TMI Blog1983 (8) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... flected in the balance sheet under the head 'Reserve against export obligation' as a reserve, for the purpose of computing the capital of the assessee-company for purposes of allowing standard deduction in accordance with the provisions of the Second Schedule to the Act. Subsequently, the ITO issued a notice dated 20-2-1981, under section 13 of the Act requiring the assessee-company to show cause why the assessment be not rectified as there was an apparent mistake in the original assessment inasmuch as, standard deduction was allowed on a sum of Rs. 35,50,000 which according to the ITO 'was a provision and not a reserve'. The assessee objected to the ITO's action by stating that section 13 was not applicable in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) the present appeal has been filed by the revenue and the grounds taken are as follows: "1. On the facts and in the circumstances of the case, the Commissioner (Appeals) was not justified in holding that there was no mistake of law, which was rectified under section 13 by the ITO. 2. On the facts and in the circumstances of the case, the Commissioner (Appeals) was not justified in holding that the sum of Rs. 35,50,000 was in the nature of a 'reserve' and not a 'provision' as held by the ITO." 2. The learned departmental representative by making reference to the director's report for the years ending 30-9-1970 and 30-9-1971, respectively, pointed out that the assessee transferred two amounts of Rs. 14,50,000 and Rs. 21 lakhs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuous efforts in justifying the stand of the ITO even though the facts narrated by him, were neither recorded by the ITO in the impugned order under section 13 nor discussed by the Commissioner (Appeals) while allowing the assessee's appeal against the ITO's order of rectification. 3. The assessee's learned counsel in supporting the Commissioner (Appeals)'s order stated that the arguments advanced by the departmental representative were out of context inasmuch as, they were irrelevant as the Commissioner (Appeals) did not discuss the merits of the ITO's order since the appeal was decided on the point of jurisdiction, viz., whether the mistake sought to be rectified by the ITO was really a patent or an apparent mistake within the meaning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been urged that the Commissioner (Appeals) was justified in cancelling the ITO's rectificatory order passed in terms of section 13. 4. We have considered the submissions of the rival parties concerned made at length before us. In our opinion, the Commissioner (Appeals)'s order does not require any interference inasmuch as, the mistake sought to be rectified did not come within the ambit of section 13. The expression 'reserve' has not been defined in the Act, and with a view to ascertain whether a particular sum is a reserve or a provision, one has to refer to the relevant provisions of the Companies Act, 1956, in order to understand the meanings attached to these two words. It has been observed by their Lordships of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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