Law: Income Tax Act, 1922

Section: 35

Section 154 of the Income-tax Act, 1961 [Corresponding to section 35 of Indian Income-tax Act, 1922], read with Schedule I, Part II, Para D of the Finance Act, 1957 - Rectification - Of mistakes apparent from record - Assessment year 1957-58 - Whether a mistake becomes a mistake apparent from record when it is a glaring, obvious or self-evident mistake and a mistake which has to be discovered by a long drawn process of reasoning or examining arguments on points where there may conceivably be two opinions, it cannot be said to be a mistake or error which is apparent from record - Held, yes - By Finance Act, 1956, a scheme had been enacted which was obviously intended for purpose of acting as a deterrent on certain companies declaring dividends in excess of 6 per cent. of its capital investment - A rebate was granted to certain companies which satisfied certain conditions mentioned therein. Amount of rebate which was so calculated for purpose of reducing amount of super-tax was liable to be reduced if that company declared dividends in excess of 6 per cent. of its paid-up capital in relevant previous year - By the Finance Act, 1957, a scheme was further enlarged in respect of reductions in amount of rebate - Held, yes - During assessment year 1956-57 assessee company declared nil income while declared dividend in excess of statutory limit of 6 per cent of capital investment - Assessment for this year was duly recomputed - For next year i.e. assessment year 1957-58, there was positive income - (In computing corporation tax rebate was to be allowed to assessee-company - While computing rebate an amount was deducted therefrom on account of declaration of dividend in excess of 6 per cent for this year and assessment was completed - Subsequently ITO initiated rectification proceeding for assessment year 1957-58 on ground that an amount was also to be deducted from rebate as carry forward unabsorbed deduction on account of excess declaration of dividend in earlier year i.e., assessment year 1956-57 - He, subsequently, passed rectification order - Having regard to scheme of Finance Act of 1956 and sub-clause (a) of clause (i) of the second proviso of Schedule D of the…

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