Law:

Section:

Section 154, read with section 145, of the Income-tax Act, 1961 - Rectification of mistakes - Apparent from record - Assessee, who was carrying on business of dairy farming, claimed loss in respect of sale or death of cattle in assessment years 1976-77, 1977-78 and 1978-79 and which was allowed - Subsequently ITO found that loss allowed under section 36(1)(vi) was not calculated properly as there was no cost of each and every animal was available on record - However method of valuation of cattle employed by assessee over past several years was accepted by revenue - Whether there was any mistake apparent from records which could be rectified under section 154 - Held, on facts, no Facts The assessee was carrying on the business of dairy farming and maintained cattle for this purpose. The assessee claimed loss on the sale or death of cattle in the assessment years 1976-77 to 1978-79. The same was allowed under section 36(1)(vi) and assessments were completed. Sub-sequently the ITO found that there was a mistake apparent from the record within the meaning of section 154, the loss calculated was wrong as no cost of each and every animal was available on the record. The assessee was served with a notice. On writ: Held The assessee maintained for the purpose of their business a large number of cattle. It was not feasible to identify each animal and to maintain a record of the cost of its acquisition. It was reasonable that the average cost of the acquisition of the cattle should be considered. Patently, cattle which do not yield milk for the time being but which may or may not yield milk in future must be valued at something less than the average cost of acquisition. Over the years the assessee had valued such cattle, called cattle under salvage at 50 per cent of the average cost of acquisition. It was proposed by the ITO by the impugned notice to rectify the assessments of the petitioners for the aforesaid assessment years in regard to this method of valuation. While the ITO might or might not be right in the method of valuation that he proposed to substitute, it could not be said that the method employed hereto before by the assessee, and accepted by the income-tax…

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