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TMI Blog2013 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... d in holding that with regard to the expenditure of Rs.68,425/- incurred on advertisement in newspaper, is not a debatable question and is a mistake apparent on the face of record and rectifiable under section 154. (iii) Whether on the facts and circumstances, the Tribunal in justified in holding that the expenditure incurred on advertisement is covered under section 37 (3A) and the issue does not involve any debate, investigation and is a patent mistake which can be rectified under section 154. (iv) Whether on the facts of the case, the Tribunal is justified in holding that the I.A.C. (Assessment) was justified is charging interest for 5 months and excluding the payment of Rs.38,700/- which was paid on 21st October, 1978, for the purposes of the computation of interest under Section 139 (8) and such mistake is a patent mistake rectifiable under section 154. (v) Whether one month means calender month, of 30 days in law, and whether under the provisions of Income-tax Act for the charge of interest under sec.139 (8), the amount deposited prior to 31st March, 1979, as advance-tax but after the due date cannot be considered fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the conclusion that since it was debatable whether the provisions of Section 37 (3A), were to be applied to the extent of Rs.1,70,699/- on giving presentation articles to dealers and stockists and Rs.68,425/-, on advertisement in small newspapers, the mistake could be rectified under Section 154 of the Act. The CIT (A) concluded that rectification could be done only in respect of the remaining expenditure of Rs.1,63,715/-. The dis-allowance at the rate of 15% of this expenditure of Rs.1,63,715/- came to Rs.24,557/-. The CIT (A) sustained the order of rectification with regard to the sum of Rs.24,557/- as against dis-allowance of Rs.60,421/-, which was made by A.O. So far as the charging of interest is concerned, the CIT (A) observed that under Rule 117-A of the Income Tax Rules, the A.O. had a discretion to reduce or waive interest and hence the charging of lesser interest at the time of assessment could be made on the discretion exercised by A.O. The charging of lesser interest was thus not found to be mistake apparent from the records, which could be rectified under Section 154 of the Act. 6. The Tribunal held that the expenditure of Rs.1,70,699/- on the presentation articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the fact that the interest was charged for four months, whereas it was due to be charged for five months. Further the credit for the belated payments of Rs.38,700/- on 21.10.1970 was given to arrive at the amount on which interest was to be charged. The interest under Rule 117A could be reduced or waived on certain conditions. The interest could be reduced or waived, in a case in which the assessee produces evidences to the satisfaction of the assessing authority that he was prevented by sufficient cause from furnishing the return within time. In this case there was no evidence to that effect and thus the order of the CIT (A) cancelling the rectification under Section 154 on this basis was found to be erroneous. 9. The Tribunal relied upon the judgment of the Allahabad High Court in CIT v. Laxmi Ratan Cotton Mills Co. Ltd., (1974) 97 ITR 285 to hold that a month under Section 271 (1) (a), must be taken to mean a period of 30 days and thus A.O. was justified to hold that the delay was of five months, the charging of interest for four months was thus a mistake, which could be rectified under Section 154 of the Act. 10. The payment at Rs.38,700/- made by the assessee on 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to incentives only after getting into production. The scheme was not to make any payment directly or indirectly for setting up the industry. Following the judgment the Commissioner of Income Tax passed a rectification order on 30.3.1998, the Commissioner of Income Tax rectified his orders by invoking Section 154 of the Act. The Supreme Court after examining the matter held as follows:- "At the outset, we may state that, in these appeals, we are concerned with Assessment Years 1993-1994 and 1994- 1995. The short point involved in these appeals is, whether there existed a 'rectifiable mistake' enabling the Department to invoke Section 154 of the Act? If one examines the Scheme of the Income Tax Act, as it stood at the material time, one finds a clear dichotomy between Section 154 and Section 147 of the Act. Section 154 deals with rectification of mistake. Section 154(1), inter alia, states that, with a view to rectify any mistake apparent from the record, an Income Tax Authority may amend any order passed by it under the provisions of the Act, whereas Section 147, inter alia, states that if the Assessing Officer has reason to believe that any income charged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration of change of opinion." 12. The Supreme Court in MEPCO Industries Ltd. (Supra) distinguished the judgments of Calcutta High Court in Jiyajeerao Cotton Mills ltd. v. ITO, (1981) 130 ITR 710 (Cal) and Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. Income Tax Appellate Tribunal, (1988) 174 ITR 579 (Ker). In Jiyajeerao Cotton Mills Ltd. (Supra) the Calcutta High Court held that the subsequent decision of the Supreme Court did not obliterate the conflict of opinion prior to it. The rectification under Section 154 was not permissible on a debatable issue. In Kil Kotagiri Tea and Coffee Estates Co. Ltd. (Supra) the Kerala High Court had held that rectification contemplated under Section 154 must be a rectifiable mistake, which is mistake in the light of the law in force at the time, when the order sought to be rectified was passed. The Supreme Court held that there is no straight jacket principle of distinguishing a capital receipt from revenue receipt. It depends upon the circumstances of each case. The production incentive scheme in Sahney Steel and Press Works Ltd. (Supra) was different from the scheme giving subsidy for setting up industries in the backward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istake, but was change of opinion by which the department had to adopt the reasoning on which two opinions should be possible. 15. The questions nos.(i), (ii) and (iii) in the reference are thus decided in favour of the assessee and against the revenue. 16. On question no.(iv) we find that the charging interest for four months was a clear error of law on the facts of the case in which the A.O. had failed to take into account that the return was due to be filed by 31.7.1979. Whereas it was filed on 31.12.1979 by taking the month to mean a period of 30 days, interest was to be required to be charged for five months and not for four months. The jurisdictional High Court in CIT v. Laxmi Ratan Cotton Mills Co. Ltd. (Supra) had clearly held that the word ''month' is to be taken to mean a period of 30 days and thus the delay for charging interest was of five months and not of four months. The mistake, therefore, was obvious and apparent to on the record and was rectifiable mistake for which proceedings under Section 154 could be taken. 17. On question no.(v) we find that the amount deposited prior to 31st March, 1979 could be treated as advance tax. After the due date it could not be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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