INCOME TAX ACT, 1961

Section 254(2)

Appeal (Tribunal) - Rectification under section 254(2) - Review or recalling of entire order -

AO noticed that the assessee was a wholesale dealer and acquired goods from various persons and was immediately selling the goods to retail sellers like M/s. WS RS (P) Ltd. and others, who subsequently would sell those goods as sellers on internet platform under the name 'Flipkart.Com'. The AO further noticed that the Assessee had been purchasing goods at say Rs. 100 and selling them to the retailers at Rs. 80. Accordingly a sum of Rs. 18,68,31,54,065 was treated by AO as expenditure incurred by the assessee for creating intangibles and it was furter held that the expenditure so incurred was capital expenditure and had to be disallowed and added to the total income. CIT(A) not only confirmed the action of the AO but in exercise of his powers of enhancement held that the assessee was not entitled to depreciation on the capitalized value of intangible. The Tribunal however, allowed assessee appeal. The revenue inter alia contended in M.A. filed under section 254(2) that because the transaction between the assessee and M/s. WS Services Retail was not in the nature of uncontrolled trnasaction, the profits forgone by the assessee was only with an intention of acquiring intangible asset in the form of goodwil/brand value. Held: Departmental Representative was unable to explain the relevance of the documents now sought to be filed before Tribunal for deciding the issue that was for consideration before the AO. These documents were neither the basis of assessment or the basis of conclusions by the CIT(A) for its conclusions on the addition that was in challenge before the Tribunal. There exists no relevancy of these documents now sought to be filed with regard to the issue that was decided by the Tribunal. Revenue cannot seek to raise a totally new basis of assessment in an MA and on a possibility of existence of hidden transaction after lifting corporate veil. It cannot, therefore, be said that there was mistake apparent from the record which calls for rectification under section 254(2). Tribunal does not have power to review its own orders. Power of review is not an inherent power but must be conferred by law either specifically or by necessary implication.

Relied:ITO v. Volkart Brothers (1971) 82 ITR 50 (SC) : 1971 TaxPub(DT) 355 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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