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KEY TAKEAWAYS

  • 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).

DETAILS

  • 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.

QUESTIONS

  • 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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