Rectification for capital computation error under section 154 upheld after Supreme Court ruling made the issue non-debatable.

Failure to deduct borrowed money and liabilities from the gross value of assets while computing capital for section 80-I was held to be a rectifiable mistake once the Supreme Court's ruling in Lohia Machines Ltd. removed the earlier debate on the issue. The court held that, because the point was no longer debatable, section 154 could be invoked to correct the computation error. The question was answered in the negative, in favour of the Revenue and against the assessee.

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Issues: Whether the failure to deduct borrowed money and liabilities from the gross value of assets in computing capital for the purpose of section 80-I of the Income-tax Act, 1961, constituted a mistake apparent from the record within section 154.

Analysis: The issue had earlier been treated as debatable, and section 154 was therefore thought to be inapplicable. In view of the binding decision of the Supreme Court in Lohia Machines Ltd. v. Union of India, the point was no longer debatable and the rectification provision became applicable to the computation error in question.

Conclusion: The question was answered in the negative, in favour of the Revenue and against the assessee.

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