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Issues:
1. Interpretation of the term "manufacture" for tax purposes. 2. Determination of whether a mistake was apparent from the record for rectification under section 154 of the Income-tax Act, 1961. Analysis: The judgment by the High Court of Calcutta involved a reference from the Commissioner of Income-tax regarding the justification of rectification under section 154 of the Income-tax Act, 1961. The case revolved around an assessee engaged in the business of manufacturing concrete piles and claiming relief under the Finance Act, 1964. The Appellate Assistant Commissioner rejected the claim, stating that the assessee was primarily a contractor, not a manufacturer. The Income-tax Appellate Tribunal was then approached, where the assessee argued that the activity constituted manufacturing of goods. The Tribunal, relying on the definition of "manufacture" by the Madras High Court, found in favor of the assessee, stating that a mistake was apparent from the records and directed the Income-tax Officer to recompute the tax according to the Finance Act, 1964. Subsequently, the revenue contended that the Tribunal's decision was erroneous, as no obvious mistake was present in the record. The revenue cited the Supreme Court's stance on what constitutes a "mistake apparent on the record," emphasizing the need for an obvious and patent mistake, not a debatable legal point. The assessee's counsel, on the other hand, argued that the Tribunal's finding on the manufacturing process was a factual determination, not challenged, thus justifying the rectification. Various precedents were cited to support both positions. The High Court, after detailed analysis, concluded that the Tribunal's order could not be sustained. It criticized the Tribunal for delving into detailed investigations to interpret terms like "manufacture," "piling," and "goods," leading to a flawed conclusion. The Court highlighted that the Tribunal incorrectly assumed the assessee was mainly engaged in manufacturing, whereas the records indicated a broader business scope involving construction activities. Due to the ambiguity surrounding the nature of the assessee's operations, with differing views possible, the Court held that no apparent mistake existed for rectification under section 154 of the Income-tax Act, 1961. Consequently, the Court ruled against the assessee, in favor of the revenue, with no order as to costs. In a concurring opinion, Justice C. K. Banerji agreed with the decision, emphasizing the lack of apparent mistake justifying rectification.
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