1985 (7) TMI 49 - HC - Income Tax

Summary

Issues:
Assessment of extra shift allowance for a seasonal sugar mill. Interpretation of mistake apparent from the record under section 154 of the Income-tax Act, 1961. Application of relevant rules in the absence of a Supreme Court decision. Conflict of judicial opinions on extra shift allowance for seasonal factories.

Analysis:
The case involved the assessment of extra shift allowance for a seasonal sugar mill for the assessment year 1963-64. The Income-tax Officer initially allowed the extra shift allowance for the whole year at a certain rate but later reduced it based on the actual number of days the mill operated. The Appellate Assistant Commissioner, following a Tribunal's order in a previous assessment year of the same assessee, reinstated the original extra shift allowance. The Revenue appealed to the Income-tax Appellate Tribunal, citing a previous court decision and arguing that the issue was not free from doubt. The Tribunal dismissed the appeal, leading to the Revenue seeking a reference under section 256(2) of the Act to determine if a mistake was apparent from the record for rectification under section 154.

The Revenue contended that the initial assessment's extra shift allowance was a mistake apparent from the record, as settled law should have been applied. The assessee argued that the issue was debatable, with conflicting views in different Tribunals and courts. Various court decisions were cited by both parties to support their arguments on whether the mistake was apparent from the record.

The High Court considered the arguments and previous court decisions, including a Full Bench decision of the Allahabad High Court and a decision of the Andhra Pradesh High Court, which highlighted the conflict of opinions on extra shift allowance for seasonal factories. The Court emphasized that the Income-tax Officer rectified the mistake based on a subsequent court decision, and at that time, there was no conflict of judicial opinion. Therefore, the Court held that the Tribunal erred in concluding that the issue was not free from doubt in the absence of a Supreme Court decision.

In conclusion, the Court answered the reference question in the negative, favoring the Revenue. The decision was based on the lack of doubt or conflict in the application of the relevant rule at the time of rectification, as there was uniformity in court decisions post the initial rectification. The judgment was agreed upon by both judges, and no costs were awarded.