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Issues Involved:
1. Rectification of appellate order u/s 254(2) of the Income-tax Act, 1961. 2. Mistake apparent from the record u/s 154 of the Income-tax Act, 1961. Summary: Issue 1: Rectification of Appellate Order u/s 254(2) of the Income-tax Act, 1961 The Tribunal had initially dismissed the assessee's appeal, upholding the Income-tax Officer's (ITO) rectification order dated June 21, 1973, which deducted secured loans from the capital employed for relief computation u/s 84 of the Act. The assessee filed a miscellaneous application u/s 254(2) for rectification, arguing that the Tribunal failed to consider a debatable issue regarding the deduction of secured loans. The Tribunal accepted this application, citing the Calcutta High Court's decision in Century Enka Ltd. v. ITO [1977] 107 ITR 909, and concluded that the issue was debatable, thus not suitable for rectification u/s 154. Consequently, the Tribunal vacated the ITO's order dated June 21, 1973. The High Court held that the Tribunal erred in rectifying its appellate order u/s 254(2). It emphasized that a mistake apparent from the record must be obvious and patent, not requiring elaborate reasoning or involving debatable issues. The Tribunal's subsequent order amounted to a review, which it had no jurisdiction to do. The High Court concluded that the Tribunal's initial interpretation was one of the possible views, and the subsequent change was not a rectification but a review. Issue 2: Mistake Apparent from the Record u/s 154 of the Income-tax Act, 1961 Given the High Court's decision on the first issue, the second issue regarding the mistake apparent from the record u/s 154 became redundant and was returned unanswered. Conclusion: The High Court answered question No. 1 in the negative, holding that the Tribunal was not right in law in rectifying its appellate order u/s 254(2) of the Act. Consequently, question No. 2 was deemed redundant and returned unanswered. The judgment was in favor of the Revenue and against the assessee.
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