TMI Blog1998 (2) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... of note appended to the statement of total income filed along with the return of income. During the course of assessment proceedings, the Assessing Officer raised the query with regard to the receipt of subsidy by the assessee. In its reply dated 28-3-1989, the assessee claimed the subsidy as capital receipt. The Assessing Officer completed the assessment under section 143(3) on 31st March, 1989. The Assessing Officer did not make any addition with regard to the receipt of subsidy by the assessee. Thus, he impliedly accepted the contention of the assessee that the subsidy was a capital receipt in its hand, not liable to be taxed. Subsequently, that is on 15-1-1993, the Assessing Officer issued notice under section 154 on the ground that subsidy of Rs. 12,49,877 received by the assessee remained to be taxed by mistake. The assessee filed the written reply objecting to such rectification. The assessee reiterated its earlier stand that the subsidy is a capital receipt. It was also contended that during the course of assessment proceedings under section 143(3), this matter was already examined and, therefore, it is not covered by the provision of section 154. The Assessing Officer over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of the assessee did not make the addition in the assessment order passed under section 143(3). The subsequent rectification under section 154 is only a change of opinion by the Assessing Officer. He submitted that by way of rectification under section 154, the additions on debatable points cannot be made. Merely because the Assessing Officer changed his opinion subsequently will not give him power to pass an order under section 154. In support of this contention, he relied upon the following decisions : (a) TS. Balaram ITO v. Volkart Bros. [1971] 82 ITR 50 (SC) (b) Sagar Co-operative Central Bank Ltd. v. CIT [1990] 186 ITR 292 (MP), (c) CIT v. Bhawani Prasad Girdharilal Co.[1991] 187 ITR 257(All.), (d) CIT v. Hero Cycles (P.) Ltd. [1997] 228 ITR 463/94 Taxman 271 (SC), (e) CIT v. General Industries Society Ltd. [1993] 71 Taxman 36(Cal.). He further submitted that even after the decision of the Hon'ble Supreme Court in the case of Sahney Steel Press Works Ltd., all subsidies are not revenue receipt. In fact, the Hon'ble Supreme Court in the case of Sahney Steel Press Works Ltd. has stated that the character of the subsidy in the hands of the recipients wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of both the sides and have perused the material placed before us. The only issue in the present appeal is whether the CIT(Appeals) was justified in cancelling the order under section 154 passed by the Assessing Officer. Section 154(i) read as under:--- "with a view to rectifying any mistake apparent from the record, an Income-tax Authority referred to in section 116 may amend any order passed by it under the provisions of this Act." Thus, the above section empowers the Income-tax Authority to amend any order passed by it to rectify any mistake apparent from record. The various Courts have interpreted the above provision to illustrate what is an apparent mistake. The Hon'ble Supreme Court in the case of Volkart Bros. have held--- "A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the records." The Hon'ble Supreme Court further in the case of Hero Cycles (P.) Ltd. have held--- "Rectification under section 154 can only be made when a glaring mistak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue receipt. The learned counsel for the assessee contended that even after the decision of Sahney Steel Press Works Ltd.'s case, all the subsidies are not revenue receipt We have carefully gone through the decision of Hon'ble Supreme Court in the case of Sahney Steel Press Works Ltd. The Hon'ble Supreme Court has stated--- "The character of the subsidy in the hands of the recipient whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of the fund is quite immaterial. However, if the purpose is to help the assessee to set-up its business or complete a project, the moneys must be treated as having been received for capital purposes." 8. The Hon'ble Supreme Court in this case had examined the different types of subsidies received by different assessees and have held the receipt of subsidy by the assessee by way of refund of sales tax, subsidy on power consumption, refund of water tax, etc., as revenue receipt. The Hon'ble Supreme Court on examining the scheme was of the view that all the incentives received by the assessee were production incentives. However, in the same decision, their Lordships ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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