Income-tax---

----Rectification of mistakes---Investment allowance---Rectification on basis of Supreme Court judgment to withdraw set off of unabsorbed investment allowance---Amounts to taking different view on merits---Not permissible in rectification---.Indian Income Tax Act, 1961, Ss.32A & 154.

For the assessment years 1987-88 and 1988-89, the assessee was allowed investment allowance in a total sum of Rs.10,22,341. The assessee claimed set-off of unabsorbed allowance against income for the assessment year 1989-90. The Income-tax Officer allowed it, but later he initiated action under section 154 of the Income Tax Act, 1961, and withdrew the unabsorbed investment allowance relying on the judgment of the Supreme Court in the case of N.C. Budharaja & Co. (1993) 204 ITR 412. The Tribunal held that this was not permissible under section 154. On an application to direct reference:

Held, dismissing the application, that section 154 of the Act empowers the income-tax authority to rectify any mistake apparent from the record. Admittedly, in this case, the Income-tax Officer exercised the power under section 154 relying on the judgment of the Supreme Court in N.C. Budharaja & Co. (1993) 204 ITR 412. Interfering with the assessment order relying on a judgment of the Supreme Court could not be said to be rectifying a mistake apparent on the record. On the other hand, it was an order on the merits taking a different view relying on the judgment of the, Supreme Court. The. Tribunal was right in holding that the Income-tax Officer should not have rectified the assessment order under section 154 of the Act.

CIT v. N.C. Budharaa & Co. (1993) 204 ITR 412 (SC) ref.

S.R. Ashok for the Commissioner.

Nemo for the Assessee

JUDGMENT

MS. S. V. MARUTHI, J.---This petition is filed by the Revenue under section 256(2) of the Income Tax Act, 1961 (for short "the Act").

The facts in brief are as follows:

The assessee-firm was engaged in the business of manufacture and supply of RCC spun pipes and PSC concrete pipes. The assessee also under took the work of laying of RCC pipes and PSC concrete -pipes. For the assessment years 1987-88 and 1988-89, the assessee was allowed investment allowance in a total sum of Rs.10,22,341. The assessee claimed set-off of unabsorbed allowance against income for the assessment year 1989-90. The said unabsorbed allowance was set off against the income for the assessment year 1989-90. The said claim was accepted by the Assessing Officer while framing the assessment. But later, he initiated action under section 154 of the Act proposing to withdraw the unabsorbed investment allowance relying on the judgment of the Supreme Court in the case of CIT v. N.C. Budharaja & Co. (1993) 204 ITR 412. Accordingly, he passed the consequential order modifying the assessment made for the assessment year 1989-90 by withdrawing the set-off of unabsorbed investment allowance of the earlier years. On appeal, the Commissioner of Income-tax (Appeals) found that the judgment in N.C. Budharaja's case (1993) 204 ITR 412 (SC) is not applicable to the facts of the case. On further appeal to the Tribunal, the Tribunal held that the Income-tax Officer in exercise of the power under section 154 of the Act can only rectify the mistakes which are apparent from the record and he cannot go deep into the subject and upheld the order of the Commissioner of Income-tax (Appeals). The Tribunal also refused/rejected the petition filed by the Revenue under section 256(1). Hence, the Revenue is before us under section 256(2) of the Act.

Section 154 of the Act empowers the income-tax authority to rectify any mistake apparent from the record. Admittedly, in this case, the Income tax Officer exercised the power under section 154 relying on the judgment of the Supreme Court in N.C. Budharaja's case (1993) 204 ITR 412. Interfering with the assessment order relying on a judgment of the Supreme Court cannot be said to be rectifying the mistake apparent on the record. On the other hand, it is an order on the merits taking a different view relying on the judgment of the Supreme Court. Therefore, we agree with the view expressed by the Tribunal that the Income-tax Officer should not have rectified the assessment order under section 154 of the Act. The petition is, therefore, dismissed.

No costs.

M.B.A./138/FC Petition dismissed.