Revisiting earlier order on merits is beyond the scope & ambit of powers available u/s 254(2)

CIT Vs Reliance Telecom Limited (Supreme Court of India)

Facts- The Assessee entered into Supply Contract dated 15.06.2004 with Ericsson A.B. Assessee filed an application under Section 195(2) of the Act before the AO, to make payment to the non­resident company for purchase of software without TDS. It was contended by the Assessee that it was for the purchase of software and Ericsson A.B. had no permanent establishment in India and in terms of the DTAA between India and Sweden & USA, the amount paid is not taxable in India.

AO passed an order dated 12.03.2007 rejecting the Assessee’s application holding that the consideration for software licensing constituted under Section 9(1)(vi) of the Act and under Article 12(3) of the DTAA is liable to be taxed in India and accordingly directed the assessee to deduct tax at the rate of 10% as royalty.

ITAT allowed the revenue’s appeal in the matter vide order dated 06.09.2013. Assessee filed the miscellaneous appeal for rectification u/s 254(2) and also filed appeal before HC. ITAT allowed the miscellaneous appeal and recalled its order dated 06.09.2013 against which revenue preferred writ petition.

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