Law: Income Tax Act, 1961

Section: 115J,143(1)(a)

(a) Income Tax-Reference---Assessment---Adjustments under S. 143(1)(a) for computation of book profit under S. 115J---Exclusion of unabsorbed depreciation in calculating loss---Is of debatable nature---Is outside the purview of S. 143(l)(a)---Indian Income Tax Act, 1961, Ss. 115J & 143(1)(a). In exercise of jurisdiction under section 143(1)(a) of the Income Tax Act, 1961, as it stood at the relevant point of time, the Assessing Officer cannot- proceed to make such adjustments regarding which there could be scope for doubt or argument in the sense that two views can reasonably be taken in the matter. In the proceedings under section 143(1)(a) of the Act for the years 1988 to 1990, the Assessing, Officer computed the loss excluding unabsorbed depreciation for earlier - years, while arriving at the book profit under section 115J, whereas according to the assessee's return, loss was calculated including unabsorbed depreciation. Thereafter, the assessee filed a petition for rectification under section 154. The assessee contested the method of computation of business loss as per section 115J while processing the return under section 143(1)(a) and that petition was rejected on the ground that there was no apparent mistake in the "intimation" which needs to be rectified under section 154. The Tribunal held that in view of the debatable nature of the issue involved, the Assessing Officer ought not to have resorted to prima facie adjustment under the provisions of section 143(1)(a) as it then stood. On the date of issuing the intimation under section 143(1)(a) or rectification order under section 154, the interpretation and computation of "loss" as per section 115J was the subject-matter of controversy and in March, 1992, the Hyderabad Bench of the Tribunal resolved the issue in favour of the Revenue. At the time the Assessing Officer completed the assessment under section 143(l)(a) of the Act by impliedly rejecting the assessee's claim and making necessary adjustments on the view taken by him, the legal position was in a state of flux. On a petition under section 256(2) for calling for a reference. (b) Income-tax--- ----Rectification of mistakes---Adjustment under…

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