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TMI Blog2024 (7) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ein. Once it so then there is no provision in the law conferring any discretion to tax authorities to allow deduction. On the contrary, impugned item calls for disallowance in-limine without requiring any examination. By application of stricter interpretation of law in view of the ratio laid down in CoC Vs Dilip Kumar Co [ 2018 (7) TMI 1826 - SUPREME COURT] the impugned item provision for loss in investment representing portion of investment held by the assessee being not falling any of the deduction enumerated u/c IV-D of the Act and further not eligible for deduction u/s 37(1) of the Act does not in our considered view is debatable under the Act. Hence there is much less reason to countenanced the view of Ld. first appellate authority. The impugned item i.e. provision for loss in investment was appearing glaringly on the face of financial statement which travelled to computation of income - AO however lost sight of impugned item while framing the assessment u/s 143(3) of the Act. The audit objection notified the mistake of allowing the impugned item which was obvious patent and not something which can be established by a long-drawn process of reasoning on points on which there ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or various reasons thus came witnessing sixteenth hearing today. While going through order-sheet entries it ostensibly revealed that, this case on equi-reasons was formerly sought to be adjourned by the Revenue on 09/05/2023, 31/05/2023, 12/07/2023 18/10/2023 but there is hardly any progress till today. Having considered the order-sheet entries, content of email reply dt. 15/01/2024 received from Ld. AO, subject matter of dispute, and lastly the reasons founded for adjournment could hardly inspire any confidence to us, in the event we deem it fit to reject the adjournment and proceed to adjudicate the matter in the absence of respondent ex-parte u/r 25 of ITAT-Rules, 1963 on merits with the able assistance from the Revenue. Ordered proceeded accordingly. 4. We have heard the Revenue and subject to rule 18 of the ITAT-Rules, 1963 perused the material placed on records and considered the facts in the light of settled legal position and note that, the respondent assessee is a state-owned corporation engaged in the business of carrying out mineral based activities in the state of Uttar Pradesh. The return of loss ₹2,55,26,557/- filed by the assessee for the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion for loss in investment while assessing the income is a mistake apparent on record hence is rectifiable u/s 154 of the Act. The present challenge thus seeks to answer twin questions viz; (1) as to whether disallowance of provision for loss in investment is a debatable issue? And (2) as to whether non-disallowance of such provision is apparent on the face of the record so has to fall within the ambit of section 154 of the Act? 6. Before we procced to fetch answer to former twin questions, we note that, there is much less dispute over that; (a) the assessee is maintaining its books of accounts on mercantile/accrual basis and thus all income expenses are booked as when they are incurred irrespective of actual receipt or payment thereof, (b) the assessee holds certain investments and the provision for loss in investment was debited to profit loss account and claimed in the return of income accordingly (c) such provision however remained to be disallowed while framing the original assessment (d) the assessee was given reasonable opportunity before the impugned rectification was carried out u/s 154 of the Act by the Ld. AO. 7. A provision simply is a charge created against the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late to any revenue expenses which is specifically deductible/allowable u/c IV-D of the Act or otherwise it must possess all the cumulative characters of section 37(1) of the Act. (ii) the expenses against which provision is made must clearly be specified and must therefore be valued/estimated with sufficient approximation according to the applicable accounting/reporting rules or standards (iii) the provisional charge must sprung from current year s operation/events. That is to say, a provision of expenses relating to an event/obligation occurring prior or after the previous year is not deductible. In simple terms provisions must represent obligation incurred by an assessee for the year under consideration and lastly (d) the provisions must pass through Profit Loss Account [in brief P L ] i.e., provision must be the one which is debited to P L account expense or charge against the income of the current financial year (previous year) relevant to assessment year. 10. The investments by and large nature are capital assets held for earning income by way of interest, dividend, rentals, capital appreciation and for such other non-financial benefit including management, control and busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction notified the mistake of allowing the impugned item which was obvious patent and not something which can be established by a long-drawn process of reasoning on points on which there may be two opinions. In the event after following the due process according reasonable opportunity to the assessee, Ld. AO reversed the impugned allowance by an order passed u/s 154 of the Act. 14. In the event of effective failure on the part of assessee to dislodge the authority and jurisdiction of Ld. AO, the impugned rectification was carried out. 15. It is well settled law that any item of allowance/deduction or disallowance which requires no examination or verification of facts falls within the ambit of mistake apparent on record for the purpose of section 154 of the Act. The obvious mistake glaring or appearing on the face of the record and requiring no examination or verification whatsoever by long-drawn process can be rectified in view of the ratio laid down by the Hon ble Apex Court in TS Balram (ITO) Vs M/s Volkart Bros. [1971, 82 ITR 40 (SC)]. 16. Without multiplying the authority on the issue, in view of the former judicial precedents we find no fault in reversing the inadvertent allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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