Law:

Section:

Section 154 of Income-tax Act, 1961, read with Articles IV to VI of Agreement for Avoidance of Double Taxation between India and Pakistan - Rectification of mistake - Apparent from record - Assessment year 1962-63 - ITO having noticed that abatement on Pakistan income was not properly allowed and that Pakistan income assessed in India was also computed wrongly, rectified mistake under section 154 - AAC dismissed assessee's appeal in regard to ITO's incompetence to resort to section 154 - Tribunal held that a plain reading of Article VI did not admit of any contrary opinion, and that ITO at time of original assessment made a clear and patent mistake in calculating abatement which was rightly and correctly calculated by successor - ITO in accordance with Article VI - Whether in view of facts that under Article VI, ITO had, firstly, to ascertain proportion of doubly taxed income to total income and then to apply such proportion to tax payable on doubly taxed income, ITO at time of original assessment applied said formula while computing income tax but omitted to do so while computing corporation tax, said omission was a patent and obvious mistake rectifiable under section 154 - Held, yes FACTS The ITO having noticed that the abatement on the Pakistan income was not allowed properly and that the Pakistan income assessed in India was also computed wrongly, rectified the mistake under section 154 after hearing the assessee, enhanced the Pakistan income and computed the total revised income. He also computed the double taxation abatement on the basis of the average rate of tax applicable to the excess worked out under the Agreement for Avoidance of Double Taxation between India and Pakistan. On appeal, the AAC rejected the assessee's plea that the ITO was not free to resort to section 154. On second appeal, the Tribunal held that Article VI did not admit of any contrary opinion and that the ITO at the time of the original assessment made a clear and patent mistake in calculating the abatement which was rightly and correctly calculated by the successor - ITO in accordance with Article VI of the agreement. On reference : HELD Article VI(a) says that for the purposes of…

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