Debatable accounting classification is not a mistake apparent from the record, barring rectification under surtax law.

Rectification under section 13 of the Companies (Profits) Surtax Act, 1964 is limited to obvious and patent mistakes; it cannot be used where the issue requires detailed reasoning or reappraisal of facts. The distinction between a provision and a reserve for bad and doubtful debts depends on commercial accounting principles and on whether the amount was set aside to meet a known liability. Because that classification was debatable and the relevant facts were not admitted in a way that allowed simple correction, the alleged error was not a mistake apparent from the record. Accordingly, rectification was unavailable and the reference application under section 256(2) of the Income-tax Act, 1961 was rejected.

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Issues: Whether the alleged error in treating the amount set apart for bad and doubtful debts as a reserve, and not a provision, was a mistake apparent from the record so as to justify rectification under section 13 of the Companies (Profits) Surtax Act, 1964 and the consequent reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The scope of rectification is confined to obvious and patent mistakes and does not extend to matters that require a long drawn process of reasoning or reappreciation of facts and evidence. The distinction between a provision and a reserve depends on established principles of commercial accounting and often turns on whether the amount was set apart to meet a known liability or a liability already known to exist on the balance-sheet date. The Tribunal had found that this question was itself debatable and that the relevant facts were not admitted in a manner permitting a simple correction on the record. Such an enquiry would require drawing inferences from primary facts, which is outside the ambit of rectification.

Conclusion: The purported error was not a mistake apparent from the record, and the power of rectification under section 13 of the Companies (Profits) Surtax Act, 1964 could not be invoked. The application under section 256(2) of the Income-tax Act, 1961 was rightly rejected.

Ratio Decidendi: A question that is debatable or that can be resolved only by a detailed process of reasoning and factual reappraisal is not a mistake apparent from the record and cannot be corrected in rectification proceedings.

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