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Issues:
1. Rectification of mistake apparent from records in the order dated 3-7-1982 regarding the allowance of legal expenses spent on bonus shares as revenue expenditure. Detailed Analysis: The dispute in this case revolved around whether a sum of Rs. 6,000 spent by the assessee as legal expenses in connection with the issue of bonus shares should be treated as revenue or capital expenditure. The Income Tax Officer and Commissioner (Appeals) had considered it as capital expenditure, a decision upheld by the Tribunal in their order dated 3-7-1982. However, subsequent to this, the Bombay High Court, in a judgment dated 12-7-1982, held that such expenses are admissible as revenue expenditure. The assessee filed a miscellaneous application seeking rectification of the Tribunal's order based on the Bombay High Court's decision, arguing that the original decision was erroneous in light of the new judgment. The assessee's representative contended that the subsequent decision of the Bombay High Court made the Tribunal's decision erroneous and necessitated rectification under section 254(2) of the Income-tax Act, 1961. He emphasized that the issue was no longer debatable following the High Court's decision, making rectification appropriate. On the other hand, the department's representative argued against rectification, citing cases where the Tribunal's order was not reviewable under section 254(2) and highlighting the debatable nature of the issue based on differing High Court decisions. The Tribunal, after considering the contentions of both parties, concluded that there was a patent mistake in their original order dated 3-7-1982, which needed rectification under section 254(2) due to the subsequent decision of the Bombay High Court. The Tribunal acknowledged the binding nature of the High Court's decision and rectified their order to align with the High Court's ruling, allowing the sum of Rs. 6,000 as revenue expenditure in connection with the issue of bonus shares. The Tribunal clarified that the rectification was not a review but a correction based on new legal developments, ultimately partially allowing the appeal. In summary, the Tribunal rectified its original order to allow the legal expenses as revenue expenditure following the Bombay High Court's decision, emphasizing the binding nature of the High Court's judgment and the absence of debate on the issue post the High Court's ruling. The rectification was made under section 254(2) to correct the apparent mistake in the original order, ensuring alignment with the legal position established by the High Court.
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