TMI Blog2011 (7) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in invoking Section 154 of the Act and the Tribunal below committed substantial error of law in affirming the unauthorised act of the Assessing Officer - Decided in favour of the assessee - I.T.A. No.60 of 2004 - - - Dated:- 13-7-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J. P. Khaitan, Mr. Agnibesh Sengupta. For the Respondent: Md. Nizamuddin, Mr. Aniket Mitra. Bhaskar Bhattacharya, J.: 1. This appeal under Section 260A of the Income-tax ( Act ) is at the instance of an assessee and is directed against an order dated August 21, 2003 passed by the Income-tax Appellate Tribunal, A Bench, Kolkata, in Income-tax Appeal bearing ITA No.1375(Kol)/2002 for the Assessment Year 1995-96 dismissing the appeal preferred by the assessee. 2. The facts giving rise to filing of this appeal may be summed up thus: a) The appellant before us is a public limited liability company within the meaning of the Companies Act, 1956 and is assessed to tax under the Income-tax Act. The present appeal arises out of the assessment under the Act for the Assessment Year 1995-96 for which the relevant previous year wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer was not permissible under Section 154 of the Act. e) Being dissatisfied, the Revenue preferred an appeal before the Incometax Appellate Tribunal and by the order impugned in this appeal, the Tribunal held that the Assessing Officer was bound to follow the judgment of the Hon ble Supreme Court in the case of CIT Vs. United General Trust Ltd., reported in (1993) 200 ITR 488 while making the rectification. According to the Tribunal, it could not be held that no expenses were incurred for earning the dividend and thus, set aside the order of the Commissioner of Income-tax (Appeals). f) Being dissatisfied, the appellant has come up with the present appeal. 3. A Division Bench of this Court at the time of admission of this appeal formulated the following substantial questions of law: i) Whether the question as to whether any expenditure was incurred for earning dividend income and if so, the quantum thereof could be gone into and decided in proceedings under Section 154 of the Income Tax Act, 1961 and the Tribunal was justified in law in upholding the order dated June 30, 2000 passed by the Assessing Officer under Section 154. ii) Whether in the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, prays for setting aside the order passed by the Tribunal below. 6. Mr. Nizamuddin, the learned Advocate appearing on behalf of the Revenue, on the other hand, supported the order passed by the Tribunal below and has contended that this Court within the narrow scope of Section 260A should not interfere with the discretion exercised by the Assessing Officer and affirmed by the Tribunal below. Mr. Nizamuddin, thus, prays for dismissal of the appeal. 7. Therefore, the only question that falls for determination in this appeal is whether the Tribunal below was justified in approving the order of rectification of the assessment notwithstanding the fact that no materials was available to indicate the actual expenditure of the appellant in getting the net dividend and the consequent benefit of deduction under Section 80 M of the Act and the order of rectification was not based on actual expenditure. 8. After hearing the learned counsel for the parties and after going through the materials on record we find that in the original return filed by the appellant there was no mention of any expenditure in getting the dividend. It was stated that the interim dividend to the extent of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,04,288x60,88,864=8,71,725 1,12,04,802 Allowable deduction u/s 80M Rs.60,88,864 8,71,725 = 52,17,069/- Charge Intt. if applicable Sd/- (C.MERWAR) ADDL. C.I.T. S.R. 6, CALCUTTA 12. In the case of CIT Vs. United General Trust Ltd, (supra) the Supreme Court did not lay down any proposition of law but on the basis of the agreement between the counsel for the parties held that question sought to be raised by the Revenue but not permitted to be raised by the High Court was concluded against the assessee and in favour of the Revenue in the case of Distributors (Baroda) P Ltd. Vs. Union of India reported in (1985)155 ITR 120 and the same principles should apply to the said case. 13. In the case of Distributors (Baroda) P. Ltd. (supra), the five-judge-bench of the Supreme Court laid down the following proposition for computing the deduction under Section 80M of the Act: Now when in computing the total income of the assessee, a deduction has to be made from "such income by way of dividends", it is elementary that "such income by way of dividends" from which deduction has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture indicated which allegedly escaped the notice of the Assessing Officer. Even in his order of rectification quoted above, the expenditure is assessed not on actual basis but on notional one which is contrary to the law laid down by the Division Bench of this Court. 16. Thus, even without going into the question whether it was permissible to the Assessing Officer to invoke Section 154 of the Act, we find that the order under Section 154 of the Act is contrary to the Division Bench decision of this Court in the case of CIT Vs. United Collieries (supra). 17. The next question is whether Section 154 of the Act authorizes the Assessing Officer to issue notice in the facts of the present case. 18. In a recent case of Deva Metal Powder (P) Ltd Vs. Commissioner Trade Tax, Uttar Pradesh, the Supreme Court had occasion to deal with the scope of Section 22 of the U. P. Trade Tax Act, 1948 conferring similar power of rectification as indicated in Section 154 of the Act. The said provision of Section 22 is quoted below: 22. Rectification of mistakes. (1) Any officer or authority, or the Tribunal or the High Court may, on its own motion or on the application of the dealer or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where an alleged error is far from self-evident and if it can be established, it has to be established, by lengthy and complicated arguments, such an error cannot be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ. 12. A bare look at Section 22 of the Act makes it clear that a mistake apparent from the record is rectifiable. In order to attract the application of Section 22, the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. Mistake means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error, a fault, a misunderstanding, a misconception. Apparent means visible; capable of being seen; obvious; plain. It means open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming . A mistake which can be rectified under Section 22 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. 13. In our view rectification of an order does not m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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