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K.S. Venkatesh Versus The Deputy Commissioner of Income Tax

2015 (10) TMI 320 - KARNATAKA HIGH COURT

Rectification of mistake - set off of the carry forward business loss denied - Held that:- In the instant case the Assessing Officer sought to rectify the original assessment order on the ground that carried forward business loss and same had been set off against the total income which was inclusive of the income earned by the assessee under the head "Income from Other Sources" and "Income from House Property" as declared by him in the return of income and carried forward loss could have been se .....

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earned by the assessee as per the assessment order dated 30.11.2006. As to whether income earned by way of interest would form part of total income so as to allow the assessee to seek set-off is an issue which will have to be gone into in detail and mere declaration in the return of income by assessee would not alter its status and as such it cannot be held that an error had occurred in the assessment order so as to enable the Assessing Officer to invoke section 154 of the Act for rectification .....

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BANG/2009. 2. Facts in brief which has led to the filing of this appeal are as under: Return of income came to be filed for the assessment year 2004-05 claiming a loss of ₹ 24,23,760/- and the jurisdictional Assessing Officer after issuing notice under section 143(2) of the Income Tax Act (for short Rs.Act ) framed the assessment order under section 143(3) of the Act on 30.11.2006 whereunder the carried forward loss of ₹ 24,23,760/- came to be accepted by the Assessing Officer and wa .....

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by the authority that assessee had himself shown interest income earned from the Banks, NSCs and Fixed Deposits had been indicated as "Income from Other Sources" in the return of income and as such it came to be held that it is an error apparent on the face of the record and as such order passed by the Assessing Officer dated 30.11.2006 came to be rectified and the business loss as determined for the assessment year 2003-04 at ₹ 21,43,917/- was brought forward to the assessment .....

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val contentions held that one cannot change the "head" in proceedings under section 154 and therefore Assessing Officer could not have changed the head from "income from other sources" as claimed by assessee to that of "income from business" and could not have allowed to set off against the carry forward business. As such the Tribunal dismissed the appeal filed by the Assessee by order dated 09.04.2009 and confirmed the orders passed by the authorities. Hence, this .....

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nts of Sri.A.Shankar, learned counsel appearing for appellant-assessee and Sri.K.V.Aravind, learned counsel appearing for the respondent-revenue. 5. It is the contention of Sri.A.Shankar, learned counsel appearing for the assessee that jurisdictional Assessing Officer could not have invoked section 154 of the Act since there was no error apparent on the record of the assessment order dated 30.11.2006 and if two (2) views are possible and one view has been adopted by the Assessing Officer, rectif .....

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54 of the Act. He has also contended that the word "head" found in sub-section (1) of Section 72 preceding the words "profits and gains of business or profession" is conspicuously absent in subclause (i) of section 72 and as such there is no impediment on the part of the assessee to seek for set off of the business loss for the assessment year in question against "profits and gains" and such business loss cannot be restricted to business profits only. Hence, he woul .....

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t of this court rendered on 09.06.2015 in ITA No.432/2009 - The Commissioner of Income Tax and anr Vs M/s.Crane Software International Ltd. 6. Per contra, Sri.K.V.Aravind, learned counsel appearing for respondent-revenue would support the orders passed by the authorities and contend that when the assessee himself had declared in his return of income filed for the assessment year 2004-05 that the income earned was from "other sources" Assessing Officer had committed an error in giving a .....

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he assessee and in favour of the revenue and prays for dismissal of the appeal. In support of his submissions he has relied upon the following Judgments: 1. (1997) 93 TAXMAN 502 - Tuticorin Alkali Chemicals and Fertilizers Ltd., Vs Commissioner of Income Tax. 2. (2003) 128 TAXMAN 0011 - Commissioner of Income Tax Vs Menon Impex (P) Ltd 7. After having heard the learned Advocates appearing for the parties and on perusal of the case papers we find from the records that undisputedly the assessment .....

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Assessing Officer and accordingly assessment order came to be framed on 30.11.2006. It is also not in dispute that assessee is carrying on the business of money lending and had deposited money in Fixed Deposits, NSCs, Banks and had earned interest and in the return of income filed had shown the interest income earned under the head "Income from other sources". As to whether the interest earned on the Fixed Deposits, NSCs is an income which can be set off under section 72 would arise fo .....

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amend any order passed by it under the provisions of the Act, amend with intimation or deemed intimation under sub11 section(1) of Section 143 or on intimation under subsection (1) of section 200A as indicated under section1(a)(2) to (8) of Section 154 in order to rectify any mistake apparent from the record. Thus, keeping in mind this tenor of the language used in section 154, the facts on hand are required to be examined. 9. In the instant case the rectification proceeding was invoked by the j .....

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posits as "Income from Other Sources" in his return of income. As to whether this set off which has been claimed by the assessee is to be construed as one falling within four corners of Section 72 of the Act itself would be a debatable point and as such if the issue involves examination in detail, we are of the considered view that the Assessing Officer could not have resorted to invoking section 154 of the Act so as to bring within the sweep of "error apparent on the face of the .....

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e first respondent is not free from doubt. Therefore, the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. 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 th .....

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where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record - see Sidhramappa Andannappa Manvi Vs Commissioner of Income tax. The power of the officers mentioned in section 154 of the Income Tax Act, 1961, to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an &q .....

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ee under the head "Income from Other Sources" and "Income from House Property" as declared by him in the return of income and carried forward loss could have been set off against "Business Income" only. As already observed by us herein above the issue as to whether the said income earned by way of interest on Fixed Deposits, NSCs, would be available to the assessee to seek for set off as business loss or not under section 72 of the Act is a debatable issue and as su .....

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