REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7110 OF 2021 Commissioner of Income Tax (IT-4), Mumbai Appellant Versus M/s Reliance Telecom Limited Respondent WITH CIVIL APPEAL NO. 7111 OF 2021 Commissioner of Income Tax (IT-4), Mumbai Appellant Versus M/s Reliance Communications Limited Respondent JUDGMENT M.R. SHAH, J. 1. Feeling aggrieved and dissatisfied with impugned common judgment and order dated 08.08.2017 passed by High Court of Judicature at Bombay in Writ Petition No. 1432/2017 and Writ Petition Signature Not Verified Digitally signed by DEEPAK SINGH No. 1406/2017, by which High Court has dismissed aforesaid writ Date: 2021.12.03 15:43:56 IST Reason: petitions preferred by Commissioner of Income Tax (IT-4), Mumbai 1 (hereinafter referred to as Revenue ) and has confirmed order passed by Income Tax Appellate Tribunal, Bench at Mumbai (hereinafter referred to as ITAT ) dated 18.11.2016 passed in Miscellaneous Application Nos. 261/M/2014 and 419/M/2013, by which ITAT in exercise of powers under Section 254(2) of Income Tax Act (hereinafter referred to as Act ) has recalled its earlier order dated 06.09.2013 passed in ITA No. 5096/Mum/2008 and ITA No. 837/Mum/2007, Revenue has preferred present appeals. 2. facts leading to present appeals in nutshell are as under. For sake of convenience, facts in Civil Appeal No. 7110 of 2021 arising from Special Leave Petition (Civil) No.13963/2018 in case of M/s Reliance Telecom Limited (hereinafter referred to as Assessee ) are narrated. facts in another appeal are similar except that assessee is different, but with respect to same group of companies. 2.1 That Assessee entered into Supply Contract dated 15.06.2004 with Ericsson A.B. Assessee filed application under Section 195(2) of Act before Assessing Officer, to make payment to non- resident company for purchase of software without TDS. It was contended by Assessee that it was for purchase of software and Ericsson A.B. had no permanent establishment in India and in terms of DTAA between India and Sweden & USA, amount paid is not taxable in India. 2 2.2 Assessing Officer passed order dated 12.03.2007 rejecting Assessee s application holding that consideration for software licensing constituted under Section 9(1)(vi) of Act and under Article 12(3) of DTAA is liable to be taxed in India and accordingly directed assessee to deduct tax at rate of 10% as royalty. 2.3 Assessee after deducting tax appealed before Commissioner of Income Tax (Appeals). CIT vide order dated 27.05.2008 held in favour of Assessee. Revenue appealed before ITAT and by detailed judgment and order dated 06.09.2013, ITAT allowed Revenue s appeal by relying upon judgments/decisions of Karnataka High Court and held that payments made for purchase of software are in nature of royalty. Against detailed judgment and order dated 06.09.2013 passed by ITAT, Assessee filed miscellaneous application for rectification under Section 254(2) of Act. Simultaneously, Assessee also filed appeal before High Court against ITAT order dated 06.09.2013. 2.4 That vide common order dated 18.11.2016, ITAT allowed Assessee s miscellaneous application filed under Section 254(2) of Act and recalled its original order dated 06.09.2013. Immediately, on passing order dated 18.11.2016 by ITAT recalling its earlier order 3 dated 06.09.2013, Assessee withdrew appeal preferred before High court, which was against original order dated 06.09.2013. 2.5 Feeling aggrieved and dissatisfied with order passed by ITAT allowing miscellaneous application under Section 254(2) of Act and recalling its earlier order dated 06.09.2013, Revenue preferred writ petition before High Court. By impugned common judgment and order, High Court has dismissed said writ petition/s. Hence, Revenue is before this Court by way of present appeal/s. 3. We have heard Shri Balbir Singh, learned Additional Solicitor General of India appearing on behalf of Revenue and Shri Anuj Berry, learned Advocate appearing on behalf of Resolution Professional of respondent-company. At this stage, it is required to be noted that respondent-company/companies respective assessees currently are undergoing corporate insolvency resolution process and Resolution Professional is appointed. We have heard learned counsel for Resolution Professional of respondent- assessee. 3.1 We have considered order dated 18.11.2016 passed by ITAT allowing miscellaneous application in exercise of powers under Section 254(2) of Act and recalling its earlier order dated 06.09.2013 as well as original order passed by ITAT dated 06.09.2013. 4 3.2 Having gone through both orders passed by ITAT, we are of opinion that order passed by ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is beyond scope and ambit of powers under Section 254(2) of Act. While allowing application under Section 254(2) of Act and recalling its earlier order dated 06.09.2013, it appears that ITAT has re-heard entire appeal on merits as if ITAT was deciding appeal against order passed by C.I.T. In exercise of powers under Section 254(2) of Act, Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of Act with view to rectifying any mistake apparent from record only. Therefore, powers under Section 254(2) of Act are akin to Order XLVII Rule 1 CPC. While considering application under Section 254(2) of Act, Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. powers under Section 254(2) of Act are only to rectify/correct any mistake apparent from record. 4. In present case, detailed order was passed by ITAT when it passed order on 06.09.2013, by which ITAT held in favour of Revenue. Therefore, said order could not have been recalled by Appellate Tribunal in exercise of powers under Section 254(2) of Act. If Assessee was of opinion that order passed by ITAT was erroneous, either on facts or in law, in that case, only remedy 5 available to Assessee was to prefer appeal before High Court, which as such was already filed by Assessee before High Court, which Assessee withdrew after order passed by ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013. Therefore, as such, order passed by ITAT recalling its earlier order dated 06.09.2013 which has been passed in exercise of powers under Section 254(2) of Act is beyond scope and ambit of powers of Appellate Tribunal conferred under Section 254 (2) of Act. Therefore, order passed by ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is unsustainable, which ought to have been set aside by High Court. 5. From impugned judgment and order passed by High Court, it appears that High Court has dismissed writ petitions by observing that (i) Revenue itself had in detail gone into merits of case before ITAT and parties filed detailed submissions based on which ITAT passed its order recalling its earlier order; (ii) Revenue had not contended that ITAT had become functus officio after delivering its original order and that if it had to relook/revisit order, it must be for limited purpose as permitted by Section 254(2) of Act; and (iii) that merits might have been decided erroneously but ITAT had jurisdiction and within its powers it may pass erroneous order and that such objections had not been raised before ITAT. 6 6. None of aforesaid grounds are tenable in law. Merely because Revenue might have in detail gone into merits of case before ITAT and merely because parties might have filed detailed submissions, it does not confer jurisdiction upon ITAT to pass order de hors Section 254(2) of Act. As observed hereinabove, powers under Section 254(2) of Act are only to correct and/or rectify mistake apparent from record and not beyond that. Even observations that merits might have been decided erroneously and ITAT had jurisdiction and within its powers it may pass order recalling its earlier order which is erroneous order, cannot be accepted. As observed hereinabove, if order passed by ITAT was erroneous on merits, in that case, remedy available to Assessee was to prefer appeal before High Court, which in fact was filed by Assessee before High Court, but later on Assessee withdrew same in instant case. 7. In view of above and for reasons stated above, impugned common judgment and order passed by High Court as well as common order passed by ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 deserve to be quashed and set aside and are accordingly quashed and set aside. original orders passed by ITAT dated 06.09.2013 passed in respective appeals preferred by Revenue are hereby restored. 7 8. Considering fact that Assessee had earlier preferred appeal/s before High Court challenging original order passed by ITAT dated 06.09.2013, which Assessee withdrew in view of subsequent order passed by ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013, we observe that if Assessee/s prefers/prefer appeal/s before High Court against original order dated 06.09.2013 within period of six weeks from today, same may be decided and disposed of in accordance with law and on its/their own merits and without raising any objection with respect to limitation. 9. Both appeals are accordingly allowed in aforesaid terms. However, there shall be no order as to costs. .J. [M.R. SHAH] NEW DELHI; .J. DECEMBER 03, 2021. [B.V. NAGARATHNA] 8 Commissioner of Income-tax (IT-4), Mumbai v. Reliance Telecom Limited