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2015 (9) TMI 1288 - ITAT LUCKNOW

2015 (9) TMI 1288 - ITAT LUCKNOW - TMI - Rectification of mistake - claim for bad and doubtful debts under section 36(1)(vii) - Held that:- The issue before the Tribunal was whether the provisions for bad and doubtful debts can be allowed under section 36(1)(vii) on the basis of approval of the Board of Directors of the assessee-company. The Tribunal has examined this issue in para 9 of its order and has given a categorical finding that the assessee has claimed deduction for bad and doubtful deb .....

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he provisions of clause (vii)(a) of section 36(1) of the Act, which deals with the issue of claim of provision for bad and doubtful debts made by the Scheduled Bank, non-Scheduled Bank or Corporation Bank, etc. Therefore, it cannot be said that the Tribunal has not dealt with the issue in the light of assessee’s contentions. Since the Tribunal has taken a particular view in the light of assessee’s contentions, the findings of the Tribunal cannot be reviewed under the garb of rectification.
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A. K. GARODIA, ACCOUNTANT MEMBER For The Applicant : Shri. Arvind Shukla, Advocate For The Respondent : Smt. Pinki Mahawar, D.R. ORDER PER SUNIL KUMAR YADAV: This Miscellaneous Application is preferred on behalf of the assessee against the order of the Tribunal dated 14.11.2014 seeking rectification in the order of the Tribunal on the ground that the Tribunal has not appreciated the claim raised by the assessee for bad and doubtful debts under section 36(1)(vii) of the Income-tax Act, 1961 (here .....

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tricity Board to make provisions @ 15% of the doubtful debts due from the consumer and the said dues to be credited in the account code No.79.460 under the head bad and doubtful debts provided for dues from consumer and debited in the account code No.79.410 bad debts written off dues from consumer. Copies of the group code No.79.460 and 79.410 were also filed before the Tribunal. The Tribunal has not considered the provisions of section 36(1)(vii) of the Act and mentioned in its order that the p .....

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of the Hon'ble Apex Court. It was further contended that there is an error apparent in the order of the Tribunal, which calls for rectification. 3. The ld. D.R. has strongly opposed the Miscellaneous Application with the submission that the Tribunal has carefully examined the issue in the light of assessee s contentions. The Tribunal has consciously dealt with the issue in the light of the provisions of section 36(1)(vii) of the Act. The Tribunal has given a categorical finding that the prov .....

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e basis of approval of the Board of Directors of the assessee-company. The Tribunal has examined this issue in para 9 of its order and has given a categorical finding that the assessee has claimed deduction for bad and doubtful debts under section 36(1)(vii) of the Act; whereas this section deals with only actual claim of deduction. Since the Tribunal has taken into account all the arguments of the assessee while adjudicating the issue, we find no error apparent in the order of the Tribunal. The .....

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lt with the issue in the light of assessee s contentions. Since the Tribunal has taken a particular view in the light of assessee s contentions, the findings of the Tribunal cannot be reviewed under the garb of rectification. 5. The scope of provisions of section 254(2) is very limited and only those errors which are apparent or arithmetical can only be rectified. The scope of provisions of section 254(2) of the Act has been repeatedly examined by the Hon'ble Apex Court and various High Cour .....

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ir Lordships of the Punjab and Haryana High Court have held in specific terms that the Appellate Tribunal is creation of statutes and it can exercise only those powers which have been conferred upon it. The only power conferred on the Tribunal u/s 254(2) of the I.T. Act, 1961 is to rectify any mistake apparent from record. The jurisdiction to review or modify orders passed by the authorities under the Act cannot be interfered with on the basis of supposed inherent rights. U/s 254(1) of the Act, .....

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aborate reasons or inquiry is necessary. Where two opinions are possible, then it cannot be said to be an error apparent on the face of the record . 7. In the case of CIT Vs. Suman Tea and Plywood Industries (P) Ltd., 226 ITR 34 their Lordships of Calcutta High Court have expressed similar observations after holding that under section 254(2) of the Incometax Act, an order, which has been passed by the Tribunal reaches finality the moment the same is passed; cannot be touched thereafter. By secti .....

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Court have also held that section 254(2) of the Income-tax Act, 1961 empowers the Tribunal to amend its order passed u/s 254(1) to rectify any mistake apparent from the record either suo moto or on an application. If in its order there is no mistake which is patent and obvious on the basis of the record, the exercise of the jurisdiction by the Tribunal u/s 254(2) will be illegal and improper. An oversight of the fact cannot constitute an apparent mistake rectifiable under section 254(2). This m .....

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ss such orders in any appeal filed before it as it thinks fit. Sub-section (2) of section 254 postulates that the Tribunal may amend any order passed by it under sub-sec. (1) of section 254 with a view to rectifying any mistake apparent from the record. The power of the Tribunal conferred by sub-section (2) of section 254 for rectifying any mistake apparent from the record cannot be exercised by the Tribunal to recall any order passed by it under section 254(2). Further, reviewing and recalling .....

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s very limited and it is only the apparent error which can be rectified. 9. Their Lordships of the Apex court in the case of T.S. Balaram ITO Vs. Volkart Brothers; 82 ITR 50 (SC) have held that 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 record. Their Lordships hav .....

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d by the ITO without being permitted to cross examine by the assessee. This is not a matter in which the apparent error is involved but it is a matter more of merit and cannot be rectified within the scope of rectification. The powers of the Tribunal while making a rectification were again examined by the Apex Court in the case of CIT Vs. Hero Cycles Pvt. Ltd.; 228 ITR 463 in which their Lordships have held that rectification can only be made when a glaring mistake of fact or law committed by th .....

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mistake from record. However, section 254(2) does not authorize the Tribunal to review its order or to sit in appeal over its earlier order. If it is done, it would amount to an amendment of an earlier order with a view to rectify a mistake apparent from record, but it would be an order passed on reappraisal of the material facts and circumstances and on a fresh application of the legal position which is not permissible within the scope of section 254(2) of the Act. 10. In the case of Ms. Deeksh .....

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ions. The language of section 254(2) of the Income-tax Act, 1961 is clear. The foundation for the exercising the jurisdiction is with a view to rectify any mistake apparent on the record and the object is achieved by amending any order passed by it . 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 i .....

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