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By Vijay Kumar

Income Tax

Rectification of mistake apparent - Sec 254(2) of Income Tax Act - Supreme Court says principle of rectifying errors is different from tribunal or court's inherent powers to review decision; None should suffer due to error committed by ITAT

IT is common knowledge that our tax tribunals have the right to rectify mistake from the record. But what causes trouble is the thin line between the inherent power to review its decision and powers to rectify mistake apparent. While distinguishing these two critical terms, the Apex Court in its latest decision has held in the context of Sec 254(2) of the Income Tax Act that the rationale of enacting such a Section is to ensure that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal.

Long-term capital gains - Definition of 'capital asset' refers to property of any kind 'held' - In contra-distinction of word 'owner' or 'owned', definition uses phrase 'held' - Law does not contemplate compliance of an impossible act : Madras High Court

The High Court held that even if the amount was not paid in full by the assessee in terms of the agreement, it could not be construed that the assessee had no right or interest in the property. The assessee was put in possession as early as 1970 and was remaining in occupation as a matter of right. Thus for all purposes, he was a beneficial owner from the start. In the context of this view taken, the Court held that the capital gain was assessable as long-term capital gain.

Service Tax

Pay out amount received from bank for services rendered chargeable to service tax under head 'BAS' - Matter remanded to Commissioner(A) for deciding matter on merits : Tribunal

The case is - in order to facilitate their customers to avail finance from the banks to purchase vehicles (for which the assessee was the dealer), they had been acting under an agreement with the bank by which they were required to process loan applications of such customers and after scrutinizing the same forward them to the bank. It was the assessees case that while they received 3% to 5% of the financed amount for this service from the bank as commission, they retained only 1% to 2%, and passed on the remaining amount to the customer as discount. According to the Revenue, the assessee had evaded Service Tax under the head BAS on the "pay out" received by them from the bank for their services.

See our columns tomorrow for the judgements