TMI Blog1974 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... After giving the petitioner credit for the tax deducted at source on this account the tax liability of the petitioner was nil on this amount. Thereafter, on the 26th December, 1967, supplementary assessment was made under section 143(3) read with section 147(a) of the Income-tax Act, 1961, to include the capital gains arising as a result of the sale of 2,14,174 shares of Rs. 10 each to Vazir Sultan Tobacco Co. Ltd. On the 15th of February, 1968, an order was passed under section 154 of the Act on the ground that there was a mistake in the calculation of tax. In the said order in recomputing the tax, the tax on dividend income was calculated at 25% as was made in the original assessment. Thereafter, on the 5th of January, 1970, another Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as correctly been invoked in this case. Section 154 of the Income-tax Act, 1961, and the previous section 35 of the old Act of 1922 provide for rectification of mistake apparent from the record. The scope and ambit of the sections have been the subject-matter of several decisions and it has been field that a mistake which is not obvious or which requires investigation or in respect of which two different views are possible is not a mistake covered or contemplated by section 154 of the Income-tax Act, 1961. We may refer to the decisions in the cases of T. S. Balaram v. Volkart Brothers, Income-tax Officer v. India Foils Ltd. and of Harbans Lal Malhotra Sons Private Ltd. v. Income-tax Officer Therefore, in order to come within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes any income by way of dividends received by it from an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, the assessee shall be entitled to a deduction from the income-tax with which it is chargeable on its total income for any assessment year of so much of the amount of income-tax calculated at the average rate of income-tax on the income so included (other than any such income on which no income-tax is payable under the provisions of this Act) as exceeds an amount of twenty-five per cent. thereof." The section first deals with the question of an assessee who is a company and whose total income includes divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be 21.03%. 21.03% would amount to Rs. 3,36,852. This would be deducted from the total liability and the total liability of the tax would be Rs. 18,50,842 and from this the petitioner is entitled to a deduction of Rs. 3,36,852. This was the mistake which was sought to be rectified. This mistake, in our opinion, was the result of miscalculation of the tax. It appears that the Income-tax Officer misread the section. He thought that section 85A provided for a charging section and laid down the rate of tax on the dividend income of this type. What the section on the other hand stipulated was a deduction from the general average rate applicable. It did not provide for any rate of tax for the dividend income. The facts of the instant case, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the intention at the time of original introduction of section 85A that the companies of this type should not bear income-tax at a rate of more than 25%. But the intention of the legislature must be found in the language used and here in the instant case in view of the language used, viz., "the average rate of income-tax on the income so included" and the expression "deduction" used in section 85A, it is not possible to say that the section as enacted was possible of a construction that the dividend income would bear tax at the hands of a company at the rate of 25% only. We are not, at this stage, concerned with the correctness or otherwise of the view taken by the Income-tax Officer because the rectification order is not under challenge. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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