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TMI Blog1988 (4) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment orders, all of which were dated 30-7-1974, had no occasion to consider the claim of exclusion of interest from the chargeable profit under Rule 1(x) of the First Schedule. Subsequently, however, the IAC gave a show-cause notice of his intention to rectify a number of mistakes in the assessment orders. Here, it will be necessary to point out that the mistakes found by the IAC and of which show cause was given, were mistakes other than that of exclusion of interest from the chargeable profits. It was however pointed out to the IAC that not only the mistakes proposed to be rectified by him in the show-cause notice were not mistakes apparent from records and could not be rectified, the assessee-company had also made applications for rectification of the assessments by applications dated 9-6-1977 for the assessment years 1971-72 and 1972-73 and by letter dated 15-4-1978 for the assessment years 1966-67 to 1970-71, i.e., in other words, reference was made to the request for rectification of the assessments with a view to correct the mistake of non-exclusion of the interest income from the chargeable profits under Rule 1(x) of the First Schedule. The IAC while rectifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Government or Local authority or an Indian concern and, therefore, this interest would not be excluded from the chargeable profits. He, however, excluded the other interest received from Indian parties from the chargeable profits and recomputed the surtax payable accordingly by orders giving effect to the order of the Appellate Tribunal read with order under section 13 of the Act which were dated 15-3-1984. The assessee-company was not satisfied with these orders of the IAC and, therefore, went up, again, in appeal, to the Commissioner of Income-tax (Appeals). 5. The Commissioner of Income-tax (Appeals) held that in the first place, since the assessment orders sought to be rectified were dated 30-7-1974, the rectification of these assessments by orders under section 13 of the Act passed on 15-3-1984, more the five years after the expiry of the limitation period, was invalid. He further held that this issue was raised before the Commissioner of Income-tax (Appeals) in the appeals against the original order under section 13 of the Act dated 10-7-1978 by the additional ground of appeal which was canvassed before him and, therefore, on this issue the order of the IAC had merged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. ITO [1969] 71 ITR 204 and another of the Hon'ble High Court of Bombay in the case of Gordhandas Desai (P.) Ltd. v. V. B. Kulkarni, ITO [1981] 129 ITR 495 in support of the contention that if the applications for rectification were filed within the statutory time limit, the authorities who hear the applications were bound to pass orders on the applications for rectification on merits. He, therefore, submitted that the Commissioner of Income-tax (Appeals) erred in holding that since the assessment orders sought to be rectified were dated 30-7-1974, the orders of rectification dated 15-3-1984 were invalid and without jurisdiction. Proceeding further, Sri Dastur submitted that in the appeals against the orders under section 13 of the Act dated 10-7-1978, the Commissioner of Income-tax (Appeals) did not consider the assessee's claims made by applications for rectification dated 9-6-1977 and 15-4-1978 and, therefore, it was wrong to say that on the issue of exclusion of the interest income from the chargeable profits under Rule 1(x) of the First Schedule, the order of the IAC had merged in the order of the Commissioner of Income-tax (Appeals). Reference in this connection was also ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief was due to the assessee, the Department should not stand on technicalities and the relief should be given. He then referred to the ruling of the Hon'ble Supreme Court in the case of Anchor Pressings (P.) Ltd. v. CIT [1986] 161 ITR 159 wherein their Lordships laid down that if precise factual material and clear data were contained in the record which were sufficient to enable the Income-tax Officer to consider the claim of relief, the claim of relief should not be denied while, on the other hand, if no such material was available, no fault can be found with the Income-tax authorities for not accepting the assessee's claim. Reference was made by him in passing to the ruling of the Hon'ble High Court of Calcutta in the case of West Bengal State Warehousing Corpn. v. CIT [1986] 157 ITR 149 wherein even the claim of exemption under section 83 of the Income-tax Act, 1961, from warehousing not made before the Income-tax Officer or appellate, authorities was held to be a mistake apparent from the record which could be rectified by an order under section 154 of the Income-tax Act, 1961. He then referred to the copies of the audited Balance Sheets and Profit Loss accounts and the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the course of the assessment proceedings there cannot be said to be any mists apparent from the record if this claim was not considered by the IAC in the assessment order. Reference in this connection was made by him to the numerous case laws cited by Sampath Iyengar in his book "Law of Income Tax", Seventh edition. Vol. 4 page 3628. He then referred to the letter of the assessee dated 25-11-1978 wherein it was placed on record that two additional grounds were canvassed at the time of hearing, one of which was that the IAC while rectifying the assessments had omitted to exclude from the chargeable profits the interest income under Rule 1(x) of the First Schedule as required by the assessee's letters dated 9-6-1977 and 15-4-1978 copies of which were handed over to the Commission of Income-tax (Appeals) at the time of hearing. Thus, according to the learned Departmental Repressentative, Sri Tiwari, clears shows that the additional ground to this effect was not only raised before the Commissioner of Income-tax (Appeals) but the ground was also canvassed at the time of hearing. He then referred is the ruling of the Hon'ble High Court of Bombay in the case of Sakseria Cotton Mills Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person concerned with or interested in the proceedings. Viewed in this context it is not under dispute that applications for rectification of the assessment orders dated 30-7-1974 pointing out that there was a mistake in not excluding the interest income from the chargeable profits under Rule 1(x) of the First Schedule, were made before the IAC on 9-6-1977 for the assessee years 1971-72 and 1972-73 and by letter dated 15-4-197 8 for the assessment years 1966-67 to 1970-71 i.e., in other words, there was a request for rectification of the assessment within the time limit of four years of the completion of the assessment. It is by now well settled and does not admit of any dispute that where an assessee moves an application within the specified time limit allowed, a right is conferred on the assessee to get an order from the authority concerned on his application and this right cannot be extinguished by reason of lapse or negligence of the authority concerned to pass the order within the prescribed time limit. We cannot, therefore, agree with the Commissioner of Income-tax (Appeals) that since the IAC failed to pass the order on the assessee's request for rectification made within ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he auditors' note to the Profit Loss account clearly indicated that the income from other sources included interest on advance rent, security deposits and bank fixed deposits, etc. The IAC was also aware and, in fact, made the assessments treating the assessee as a non-resident company which had not made the prescribed arrangement for the declaration and payment of dividend within India. There was, therefore, enough material before the IAC to conclude that Rule 1(x) of the First Schedule provision for exclusion of the internal income from the Government, Local authority or any Indian concern from the chargeable profits was applicable in this case and the relief on this account was due to the assessee. In these circumstances, if such a relief was not claimed in the returns or the course of the assessment proceedings, it was open to the assessee to claim this relief by applications for rectifications for rectification of the assessments and the IAC rightly passed orders under section 13 of the Act entertaining such a claim. We, therefore, again, do not agree with the Commissioner of Income-tax (Appeals) that the claim of relief under Rule 1(x) of the First Schedule was wrongly ente ..... X X X X Extracts X X X X X X X X Extracts X X X X
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