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Interpretation of section 35 of the Wealth-tax Act, 1957 for rectification of assessment errors regarding the deduction of a liability due by the assessee to the Life Insurance Corporation for the assessment year 1972-73. Analysis: The case involved a question of whether section 35 of the Wealth-tax Act could be invoked to rectify an error in the original assessment where a liability due by the assessee to the Life Insurance Corporation was erroneously allowed as a deduction. The Wealth-tax Officer added the sum of Rs. 45,700 as a liability due by the assessee, which was omitted to be disallowed in the original assessment. The Appellate Assistant Commissioner and the Tribunal were divided on the interpretation of section 2(m)(ii) of the Act, which led to conflicting decisions by different Benches of the Tribunal. The Tribunal held that since there were conflicting views and the matter involved a question of law, section 35 could not be applied to rectify the mistake apparent from the record. The Department argued that the debt owed by the assessee on the life insurance policies could not be deducted from the total wealth as per the provisions of section 2(m)(ii) and section 5(1)(vi) of the Act. They relied on various High Court decisions and contended that the mistake in the original assessment warranted rectification under section 35. The Department emphasized that the interpretation of section 2(m)(ii) did not involve long arguments and rectification was necessary. On the other hand, the assessee's counsel supported the Tribunal's decision, highlighting the conflicting views among the Tribunal Benches on the interpretation of section 2(m)(ii). They argued that since there was a debatable question and conflicting views existed, rectification under section 35 was not feasible. The counsel cited the Full Bench judgment to demonstrate the conflicting interpretations of the Act. The High Court held that the mistake in the original assessment, where the liability was erroneously allowed as a deduction, was rectifiable under section 35. The Court emphasized that the conflicting views among the Tribunal Benches were settled by a High Court decision, making the rectification necessary. The Court relied on precedents to establish that a mistake apparent from the record does not require a long process of reasoning and that rectification was warranted in this case. Consequently, the Court ruled in favor of the Department, answering the question referred in the negative and against the assessee, with no costs awarded.
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