TMI Blog2013 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ch needs to be established by a long drawn process of reasoning, or where two opinions are possible. It must be a patent mistake, which is obvious. Its discovery should not depend on elaborate arguments. - Therefore, the order u/s 154 was not made on any mistake apparent from the record, which was a rectifiable mistake, but was change of opinion by which the department had to adopt the reasoning on which two opinions should be possible. In favour of assessee Interest u/s.139 (8) – Rectification of order u/s 154 – Mistake in calculation of month for charging interest u/s 139(8) - Due date of filing return was 31.7.1979 – Return was filed on 31.12.1979 - Held that:- In case Laxmi Rattan Cotton Mills (1973 (4) TMI 29 - ALLAHABAD HIGH COURT) that a month, must be taken to mean a period of 30 days - 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. - In favour of revenue Advance tax – Whether the amount deposited prior to 31st March, 1979, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 for the purposes of the computation of interest. (vi) Whether on facts and circumstances of the case, the Hon'ble Tribunal was legally justified to hold that the provisions of Section 154 was applicable in the case specially where the issue involved was debatable and where two opinions were possible." 3. The Inspecting Asstt. Commissioner (Asstt.) completed the assessment of the assessee for the assessment year 1979-80 on 29.4.1980. On a later date he realised the mistake of dis-allowance of advertisement expenses, under the provisions of Section 37 (3A) of the Income Tax Act, 1961 (in short the Act). The A.O. also realised that by mistake interest under Section 139 (8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 to the stockists and dealers is clearly an expenditure on sales, promotions and hence it would fall within the purview of Section 37 (3A). In Venkatachalam v. Bombay Dyeing and Manufacturing Co. Ltd., 34 ITR 143 it was held that a patent and obvious mistake could be rectified under Section 154 of the Act. The Tribunal held that the CIT (A) committed an error in holding that the issue was debatable and thus no rectification could be made under Section 154 of the Act. The Tribunal found that the AO having allowed a portion of the expenditure at the time of completion of assessment committed a patent and obvious mistake of law, which could be rectified under Section 154, and hence the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 21.10.1978 was required to be deducted fro the amount of tax payable on the total income as determined in the assessment in order to arrive at the amount on which interest under Section 139 (B) was to be charged. This amount could not be regarded as advance tax. It is only the advance tax paid in accordance with the provisions dealing with the payment of advance tax for which a deduction is to be given to arrive at the amount on which interest is to be charged. The CIT (A) erred in law in interfering with the order of A.O. in deducting the amount, which could be treated as advance tax paid in accordance with the provisions of Act dealing with payment of advance tax for calculating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme 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 to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or re-assess such income which has escaped assessment and which comes to the notice of the Assessing Officer subsequently in the course of proceedings under the said Section. In the present case, the Department did not invoke Section 147 of the Act even when the matter was within the time limit prescribed. Be that as it may, in these appeals, we are concerned with the meaning of the words `rectifiable mistake'. On the facts of the present case, we are of the view that the present case involves change of opinion. In this connection, it must be noted that Government g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 areas. In the circumstances, the case was an example of change of opinion and therefore the department had erred in invoking Section 154 of the Act. 13. The Supreme Court approved the judgment in CCE v. ASCU Ltd., (2003) 9 SCC 230 and Deva Metal Powders (P) Ltd. v. CTT, (2008) 2 SCC 439 in which it was held that a rectifiable mistake is mistake, which is obvious and not something, which needs to be established by a long drawn process of reasoning, or where two opinions are possible. It must be a patent mistake, which is obvious. Its discovery should not depend on elaborate arguments. 14. Coming to the present case we find that during the course of assessment the claims were duly scrutinized, considered and allowed in respect of expenses claimed both under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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