Rectification under section 154 cannot decide industrial company status without clear record material for each assessment year.

Rectification under section 154 is limited to an obvious, patent mistake and cannot be used to decide a claim that depends on factual inquiry or a debatable legal issue. Whether a company qualifies as an industrial company turns on the nature of its business and the income attribution test, supported by material in the assessment record for each relevant year. Later treatment of the assessee as an industrial company, or a later rectification order, did not by itself show a mistake apparent from the record for the years in question. The claim was therefore not allowable under section 154.

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Issues: Whether the assessee's claim that it was an industrial company could be accepted in rectification proceedings under section 154 of the Income-tax Act, 1961, on the footing that the earlier assessments contained a mistake apparent from the record.

Analysis: Rectification under section 154 is confined to an obvious and patent mistake and cannot be used where the issue depends on investigation of facts or a debatable question of law. Whether a company is an industrial company depends upon the nature of its business and the required income attribution test, both of which must be supported by material available in the assessment record for each relevant assessment year. The fact that the assessee had been treated as an industrial company in later years, or that a later rectification had been made, was not enough by itself to establish a mistake apparent from the record in the years under reference. The record had not been examined to see whether sufficient material existed to justify the claim in each assessment year.

Conclusion: The assessee's claim could not be allowed under section 154 merely on the basis of later assessments or later rectification orders. The reference was answered against the assessee and in favour of the Revenue.

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