TMI Blog1990 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 35B of the Income-tax Act, 1961, in respect of various items of expenditure including bank interest and packing expenses of Rs. 11,57,255 and Rs. 17,41,812, respectively. In the original assessment, the Income-tax Officer allowed weighted deduction under section 35B on all the items including bank interest and packing expenses. A sum of Rs. 6,08,842 was spent on payment of allowance and commission to two governing directors of the assessee-company. In the original assessment, the Income-tax Officer did not make any disallowance under section 40(c) of the Income-tax Act, 1961 The Income-tax Officer passed a rectification order under section 154 on September 10, 1985. According to him, the assessee got the excess deduction of Rs. 4,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this point was, accordingly, confirmed. As both the parties felt aggrieved by the order of the Commissioner of Income-tax (Appeals), they came up in appeal before the Tribunal. In the appeal filed by the assessee, only one point was pressed, viz., that the order passed by the Income-tax Officer under section 154 on September 10, 1985, was barred by limitation. The other ground, namely, that the Commissioner of Income-tax (Appeals) was in error in confirming the order of the Income-tax Officer under section 154 in respect of deduction under section 40(c) was not pressed on behalf of the assessee and the said ground was, accordingly, rejected by the Tribunal. The learned advocate for the assessee submitted that the mistake, if there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the Department it was, on the other hand, submitted that section 154(7), as amended by the Taxation Laws (Amendment) Act, 1984, with effect from October 1, 1984, would govern the period of limitation for rectification of the assessment order. It was submitted that the rectification order was passed within the time extended by the amendment introduced under section 154(7) with effect from October 1, 1984, and was, therefore, within time. Reliance was placed on the decision of the Tribunal in the case of S. Mahalingam v. WTO [1984] 19 ITR 747 (sic). It was further submitted on behalf of the Department that the first rectification order was passed by the Income-tax Officer on April 20, 1985, and that fresh limitation would run from that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od in the assessment year would govern the proceedings. He submits that an order made by the Income-tax Officer in rectifying an assessment order forms part of the proceedings of assessment. He has drawn our attention to the decision of the Supreme Court, which was also relied on before the Tribunal, in the case of S. Sankappa v. ITO [1968] 68 ITR 760 (SC). There, the Supreme Court observed that when proceedings are taken for rectification of assessment to tax, those proceedings must be held to be proceedings for assessment. In the proceedings for rectification, what the Income-tax Officer does is to correct the errors in, or rectify orders of, assessment made by him, and orders making such corrections or rectifications are, therefore, clea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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