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TMI Blog1995 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... h Jan., 1987and carry forward of loss and had not been allowed and since there was no mistake apparent from the record, the matter was not rectifiable under s. 154 and thereby rejected the application. 2.2 On appeal before the CIT(A), the learned counsel for the assessee contended that the Asstt. CIT had wrongly rejected the application under s. 154 of the IT Act on the ground that there was no mistake apparent from the record. He submitted that as the assessee was entitled to carry forward of loss, the mistake should have been rectified. The CIT(A) observed that there was no force in the submissions made by the learned counsel. She also observed that the Assessing Officer had rejected the assessee's claim after considering the same in the light of the provisions of s. 80 of the IT Act, 1961. She further observed that as there was difference of opinion whether the extension application filed on which no decision had been taken tantamounts to extension of time, as held by the various Courts, the matter was debateable and was not covered under s. 154 of the Act. She also observed that the said matter should have been agitated in an appeal filed against the order passed under s. 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 CTR (Cal) 290 : (1982) 137 ITR 646 (Cal), the decision of the Hon'ble Patna High Court in the case of CIT vs. Bishwanath Khirwal (1986) 51 CTR (Pat) 329 : (1986) 161 ITR 382 (Pat). The learned counsel also relied on the decision in the case of Kaloo Ram Tirasilal vs. ITO (1966) 59 ITR 308 (MP) and in the case of CIT vs. Sankaranarayanan Nair (1988) 169 ITR 397 (Ker) for the proposition that a rectification with reference to the carry forward of loss could be made under s. 154 of the IT Act, 1961. The learned Departmental Representative Smt. Surabhi Sinha relied on the orders of the tax authorities and further submitted that the issue regarding deemed extension of time where the application for extension of time is not rejected by the Assessing Officer, is a debatable issue and the assessment order cannot be rectified on the said basis under s. 154 and that the proper course for the assessee was to agitate the matter in the appeal filed against the said assessment order. In this connection, she relied on the decision in the case of T.S. Balaram, ITO vs. Volkart Bros. Ors. (1971) 82 ITR 50 (SC) in the case of T. Venkata Krishnaiah Co. vs. CIT (1974) 93 ITR 297 (AP) and CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also held that the ITO was not obliged to demonstrate that income against which loss was set of was indisputably "Income from other sources" and the rectification order was held valid under s. 154 of the IT Act. 4.1 The decision of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO vs. Volkart Bros. Ors., lays down the general proposition that a decision on a debatable point of law is not a mistake apparent from the record and is strictly not on the point involved in this appeal. Similarly the decision of the Hon'ble Andhra Pradesh High Court in the case of T. Venkata Krishnaiah Co. vs. CIT relates to a situation where the application for extension of time was made after the issue of notice by the ITO under s. 139(2) calling upon the assessee to file its return on or before 16th Sept., 1963 and the said application had been received by the ITO on 18th Sept., 1963 and it was held in that case that the ITO was not bound under the provisions of the IT Act or any Rules made thereunder to pass any order thereon. Similarly in the case of CIT vs. S.P. Viz Construction Co., the application for extension of time was filed after the due date for filing of the return and the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of its stand. The Assessing Officer observed that the case cited by the assessee was distinguishable on facts as in that case the commission had been paid to mechanics who may not have been IT assessees. In the present case, the payments had been made to doctors who may be having their own practice and may also be IT assessees. The Assessing Officer further observed that commission payments to doctors would mean that they were also acting as commission agents apart from doing medical practise and that was prohibited by law. The Assessing Officer relied on the case of Goodlass Nerolac Paint Ltd. vs. CIT (1982) 28 CTR (Bom) 186 : (1982) 137 ITR 58 (Bom) wherein it was held that the secret commission paid by the assessee company to promote its sales could not be regarded as expenses deductible under s. 37(1) of the IT Act and made an addition of Rs. 22,955 towards the income of the assessee. On appeal, the CIT(A) noted that there was no direct evidence with regard to the payment having been made to various doctors for having sent their patients to the assessee's nursing home and further the vouchers issued for the payment did not show the signature of the alleged recipients. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the board of directors at the end of every month. The Tribunal had also taken into account that the assessee in that case was a public limited company, that the accounts were not merely audited but were also placed before the general body of shareholders, that the assessee's turnover was increasing year after year and that such payments claimed as deduction has dropped from 1.34% for one of the years to 0.22% in the year in question, before concluding that the fact of payment of commission was established even though the names and addresses of the recipients were not given and that the payments were made for the purposes of business. In view of the said finding of fact by the Tribunal, the High Court declined to interfere. As against this, the decision of the Hon'ble Bombay High Court in the case of Goodlass Nerolac Paints Ltd. vs. CIT is relevant to the issue under consideration. In the said case, the Tribunal had found that the payments were nothing but secret commission and disallowed the claim for deduction on the ground that the secret commission which was paid to the employees of the customers would be liable to be taxed in the hands of the recipients and it would be against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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