2021 (12) TMI 509 - AT - Income Tax

Rectification of mistake u/s 154 - scope of alternate remedy - deduction u/s. 57(iv) i.e. @ 50% of interest on compensation as received on acquisition of his agricultural land by Land Collector, Rohtak - HELD THAT - As per the clear mandate of law, an intimation or a deemed intimation under sub-section (1) of Section 143 falls within the realm of clause (b) to sub-section (1) of Section 154 of the Act, therefore, a mistake emanating therefrom, as long as the same is apparent from record, is beyond any doubt rectifiable under the said statutory provision. As regards the view taken by the CIT(A) that the remedy for claim of the aforesaid deduction can be traced in Sec. 119(2)(b) of the Act, the same too does not find favour with us. Where a remedy available to an assessee falls within the four corners of a specific statutory provision, then, the same cannot be declined to him, for the reason, that an alternative remedy is available elsewhere. Be that as it may, we are of a strong conviction that as the A.O remains under a statutory obligation to deduce the true income of an assessee, therefore, the entitlement of the assessee before us towards deduction u/s 57(iv), which is inextricably interwoven or in fact intertwined with the corresponding interest income which had duly been disclosed by him in his return of income, could not have been declined by the A.O on the basis of hyper technical reasons. Our aforesaid view is fortified by the Judgment of the Hon ble Supreme Court in the case of Anchor Pressings (P) Ltd. 1986 (7) TMI 1 - SUPREME COURT as observed, that where an assessee who was entitled to claim a deduction had omitted to raise such claim in his return of income or in the course of the assessment proceedings, then, he was entitled to make such claim by moving an application u/s. 154 of the Act. We are unable to persuade ourselves to subscribe to the view taken by the lower authorities that the omission on the part of the assessee to claim deduction u/s. 57(iv) in his return of income was not in the nature of a mistake rectifiable under Sec. 154 of the Act. We, thus, set-aside the order of the CIT(A) and direct the A.O to allow the assessee s claim for deduction u/s. 57(iv) i.e. @ 50% of the interest on compensation that was disclosed by him in his return of income for the year under consideration. - Decided in favour of assessee.

Summary

Issues:
1. Claim for deduction under section 154 of the Income Tax Act.
2. Interpretation of section 57(iv) of the Act regarding statutory deduction.
3. Rectifiability of mistake apparent from record under section 154 of the Act.

Issue 1: Claim for deduction under section 154 of the Income Tax Act:
The appellant, an assessee, filed an appeal against the order passed by the AO and CIT(A) regarding the rejection of the application filed under section 154 of the Income Tax Act for the assessment year 2012-13. The appellant contended that the rejection of the application was erroneous both on legal and factual grounds. The primary dispute revolved around the claim for deduction under section 57(iv) of the Act concerning interest income received on compensation for land acquisition. The appellant asserted that the failure to claim the deduction was a mistake apparent from the record and rectifiable under section 154 of the Act.

Issue 2: Interpretation of section 57(iv) of the Act regarding statutory deduction:
The controversy centered on whether the omission by the assessee to claim a deduction under section 57(iv) of the Act, which allows a statutory deduction of fifty percent of interest on compensation received for land acquisition, constituted a rectifiable mistake under section 154 of the Act. The Tribunal analyzed the provisions of section 57(iv) and emphasized that the entitlement for the deduction is linked to the receipt of interest income without requiring additional documentary evidence. The Tribunal concluded that the failure to claim the deduction, despite disclosing the interest income in the return, was a clear mistake apparent from the record, making the AO's rejection of the application for rectification untenable.

Issue 3: Rectifiability of mistake apparent from record under section 154 of the Act:
The Tribunal rejected the CIT(A)'s view that the claim for deduction could only be rectified through a different provision, holding that the AO's obligation to determine the true income of the assessee mandated the allowance of the statutory deduction under section 57(iv). Citing the Supreme Court's judgment in Anchor Pressings (P) Ltd. Vs. CIT, the Tribunal emphasized that an assessee's entitlement to a deduction could be claimed through a rectification application under section 154, even if not initially raised in the return of income. The Tribunal set aside the CIT(A)'s order and directed the AO to allow the assessee's claim for deduction under section 57(iv) of the Act, based on the interest income disclosed in the return.

This detailed analysis of the judgment highlights the key issues surrounding the claim for deduction under section 154 of the Income Tax Act, the interpretation of section 57(iv) regarding statutory deduction, and the rectifiability of a mistake apparent from the record under section 154 of the Act. The Tribunal's decision favored the assessee, emphasizing the statutory entitlement for deduction linked to the receipt of interest income and the rectifiability of the omission to claim the deduction through a section 154 application.