Law: Income Tax Act, 1961

Section: 37

Income-tax---Rectification of mistakes--Business expenditure--Deduction of Rasoi expenses---Decisions of High Court having jurisdiction in that area that such deduction was not admissible---Grant of deduction was a mistake which could be rectified---Fact that other High Courts had taken a contrary view with regard to deduction was not relevant---Indian Income Tax Act, 1961, Ss.37 & 154. In the presence of a decision of the Supreme Court or of the reference Court, the authorities are bound by that opinion. If there is a settled view of the Court on a point, which view had not been taken note of by the Income-tax Officer while framing the original assessment, it is open to the Income-tax Officer to pass a rectification order under section 154 of the Income Tax Act, 1961, there being a mistake apparent on the face of the record. Held, that the High Court of Punjab and Haryana had held that Rasoi expenses are not admissible for deduction (CIT v. Gheru Lal Bal Chand (1978) 111 ITR 134 (P&H). It was true that the Bombay High Court and the Gujarat High Court had taken a view contrary to the one taken by the Punjab and Haryana High Court, but in the presence of a definite opinion of the Punjab and Haryana High Court, the same shall prevail and is binding on the functionaries working within the territorial jurisdiction of that Court. The assessing authority could not have taken a view contrary to the one taken in the case of Gheru Lal Bal Chand (1978) 111 ITR 134 (P & H). The fact that he had done so was a mistake apparent from the record. The Income-tax Officer was justified in proceedings under section 154 to disallow the deduction made in respect of these expenses. CIT v. East India Cold Storage (P.) Ltd. (1996) 218 ITR 668 (Cal.); CIT v. Gher Lal Bal Chand (1978) 111 ITR 134 (P&H); CIT v. Patel Brothers & Co. Ltd. (1977) 106 ITR 424 (Guj.); CIT v. Shah Nanji Nagsi (1979) 116 ITR 292 (Bom.) and CIT v. Vardhman Spinning (1997) 226 ITR 296 (P&H) ref. JUDGMENT G. C. GARG, J.---The Income-tax Appellate Tribunal, Amritsar, has referred for the opinion of this Court the following question of law: "Whether, on the facts and in the circumstances of…

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