Law:

Section:

Section 154 of the Income-tax Act, 1961 - Rectification of mistakes - Apparent from record - Assessment years 1962-63 and 1967-68 - Whether where an order of assessment is based upon decision of Tribunal which was subject-matter of reference to High Court, when order was made, then any error discovered in that order on basis of subsequent of High Court on that reference, would be an error apparent from record - Held, yes FACTS 'BM' and his sons, 'ML' and 'PK', constituted the assessee-firm. On 22-8-1960 'ML' purported to make a gift of Rs. 10,000 to his sister. On 21-9-1960 'BM' purported to make a gift of Rs. 10,000 to his daughter-in-law. The gifts were effected by transfer entries in the books of the assessee-firm. For the assessment year 1961-62, the ITO repelled assessee's claim for deduction of interest credited in the accounts of the two ladies on the said assessments. The AAC held that these were cross-gifts. The Tribunal did not agree with the AAC that the gifts constituted cross-gifts. However, it agreed with the case of the revenue that the same were invalid on the ground that the cash balance in the account of the assessee on the dates of the gifts were not sufficient to enable the donors to make the gifts. The Tribunal, therefore, upheld the disallowance. On a reference, the High Court held that the sole consideration that the cash balance available with the assessee-firm was inadequate for covering the amounts gifted by the donors by transfer entries made in the assessee's books was insufficient to invalidate the gifts. In conclusion, the Court held that these two gifts were valid. In the meantime, the assessments for subsequent assessment years were completed. The ITO and the AAC both disallowed the deduction of interest on the common ground that the assessee did not pursue the matter further for these years. On 6-8-1971, the assessee filed an application for rectification under section 154 praying that on the basis of the the High Court in the reference for the year 1961-62, the interest paid on the aforesaid gifts might be deducted from its income, inter alia, for the years 1962-63 and 1967-68. The AAC rejected the application. On appeal, the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492