1999 (11) TMI 42 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 154 of the Income-tax Act, 1961 regarding rectification of mistakes in assessment orders.
2. Determining whether the claim for deduction under section 35B(1)(b)(viii) of the Income-tax Act can be entertained after the assessment order has merged with the order of the Appellate Tribunal.

Analysis:

Issue 1: Interpretation of section 154 of the Income-tax Act
The case involved a dispute regarding the interpretation of section 154 of the Income-tax Act, which deals with rectification of mistakes in assessment orders. The court emphasized that for an application under section 154 to be valid, the mistake must be "apparent" from the record. The term "apparent" was defined to mean open to view, visible, evident, and not requiring elaborate arguments for discovery. It was clarified that rectification under section 154 is limited to errors that are self-evident and not errors requiring extensive investigation or legal analysis. The court highlighted that the power to rectify under section 154 is not intended for debatable points of law or fact, but for clear and undisputed mistakes on the face of the record. The judgment underscored the importance of material supporting a claim for relief to justify rectification under section 154.

Issue 2: Entertaining claim for deduction under section 35B(1)(b)(viii)
The court addressed the issue of whether a claim for deduction under section 35B(1)(b)(viii) of the Income-tax Act could be entertained after the assessment order had merged with the order of the Appellate Tribunal. The court noted that the Tribunal had dismissed the claim on the grounds of merger, stating that the order of the Assessing Officer had already merged with the order of the appellate authority. However, the court considered the timing of the application for rectification under section 154, which was made before the Tribunal's order. The court found that since the issue was not before the Tribunal in connected appeals, the assessment order could not be deemed to have merged with the appellate order. Consequently, the court held that the claim for deduction under section 35B(1)(b)(viii) should be entertained based on the specific circumstances of the case.

In conclusion, the court ruled in favor of the Revenue on Question No. 2, stating that the claim for deduction under section 35B(1)(b)(viii) should not be entertained. However, due to the decision on Question No. 2, the court considered the other question to be of academic nature and did not provide an answer. The reference application was disposed of accordingly, based on the analysis and interpretation of the relevant legal provisions.