2014 (1) TMI 1278 - AT - Income Tax

Mistake apparent on the face of record Typographical error - Deletion of expenditure Held that - It was not the case of the CIT(A) without adhering to the procedure to be followed for enhancement of the income but was to direct the AO to consider the expenditure to be incurred for earning income from other sources after having adjudicated the earning of income from business and the capital gains whether isolating earning of income from other sources was to be considered at a reduced amount when the AO computed the income to be taxed was from the net profit as per profit and loss account which also included the credits on account of income from other sources and capital gains, therefore culminating only to the disallowance of Rs.1,00,000/- expenditure when the Tribunal after having deliberated on the issue had categorically directed the AO to delete the addition of Rs.1,00,000 - There was no typographical error as pointed out by the counsel in the petition that the AO was directed to delete the disallowance of Rs.1,00,000 expenditure which he had already considered allowable in view of the CIT(A) having accepted the claim of expenditure from other incomes was not to be re-considered - the matter the only mistake apparent from records could be that the AO has been directed to delete the addition is modified Decided in favour of Assessee.

Issues:
1. Disallowance of expenditure by the AO.
2. Typographical error in the order regarding the disallowed amount.
3. Appeal against the order of the ld. CIT(A) enhancing the disallowance of expenditure.
4. Consideration of expenditure for earning income from other sources.
5. Tribunal's direction to delete the addition of disallowed expenditure.

Analysis:

1. The assessee filed a Miscellaneous Application challenging the Tribunal's direction to the AO to delete the addition of Rs.1,00,000 in the computation of income. The issue arose as the expenditure claimed by the assessee was not specifically disallowed by the AO. The ld. CIT(A) had noted that the expenditure was part of the total computation of the assessee's income from business. The Tribunal considered various heads of income and directed a specific amount of expenditure to be allowed for determining the income from other sources.

2. The appellant contended that a typographical error had occurred in the order, where the figure of disallowed income was incorrectly stated as Rs.1,00,000 instead of Rs.18,75,068. The ld. CIT(A) had disallowed Rs.1,00,000 as expenditure, as evident from the order. The appellant sought an amendment to reflect the correct disallowed amount and the intention behind the appeal against the order of the ld. CIT(A).

3. The ld. DR argued against revisiting the matter, stating that the Tribunal had considered the enhancement by the ld. CIT(A) in light of the expenses claimed and the computation of capital gains. The ld. CIT(A) had allowed only a specific amount as expenditure for determining the income from other sources. The ground raised by the appellant could not be revisited based on a typographical error, as the core contention was the allowance of net income from other sources after reducing a specific expenditure amount.

4. The Tribunal, after hearing the contentions, analyzed the facts and circumstances of the case. It was noted that the ld. CIT(A) did not intend to reduce the income from other sources by disallowing the claimed expenditure, but rather to ensure that income from other sources cannot be earned without incurring necessary expenditure. The Tribunal clarified that the disallowance of Rs.1,00,000 was specific and directed the AO to delete this addition based on the considerations made regarding the computation of income.

5. In conclusion, the Tribunal allowed the Miscellaneous Application of the assessee, acknowledging the specific direction to delete the addition of Rs.1,00,000 as an enhancement by the ld. CIT(A). The order was pronounced in court, resolving the issues raised regarding the disallowance of expenditure and the correct computation of income from other sources.

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