Law:

Section:

Section 154 of the Income-tax Act, 1961 - Rectification of mistake - Apparent from records - Assessee-bank advanced money to its constituents, brought bonds of an Electricity Board for them but in its own name, kept them in its own custody but the real and beneficial owners were said constituents - Assessee claimed credit for tax deducted at source on interest income of said bonds though interest income from said bonds had not been included by assessee in its return - ITO allowed credit for said tax deducted at source but subsequently withdrew it by passing an order under section 154 - Whether giving credit of tax deducted at source on said interest income which had not been included in assessee's total income amounted a mistake apparent from record and, thus, ITO was justified in rectifying it under section 154 - Held, yes Facts The assessee-banking company had advanced monies to its constituents and on their instructions, purchased bonds of State Electricity Board from out of said amount. The bonds had been taken in the name of the assessee and kept in its possession as a security for the loan advanced to the constituents for the purchase of these bonds. The said bonds had been purchased for the benefits of the constituents, and the assessee did not show the interest income from these bonds in its return for the relevant assessment year, but claimed the credit of certain amount which was the tax deducted at source in respect of the interest income on aforesaid bonds. The ITO allowed the said claim of the assessee. But subsequently he took the view that since these securities were never the properties of the assessee, it could not take the credit of tax deducted at source on the interest income from these bonds. The ITO, therefore, treated the same as a mistake apparent from record and rectified the mistake under section 154 and withdrew the said credit. On appeal, the Tribunal, however, held that the rectification proceedings could not be sustained in law as it was not a case of mistake apparent from the record, because the question as to who was the real owner of the securities as between the assessee and its constituents was a debatable issue and,…

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