Law:

Section:

Section 13, read with Second Schedule of the Companies (Profits) Surtax Act, 1964, read with section 256 of the Income-tax Act, 1961 - Rectification of mistakes - Apparent from record - Assessment year 1973-74 - Certain amount was set apart by assessee as reserve for bad and doubtful debts - During assessment, it was treated as reserve and included in computing capital - Later, IAC rectified assessment under section 13 holding that amount so set apart was a 'provision' and not a 'reserve' - Tribunal held that question as to whether sum was set apart to meet liability, which was well-known on date of balance sheet or was not so known, itself was not free from doubt and as such rectification was not justified - Whether there was any error in order of Tribunal - Held, no CASES REFERRED TO T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC), CIT v. Pratap Cashew Co. (P.) Ltd. [1979] 116 ITR 733 (Ker.) and State Bank of Patiala v. CIT [1996] 219 ITR 706/ 85 Taxman 416 (SC). J.K. Singhi for the Applicant S.M. Mehta and Ms. Preeti Sharma for the Respondent. ORDER R. Balia, J. - Heard the learned counsels for the parties. 2. This is an application under section 256(2) of the Income-tax Act, 1961 ('the Act') at the instance of the Commissioner, Jaipur. The applicant requires this Court to direct the Tribunal, Jaipur Bench, to refer the following question said to be a question of law arising out of the Tribunal's order dated 23-3-1981 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the issue arising from the order of the IAC (Assessment) was highly debatable and it is clearly beyond the purview of section 13 of the Companies (Profits) Surtax Act, 1964 ?" 3. An application under section 256(1) was rejected by the Tribunal, inter alia, on the ground that Tribunal has found as a fact that the amount was set apart by the company which could not be said that it was set apart to meet a known liability or the liability was well-known on the date of the balance sheet and, therefore, the amount set apart as a reserve for bad and doubtful debts was not a provision but a reserve liable to be computed for the purpose of…

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