Law:

Section:

Section 154 of the Income-tax Act 1961 - Rectification of mistakes - Apparent from records - Assessment year 1971-72 - Assessee company established a new industrial undertaking - Plant for said undertaking was commissioned in March 1963-Assessee incurred losses, and thus, deficiency in relief under section 80J was carried forward and allowed in assessment year 1971-72 - Subsequently, ITO revised assessment by passing order under section 154 disallowing set off on ground that deficiency in relief under section 80J could not be carried forward beyond seventh assessment year commencing from initial assessment year 1963-64 - On instant reference, it was, however, seen that Tribunal had recorded a finding that production in assessment year 1963-64 was commenced by industrial undertaking only on trial basis and that it was in assessment year 1964-65 that production was undertaken on regular basis - Whether in view of Tribunal's finding, question as to whether new industrial undertaking of assessee could be said to begin manufacture or produce articles in assessment year 1963-64 or in assessment year 1964-65 became a debatable question - Held, yes - Whether, in such circumstances, Tribunal was right in holding that ITO had no jurisdiction to exercise powers under section 154 - Held, yes FACTS In the accounting year relevant to the assessment year 1963-64, the assessee company established a new undertaking for manufacture of iron tubes. The plant for the new industrial undertaking was commissioned in the month of March 1963. In the assessment years 1963-64 and 1964-65, the assessee suffered loss in that new venture. The entire loss in assessment year 1963-64 and a part of the loss in assessment year 1964-65 was set off against the income of the assessee in the assessment year 1965-66. The remaining loss in respect of the assessment year 1964-65 was set off against the income of the assessee for the assessment year 1966-67. For the assessment year 1967-68, the total income of the assessee was finally determined which was subject to depreciation, relief under section 80J and development rebate. After setting of depreciation and relief under section 80J the income was…

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