TMI Blog2004 (3) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... of the miscellaneous application. Since the appeal was heard by the learned Third Member, the hon'ble President of the Income-tax Appellate Tribunal, 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. Before dealing with the pleas taken in the miscellaneous application and the arguments of 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 : The applicant/assessee, a private limited company, was providing emergency and medical rescue services to foreign nationals coming to India. 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 organisations 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 in India in convertible foreign exchange. The assessee claimed deduction under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee-company outside India to foreign enterprises. As there was difference of opinion between two learned Members, the hon'ble President appointed Shri R. M. Mehta, the then Vice President of the Income-tax Appellate Tribunal, Delhi, as Third Member. The learned Third Member vide order dated March 13, 2002, decided 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. I am not in agreement with the submissions of the learned counsel that the Central Board of Direct Taxes 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 examini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a technical or professional services or transmitting of know-how to a foreign enterprise. It must be emphasised that the information about the patient is prepared when his treatment is on in India and its transmission to the foreign enterprise by any mode is not a separate and independent activity de hors the treatment. 29. As rightly pointed out by the learned Departmental 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 the Central Board of Direct Taxes Circular No. 700 dated March 23, 1995 (see [1995] 213 ITR (St.) 78), is misconceived since it clarifies the following question only : The matter has been considered by the Board. It is clarified that as long as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e comments upon the same. In para. 7 of the application, it is submitted that since the order of the learned Third Member is based on the consideration of the material which was irrelevant, the said decision is vitiated and since the order suffers from mistake of law which is apparent from record, the said order needs to be recalled and matter requires to be reheard. Learned counsel for the applicant/assessee, Shri Monga made elaborate submissions in support of the contentions raised in the miscellaneous application. He submitted that the learned Third Member was wholly influenced by the circular of the Central Board of Direct Taxes No. 253 dated April 30, 1979 (see [1980] 126 ITR (St.) 21), which was not referred to by the Income-tax Officer nor by the Commissioner of Income-tax (Appeals) 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal services from India to the foreign insurance companies and therefore deduction was allowable under section 80-O and the case of the assessee was fully covered by clause (iii) of Explanation to section 80-O. In support of his arguments, learned counsel for the applicant/ assessee also placed reliance on the following decisions: (1) CIT v. Hero Cycles Pvt. Ltd. [1997] 228 ITR 463 (SC) ; (2) Seth Madan Lal Modi v. CIT [2003] 261 ITR 49 (Delhi) ; (3) H. P. Biswas and Co. v. CIT [1999] 237 ITR 288 (Patna; (4) CIT v. Trustees of H. E. H. the Nizams Charitable Trust [1981] 131 ITR 497 (AP) ; (5) CIT v. Highway Construction Co. (P.) Ltd. [1996] 217 ITR 234 (Gauhati) ; (6) Collector, Central Excise v. S. D. Fine Chemicals Pvt. Ltd. [1995] Supp. 2 SCC 336 ; [1995] 99 STC 313 (SC) ; and (7) C. S. Mathur v. CBDT [1999] 235 ITR 769 (Delhi). The learned Departmental Representative, on the other hand, submitted that there is no mistake in the order of the learned Third 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 learned Departmental Representative ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon by the Department is not to be considered. In para. 28 of his order reproduced above, the learned Third Member has observed that the learned Departmental Representative by placing reliance on the said circular has projected the object behind introduction of section 80-O. In this para. he has analysed two aspects of the agreements executed by the foreign companies with the assessee and in the context of factual aspects relating to the services rendered in pursuance to the said agreements, he concluded that the assessee was not rendering any professional and technical services. On a perusal of para. 28 of his order, it is clear that he has examined the fax messages which was considered by the Division Bench and inferred that these merely contain general information on the patients who were the clients of the foreign insurance companies. His conclusion as recorded in that para. is as under : In my opinion, such information can be transmitted to a foreign enterprise even by a person who knows how to operate a fax machine and merely because a qualified medical practitioner may have perused the text of the telex messages, it does not convert an information which is pure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objective and scope of this circular. It can, therefore, not be said that the learned Third Member was not justified in considering the relevance and applicability of this circular to the case of the assessee. On the issue relating to the significance, relevancy and applicability, we cannot substitute our judgment in place of the judgment of the hon'ble Third Member, because if we proceed to decide this issue, then we may be crossing the limits of our powers available under section 254(2) of the Act. The learned Third Member, therefore, decided the issue after appreciating the entire material and in doing so he also made reference to the circular of the Central Board of Direct Taxes dated April 30, 1979 (see [1980] 126 ITR (St.) 21), only in order to take some strength from the said circular. In doing so, he has not committed any mistake which can be said to be a mistake apparent from record within the meaning of section 254(2). On the facts and circumstances referred to above, we do not find force in the contentions of the assessee that the learned Third Member has committed error in placing reliance on the circular of the Central Board of Direct Taxes dated April 30, 1979 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made reference to the circular of the Central Board of Direct Taxes, it cannot be said that he has considered a fresh point or fresh material altogether different from the material placed before the Division Bench. The circular which related to the relevant issue could have been considered because even if the same was not considered by the members of the Division Bench as learned Third Member has got power to examine and consider the relevant material brought to his notice during the course of hearing of the matter. In any case, no prejudice was caused to the assessee as the learned counsel for the assessee got full opportunity to advance arguments in relation to and against the applicability of the said circular. The issue relating to the power of the Special Bench was considered in the case of CIT v. Highway Construction Co. (P.) Ltd. [1996] 217 ITR 234 (Gauhati). In that case the assessee was engaged in the business of building construction. The assessment was completed under section 143(3). Thereafter the assessee was served with an assessment order and a demand notice of the same date but no papers indicating the determination of tax as payable by the assessee on its total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciding the issue did not consider the observations of the Member (Judicial) and decided the issue without considering the matter in proper manner and by a cryptic order. The hon'ble Supreme Court of India after considering these aspects observed as under (headnote of [1995] Supp 2 SCC 336) : It would be evident from the opinion of the Third Member that he did not deal with the several aspects dealt with in the opinions of the two differing members. He did not also indicate whether he agrees or disagrees with the findings recorded by the Member (Judicial), viz., that after the processes undertaken by the respondent, the chemical bears a different chemical name and has an altogether different use. The Third Member did not also deal with the holding of the Member (Judicial) that after the processes undertaken by the respondent, the chemical became a different commercial commodity. The Third Member has not dealt with the case in a full and proper manner and has disposed of the issue in a cryptic manner. It has, therefore, become necessary to remit the matter for the fresh opinion of the Third Member of the Tribunal. If the Third Member, who had heard the matter is not available the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while dealing with the provisions of section 154 of the Income-tax Act, 1961, has observed as under (headnote) : A mistake apparent on the record must be an obvious and patent 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. The hon'ble Calcutta High Court also explained the term mistake apparent from the record in the case of CIT v. Calcutta Steel Co. Ltd. [1988] 174 ITR 521. In that case the order of the Income-tax Officer was sought to be rectified. The hon'ble court has observed that a decision on a debatable point of law cannot be a mistake apparent from the record. The observations of the hon'ble court on this point are as under (headnote) : The jurisdiction of the Income-tax Officer to make an order of rectification depends upon the existence of a mistake apparent on the face of the record. Such a mistake must be an obvious and patent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that there was no mistake in the order of the Commissioner. It was observed by the hon'ble court that it is settled law that any question which comes within the scope of section 154 of the Act it should be apparent from the record. The hon'ble court has also observed that it is settled law that mistake should be apparent from record and should not be a debatable point of law or failure to apply the law to a set of facts. In support of this proposition, reliance was also placed on the ratio of the decision of the hon'ble Supreme Court in the case of T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50. The issue also came before the hon'ble Delhi High Court in the case of Hotz Hotels Pvt. Ltd. v. CIT [2001] 248 ITR 647. In that case the assessee had challenged the order passed by the Income-tax Officer under section 154. In that case the Assessing Officer had held that deduction claimed under section 80M had been wrongly computed while making the original assessment. The matter ultimately came before the Tribunal. The Tribunal referred to various provisions and computed the deductions under sections 80L and 80M and restored the orders of the Assessing Officer rejecting the plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. Mistake means to take or understand wrongly or inaccurately ; to make an error in interpreting ; it is an error ; a fault, a misunderstanding, a misconception. Apparent means visible ; capable of being seen ; easily seen ; obvious ; plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in section 254(2) makes it clear that only amendment to the order passed under section 254(1) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. In our view amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order : What the assessee intends to do in the present case is precisely the substitution of the order, which according to us is not permissible under the provisions of section 254(2) and, therefore, the Tribunal was justified in holding that there was no mistake apparent on the face of the record. Where an error is far from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called its order dated August 30, 1978. Thereafter, the appeal was heard afresh and contention of the assessee was accepted. The order of the Tribunal for rectifying its earlier order under section 254(2) was challenged. It was submitted that the Tribunal erred in law in recalling its order. The hon'ble High Court justified the recall of the order by observing that a glaring and obvious mistake can be rectified. The hon'ble court made the following observation (page 56) : Applying the aforenoted principles governing an application under section 254(2) of the Act, we are of the opinion that the Tribunal was justified in recalling its order dated August 30, 1978, on the ground that while deciding the appeal, it had admittedly relied on a wrong section, which had no application to the year under appeal. We do not find any illegality in the observation of the Tribunal that it was difficult for them to say to what extent reliance on a wrong section had affected the mind of the Tribunal. Obviously, reliance on a wrong provision of law is tantamount to an error apparent from the record within the meaning of the said section. Accordingly, the question referred at the instance of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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