Law:

Section:

Section 13, read with Rule 4 to the second schedule to the companies (Profits) Surtax Act, 1964 - Rectification of mistakes - Assessment years 1967-68 to 1971-72 - For relevant assessment years, assessee-company was assessed to surtax by ITO - ITO issued various notices under section 13 and sought to (1) modify computation of capital proportionately as per deductions allowed to assessee under section 80-I and 80J of Income-tax Act, 1961, (2) sought to rectify excessive increase of capital allowed to assessee on issue of bonus shares, (3) proposed to modify capital computation by withdrawing sums which was set aside for capital redemption reserve and general reserve - Whether mistakes sought to be rectified by ITO by issuing notice were not one which were patent or self evident on face of record and issue raised highly debatable questions, therefore, ITO had no jurisdiction under section 13 to rectify said mistakes - Held, yes - Whether, consequently notices issued by ITO deserved to be quashed - Held, yes FACTS For the relevant assessment years, the assessee-company was assessed to surtax by the ITO. After the orders of assessment were passed, the ITO in exercise of the powers conferred under section 13 issued various notices to the assessee, with a view to rectify certain mistakes apparent on the face of the record. By the first notice the ITO sought to modify the computation of capital proportionately as per the deductions allowed to the assessee under section 80-I and 80J of the Income-tax, 1961. By the second notice, the ITO sought to rectify the excessive increase of capital allowed to the assessee on issue of bonus shares. By the third notice the ITO proposed to modify capital computation by withdrawing the sum which was set aside for capital redemption reserve and general reserve. On writ: HELD It is a well established principle that a decision on a debatable point of law is not a mistake apparent on the face of the record. As regard to the first notice issued by the ITO the question as to whether the expression a part of the income, profits and gains of a company is not includible in its total income as computed under the Income-tax Act, appearing in…

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