TMI Blog2020 (8) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant has not pointed out any mistake apparent from the record. A mistake apparent on the record must be an obvious 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. See T.S. Balaram, ITO v. Volkart Bros.[ 1971 (8) TMI 3 - SUPREME COURT ]. In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. The Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [ 1970 (3) TMI 163 - SUPREME COURT ] that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act as held in CIT v. Globe Transport Corpn. [ 1991 (1) TMI 23 - RAJASTHAN HIGH COURT ] - MA rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariations as discussed infra . Elaborating further, it is stated that the Tribunal, in para 7.7 (page 21) of the ITAT order, has further observed that an examination of working of total estimated loss on the project S.S. House as worked out by the assessee clearly indicates that it suffers from basic deficiencies viz. (i) total cost incurred till 31.03.2014 ₹ 91,07,85,390/- or ₹ 97,88,86,048/- is not a reliable one, as the assessee is sticking to two figures without supporting computation and (ii) total estimated loss of ₹ 3,95,51,736/- or ₹ 10,84,31,736/- is not a reliable one, as the assessee is sticking to two figures, without supporting computation. The Ld. counsel submits that the above finding has been arrived at without considering the explanation of the assessee that the difference of ₹ 6.81 crores is nothing but profit offered by the assessee in earlier years and not considering the submission made during the course of hearing constitutes mistake apparent from record . It is further submitted that the Tribunal has recorded a finding in respect of reasons for cost escalation due to delay and disputes, in para 7.4.1 (page 18) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a result of the expenses ; expense recognition, similar to revenue recognition, has a balance sheet effect and in this view, expense recognition is simultaneous with a decrease in an asset or an increase in a liability. Thus it is stated by him that in the present case, the reversal of profits declared in the earlier years on account of estimated loss of ₹ 6,81,13,166/- in WIP for the impugned assessment years by the assessee has dislocated the mercantile system of accounting, the matching principle. In view of the above, the Ld. DR submits that there is no mistake apparent from record in the impugned order passed by the Tribunal. He submits that the Tribunal has no power to review its order in the garb of section 254(2) of the Act. III 4. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In the instant case, it was the contentions of the Ld. counsel during the hearing on 01.08.2019 that the assessee-firm was undertaking the construction of its commercial project known as S.S. House , which was complete to the extent of approx 90%. The assessee has regularly and consistently follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that the revision of other accounts are also covered in the interpretation of the said Guidance Note. Thus it was explained that the AO has failed to read that the said Guidance Note which mentions that an enterprise may choose to apply this Guidance Note from an earlier date provided it applies this Guidance Note to all transactions which commenced or were entered into on or after such earlier date . Thus the Ld. counsel submitted that as the Guidance Note issued by the ICAI is applicable to the instant case, the assessee has rightly followed the same and therefore, the order passed by the Ld. CIT(A) be affirmed. 4.1 In the reasons for the decision, we have mentioned in the impugned order that in CIT v. A. Gajapathy Naidu , (1964) 53 ITR 114 (SC), it is held that income is taxable when it accrues or is earned, if the assessee s accounts are maintained on the mercantile basis. A profit can be said to have accrued or a liability or loss can be said to have been incurred only when the profit is either actually due or the liability becomes enforeceable. Further, it is held in CIT v. Associated Commercial Corporation , (1963) 48 ITR 1 (Bom) that a mere claim to a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year ended 31.03.2014 shows that the WIP was shown at ₹ 97,88,86,048/- and from the same the above amount of ₹ 6,81,13,165/- was reduced on account of reversal of profits declared in the earlier years on account of estimated loss expected . In the impugned order, we have extracted the relevant paragraphs of the Guidance Note, which are as under : 5.7 When it is probable that total project costs will exceed total eligible project revenues, the expected loss should be recognized as an expense immediately. The amount of such a loss is determined irrespective of: (a) commencement of project work; or (b) the stage of completion of project activity. 5.8 The percentage of completion method is applied on a cumulative basis in each reporting period to the current estimates of project revenues and project costs. Therefore, the effect of a change in the estimate of project costs, or the effect of a change in the estimate of the outcome of a project, is accounted for as a change in accounting estimate. The changed estimates are used in determination of the amount of revenue and expenses recognized in the statement of profit and loss in the period in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout supporting computation, and (ii) total estimated loss of ₹ 3,95,51,736/- or ₹ 108,431,736/- is not a reliable one, as the assessee is sticking to two figures, without supporting computation, (iii) there is no prudent estimate of additional cost for completion of the project. The matching principle requires recording expenses in the same accounting period in which the revenues were earned as a result of the expenses. As this is not present in the instant case, we came to a finding that the reversal of profits in the earlier years on account of estimated loss expected of ₹ 6,81,13,166/- in WIP for the impugned assessment year by the assessee dislocates the mercantile system of accounting, the matching principles and AS-7-Revised. In view of the above, we set aside the order of the Ld. CIT(A) and restored the order passed by the AO. 4.2 In the instant case, as mentioned above, the explanations given by the assessee have been duly considered. In the impugned order all the submissions and explanations by the assessee have been summarized and then a finding has been arrived at. The issue has been decided after considering the facts in entirety available on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case, we have duly considered, in the impugned order, the decisions relied on by the Ld. counsel in CIT v. Virtual Soft Systems Ltd. (2018) 404 ITR 409 (SC), ACIT v. M/s ITD Cementation India Ltd. (ITA No. 3669/Mum/2011 for AY 2004-05 by ITAT, Mumbai), Dredging international N.V. v. ADIT (2011) 48 sot 430 (Mumbai), Aarts Module v. ITO (ITA No. 9302/BOM/92 for A.Y. 1984-85). Therefore, the instant case is distinguishable from the above decision relied on by the Ld. counsel. 4.4 For guidance, we may refer here to the decision in CIT v. Ramesh Electric Trading Co. (1993) 203 ITR 497 (Bom), wherein their Lordships of the Hon ble Bombay High Court have held: Under s. 254(2) of the IT Act, 1961, the Tribunal may, with a view to rectifying any mistake apparent from the record , amend any order passed by it under subs (1) within the time prescribed therein. It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the IT Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. In the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. vs. Mallikarjun Bhavanappa Tirumale (1960) 1 SCR 890 and Syed Yakoob vs. K.S. Radhakrishnan Ors. (1964) 5 SCR 64A held that : Patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of the record means an error which strikes on mere looking and does not need long drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record. If the view accepted by the Court in the original judgment is one of the possible views, the case cannot be said to be covered by an error apparent on the face of the record. 4.6 In fact, not a single error in the impugned order has been pointed out by the applicant. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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