had already forgone the receipt of remuneration and therefore no income by way of remuneration of the said company should be included in the total income of the assessee. Thus, the addition was deleted. 49. Being aggrieved, the Revenue took the matter before the Tribunal and vide order dated30-8-1978the Tribunal allowed the appeal of the Revenue. Subsequently, the assessee moved misc. application under section 254(2) seeking rectification of the said order. The first application was dismissed but in second application the Tribunal accepted the stand of the assessee that in para 19 of its order, it had relied upon section 310 of Companies Act, 1956 which had since been amended and had no application to the assessment order under appeal. The Tribunal, therefore, recalled its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any irrelevant material or by the Circular No. 253 dated 30-4-1979 of the CBDT or he had ignored any relevant material including the Circular of CBDT No. 700 dated 23rd March, 1995. We are also of the view that there is no mistake apparent in the order of learned Third Member which requires rectification. As observed by us, the power of rectification under section 254(2) is limited and in exercise of such powers the Tribunal cannot review its earlier order. We are further of the view that there is no apparent or glaring mistake in the order of learned Third Member and what the applicant wants is to review the order of the learned Third Member which course is not available. On the basis of the above, we reject all the pleas taken in the misc. application. 54. The learned counsel for the assessee has also made reference to the decision of Hon'ble Delhi High Court in the case of C.S. Mathur to justify his point on merits of the case. 55. Since we are of the view that there is no mistake apparent on record in the order of the learned Third Member requiring any rectification, we are not required to consider the matter on the merits of the case as it would amount to review the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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