1983 (8) TMI 107 - AT - Income Tax

Summary

Issues:
1. Deduction under section 80J of the Income-tax Act for a new industrial undertaking.
2. Rectification of assessment orders under section 154 based on retrospective amendment.
3. Interpretation of "mistake apparent from the record" in rectification proceedings.

Analysis:
The judgment pertains to three appeals by a registered firm against the AAC's order concerning deduction under section 80J of the Income-tax Act for the years 1975-76 to 1977-78. The firm was engaged in the manufacture and sale of PVC footwears. The Income Tax Officer (ITO) allowed deductions based on the capital computation that included borrowed capital. However, a retrospective amendment in 1980 excluded borrowed capital for such deductions. The ITO issued show cause notices to rectify the assessments under section 154, reducing the deduction amounts. The AAC upheld the ITO's orders, leading to appeals before the Tribunal.

In the Tribunal, the firm's representative argued against the rectification, citing a decision of the Calcutta High Court and contending that the retrospective amendment did not constitute a mistake apparent from the record. The departmental representative relied on Supreme Court decisions supporting the tax authorities' view. The Tribunal examined these arguments and distinguished the Calcutta High Court decision, emphasizing that the assessment orders were made before the retrospective amendment. The Tribunal held that the case fell under the purview of the Supreme Court decisions, as the rectification was made after the amendment, making it a mistake apparent from the record. Consequently, the appeals by the firm were dismissed.

In conclusion, the Tribunal upheld the rectification orders by the ITO under section 154, emphasizing that the retrospective amendment rendered the inclusion of borrowed capital for deductions a mistake apparent from the record. The judgment highlights the significance of the timing of the amendment concerning rectification proceedings and underscores the applicability of established legal principles in tax matters.