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1. Rejection of the assessee's claim under sec. 35 in section 154 proceedings. Analysis: The judgment by the Appellate Tribunal ITAT DELHI-A involved the rejection of the assessee's claim under sec. 35 in section 154 proceedings for the assessment year 1979-80. The assessee, a limited company engaged in the purchase and sale of refrigerators, had claimed Rs. 75,209 as expenditure on scientific research under sec. 35. The Income-tax Officer disallowed the claim on the grounds that the business had not been set up and had not commenced. The Appellate Tribunal had directed in a previous order for a different assessment year that the allowability of the expenditure under sec. 35 should be considered in the assessment year 1979-80. The assessee contended that all scientific research expenses incurred during the relevant years were eligible for deduction in the assessment year in question as they were incurred within three years preceding the commencement of business. However, the Income-tax Officer disallowed the expenses citing that the business had not commenced. The Commissioner of Income-tax (Appeals) upheld the Income-tax Officer's decision, noting that the question of deduction under sec. 35 was debatable and not an error apparent from the record. The Appellate Tribunal considered whether there was a mistake apparent from the record that required rectification under sec. 154. It was emphasized that sec. 154 allows correction of only those mistakes that are apparent on the face of the record and not errors of judgment. The Tribunal noted that the assessee had multiple opportunities to raise the issue but failed to do so, and the department had filed an appeal against the order disallowing the claim. The Tribunal found that the assessee's failure to raise the issue through proper channels did not entitle it to seek rectification under sec. 154. The Tribunal also highlighted that the question of deduction under sec. 35 was debatable, requiring interpretation of the term "Scientific Research," and therefore, was not a clear-cut error that could be rectified under sec. 154. In conclusion, the Appellate Tribunal dismissed the appeal, stating that the situation the assessee found itself in was a result of its own actions. The Tribunal held that there was no error apparent from the record that warranted rectification under sec. 154, and the decision to disallow the claim under sec. 35 was upheld. This detailed analysis of the judgment showcases the sequence of events, the legal interpretations involved, and the reasoning behind the decision to reject the assessee's claim under sec. 35 in the section 154 proceedings for the assessment year 1979-80.
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