1983 (11) TMI 135 - AT - Income Tax

Summary

Issues:
1. Rectification of income computation under section 154 of the Income-tax Act, 1961.
2. Jurisdiction of the ITO to pass an order under section 154.
3. Time limitation for passing an order under section 154.

Analysis:
1. The case involves an appeal arising from an order passed under section 154 of the Income-tax Act, 1961, regarding the computation of income for the assessment year 1971-72. The ITO initially disallowed a significant portion of foreign tour expenses claimed by the assessee, which led to an appeal before the appellate authority. The AAC allowed a higher amount as revenue expenditure, and the ITO gave effect to this order by allowing a sum of Rs. 4,57,988, which included an amount of Rs. 14,180 already allowed by him. Subsequently, the ITO sought to rectify this double deduction through a revised order under section 154, which was challenged by the assessee.

2. The appellant contended that the mistake in the computation of income was in the order of the AAC, and thus, the ITO had no jurisdiction to rectify the computation under section 154. However, the tribunal rejected this argument, emphasizing that the mistake was in the ITO's order giving effect to the AAC's decision. The tribunal highlighted that the AAC had considered the entire claim and determined the allowable revenue expenditure, making it the ITO's responsibility to ensure no double deduction. Therefore, the tribunal dismissed the jurisdictional challenge raised by the appellant.

3. Another contention raised was regarding the time limitation for passing the rectification order under section 154. The appellant argued that the four-year period should commence from the date of the AAC's order, making the ITO's order beyond the prescribed time. However, the tribunal clarified that the General Clauses Act defined a year as a calendar year, and the commencement of the four-year period should exclude the date of the order sought to be amended. As the impugned order was passed within the calculated time frame, the tribunal held that the order was not time-barred.

In conclusion, the tribunal dismissed the appeal, upholding the ITO's rectification order under section 154 and affirming its jurisdiction to correct the double deduction of expenses. The tribunal also clarified the interpretation of the time limitation provision under section 154(7) based on the General Clauses Act, ensuring the order fell within the prescribed period.