INCOME TAX ACT, 1961

Section 154

Rectification under section 154 - Debatable issue - Profit on sale of show-room remained to be reduced while computing profits under section 115JB -

Assessee sold a fixed asset, namely, show-room and earned profit from same. Case of assessee was that block of asset of the office premises did not cease to exist and accordingly provisions of section 50 were not applicable in terms of tax liability on Short term capital gains and therefore, said amount was required to be reduced from computation of income. However, same was not done at time of filing of the return of income. Assessee sought rectification to return of income during course of assessment proceedings pleading that profit on sale of show-room remained to be reduced while computing profits under section 115JB. However, AO denied to carry out such rectifications. Held: The power of rectification under section 154 can be exercised only if there is a mistake apparent from the record of the assessment of the assessee. In instant case, mistake as pointed out by assessee was not apparent on record; not obvious and patent mistake. In instant case, mistakes could be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. In instant case, mistakes pointed out by assessee were, rather debatable and outside the purview of section 154.

Followed:TS Balaram, ITO v. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC) : 1971 TaxPub(DT) 355 (SC).

REFERRED : CIT v. Titaghar Paper Mills Co. Ltd. (1992) 62 Taxman 40 (Cal) : 1991 TaxPub(DT) 0234 (Cal-HC), CIT v. Shri Sandeep Bipinchandra (1986) 27 Taxman 562 (Guj.) : 1987 TaxPub(DT) 0313 (Guj-HC) and Raja Hari Chand Raj Singh v. CIT (1978) 114 ITR 727 (All.) : 1978 TaxPub(DT) 955 (All-HC).

FAVOUR : Against the assessee.

A.Y. : 2011-12

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