INCOME TAX ACT, 1961

Section 254

Appeal ITAT - Rectification of mistakes - Deduction claimed by assessee under section 10A - Tribunal not having adjudicated the issues on merits

Assessee was engaged in the business of software development services and professional services. AO re-computed the deduction claimed by assessee under section 10A by reducing the recruitment fee from the export turnover. Assessee thereupon filed an appeal before CIT(A) who, by an Order, affirmed the findings recorded by AO. However, CIT(A) accepted the alternative plea of assessee to tax only net income from the business of manpower supply. Tribunal held that income reduced from export turnover has to be reduced from total turnover. Assessee thereupon filed a petition under section 254(2) seeking rectification of the mistake. Held: Tribunal had recorded the submissions of the assessee and from perusal of the submissions recorded by Tribunal in the Order, it was evident that no such alternative submission was made by assessee. However, Tribunal had not adjudicated the issues on merits and had recorded the alternative contention which was not taken by the assessee. Therefore, Tribunal has rightly invoked the powers under section 254(2) as the order passed by the tribunal suffered from the mistake apparent on the face of the record. Thus, substantial question of law framed was answered against the revenue.

Relied:CIT, Asst. CIT v. Tata Elxsi Ltd. [ITA. No. 386, 387 & 388/2015 decided on 15-2-2016] : 2016 TaxPub(DT) 1680 (Karn-HC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2007-08

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