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TMI Blog2007 (2) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. 3. That the order passed by the learned CIT(A) is illegal and against the law. 4. That the issue in question is not debatable issue because the issues in respect of allowability of remuneration and interest have been decided by making amendment retrospectively as well as by quashing the circular by the Hon'ble jurisdictional High Court. 5. That the mistake pointed out by the assessee is purely a legal mistake and squarely covered under the definition of s. 154, therefore, the rejection is illegal and against the law." 2. The above grounds, in gist, have only one issue, which challenges the order of the AO in not allowing rectification under s. 154, as prayed for by the applicant on the reasoning that the issue is a debata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... batable point of law or it may be only failure to apply the law to a set of facts. While dismissing petition under s. 154, the learned CIT(A) also relied on the decision of the Hon'ble Supreme Court given in the case of T.S. Balaram, ITO vs. Volkart Brothers (1971) 82 ITR 50 (SC) in which it has been held that it is not permissible to an officer in rectification proceedings to reconsider, review or to go into the true scope of the provisions of law. 4. I have heard the rival submissions and perused the evidence available on record. 5. In this case, the assessment was completed under s. 143(3) by the AO by applying the provisions of s. 145(1) of the Act. The AO applied a net profit rate of 9 per cent to the entire contract receipts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter which has been so considered and decided. (2) Subject to the other provisions of this section, the authority concerned- (a) may make an amendment under sub-s. (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the CIT(A), by the AO also." From the above provisions, it is clear that any IT authority, referred to in s. 116 may rectify his order. In this case, there is nothing on record from where it can be ascertained that this issue was a subject-matter of appeal or revision. 7. The IT authorities referred to in s. 116 are the following classes: "(a) the Central Board of Direct Taxes constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Since the provisions of amended sections are applicable from 1st April, 1994, for this year, the amended provision would be taken as available on the statute book when the learned CIT(A) passed his order which has been simply overlooked by him. While dealing with the similar issue, the Hon'ble jurisdictional High Court has given a finding that reopening of assessment in view of Circular No. 737, dt. 23rd Feb., 1996, which provided that deduction on account of salary and interest paid to the partners of a firm would not be allowed, is not valid particularly when the income is estimated in accordance with the provisions of s. 44AD and s. 44AE of the Act. Taking recourse to the Circular No. 737, dt. 23rd Feb., 1996, the IT authorities had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent on the record. The Hon'ble Tribunal Bench while deciding the case of Dy. CIT vs. Schlumberger Seaco Inc. (1995) 51 TTJ (Coch) 72 : (1994) 50 ITD 348 (Coch) has held that it is amended law, which must be held to have been in force at the time when the order sought to be rectified was passed. In that case, the assessment orders for those years were passed when amended provisions of s. 44BB were not in the IT Act. The amended section was given retrospective effect from 1st April, 1983. The Tribunal held that it is to be taken as if the assessment orders were made by overlooking or ignoring the provisions of s. 44BB. It was further held that this amounts to a mistake apparent on record. It was categorically held that the assessee was justi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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