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Issues:
Assessment for the assessment year 1966-67 under the Income-tax Act, 1961; Correct invocation of Section 154 of the Income-tax Act, 1961. Analysis: The judgment pertains to an appeal related to the assessment for the assessment year 1966-67 under the Income-tax Act, 1961. The primary issue at hand is whether Section 154 of the Income-tax Act, 1961, was correctly invoked in the case. The section allows for the rectification of mistakes apparent from the record. It has been established through various judicial decisions that only mistakes that are obvious, patent, and self-evident can be rectified under this section. Mistakes that require investigation or interpretation are not covered. The crux of the matter lies in determining whether the mistake in the tax calculation, specifically regarding dividend income, falls within the purview of Section 154. The calculation of tax on dividend income was done at 25%, but the correct computation should have considered the provisions of Section 85A (now Section 80M), which entitle the assessee to a deduction based on the average rate of income tax applicable. The mistake arose from a misinterpretation of the section by the Income-tax Officer, leading to an incorrect tax liability for the petitioner-company. The judgment delves into the application of Section 85A, which allows for a deduction from the income tax chargeable to the total income for any assessment year. The petitioner-company was entitled to a deduction based on the average rate of income tax, which exceeded 25%. The mistake in the tax calculation stemmed from a misunderstanding of this provision, resulting in an erroneous tax liability for the company. The court emphasized that the mistake was due to a misreading of the section and not a matter of differing interpretations. Despite the Income-tax Officer's initial calculation at 25%, the correct application of the law warranted a different approach, entitling the petitioner to a deduction based on the average income tax rate applicable to the total income. The judgment highlighted the importance of interpreting the legislative intent based on the language used in the statute. While the original intention might have been to limit the tax rate on dividend income to 25%, the actual wording of Section 85A indicated otherwise. The section provided for a deduction from the average income tax rate, not a fixed tax rate on dividend income. Therefore, the mistake in the tax calculation was deemed rectifiable under Section 154 of the Income-tax Act, 1961. The court set aside the previous judgment and dismissed the application under Article 226 of the Constitution, ruling in favor of rectifying the tax calculation error. The appeal was allowed, with no order as to costs. In conclusion, the judgment elucidates the correct application of tax laws, emphasizing the need for accurate interpretation and computation in tax assessments. It underscores the significance of adhering to statutory provisions and rectifying mistakes that are apparent from the record to ensure fair and just taxation practices.
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