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2022 (12) TMI 836 - AT - Income TaxRectification of mistake u/s 154 - debatable issue - set off of brought forward losses and unabsorbed depreciation u/s - 79 - change in shareholding - HELD THAT:- We are of the opinion that the AO could not have invoked jurisdiction u/s 154 of the Act which power is only for rectification of mistake which is apparent on the face of record. According to Ld. AR, the AO in the appellant's case has made assessment u/s 154 by invoking the provisions of section 79 - section 79 of the Act clearly excludes the company in which public are substantially interested, now in order to check the applicability of section 79, we need to see the definition of the company in which public are substantially interested, which is defined u/s 2(18) of the Act. Section 3 of Companies Act, 1956 defines the company, Private company and public company, thus the issue in the appellant's case require interpretation of various sections, in order to see whether the provisions of section 79 is applicable on the appellant or not, and it indeed involves interpretation of various provisions of law. As noted that there are various judicial precedents on the issue of applicability of provisions of Section 79 of the Act on change in shareholding within the Group and when there is no change in ultimate holding or management. There are also various judicial precedents in which authorities tried to establish whether the company is a company in which public is substantially interested or not and thus provisions of section 79 is not applicable. In every decision, whether it is in favour or against the appellant, appellate authorities has made the decisions after satisfying itself as to the applicability and interpretation of various provisions and laws. Thus, it cannot be said that it is a mistake apparent from records, when the issue involves interpretation of relevant laws and sections. Thus, it can be safely concluded that set-off of losses when there is a change in shareholding is not a mistake apparent from record, and is debatable issue in the facts and circumstances discussed supra and it is not a case rectification. Thus, it can be safely concluded that set-off of losses when there is a change in shareholding is not a mistake apparent from record, and is debatable issue in the facts and circumstances discussed supra and it is not a case rectification AO erred in invoking Section 154 of the Act to disallow the losses u/s 79 of the Act which in any case can be termed to be mistake apparent on record. From the discussion (supra) it can be seen that not only provisions of Income Tax Act but also Companies Act need to be considered for adjudicating the issue on which several judicial precedents are there on the issue and which is mixed question of fact and law and therefore, certainly it cannot be rectified by AO u/s 154 - Appeal of the assessee is allowed.
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