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  • The Supreme Court in Commissioner of Income Tax (IT-4), Mumbai vs Reliance Telecom Limited, observed that the Income Tax Appellate Tribunal is not empowered to invoke its own orders under Section 254(2) of the Income Tax Act.
  • The Court is not to go into the merits of the case when an application is made under Section 254(2).


  • The ITAT, in this case, had held that payment made in exchange for the purchase of the software was to be considered as royalty.
  • However, upon assessee's application under Section 254(2), the ITAT recalled its own order. The Revenue Department challenged the recall of the order before the High Court. However, the challenge was unsuccessful.
  • The Court held that under Section 254(2), the Court empowered to only rectify any mistakes from the record and is not to go into the merits of the case.
  • The Court observed that even where it is established that the merits were erroneously decided, the ITAT cannot recall its own orders.
  • Where the assessee believes that the ITAT has erred in its judgement, an appeal can only be made before the High Court and the ITAT cannot recall its own judgement.


  • Do you think the Court was right in its observation?
  • Do you think the ITAT should be conferred with the power to review its own judgement?
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