Section 155(3) covers tax later held not payable, and rectification may follow from writ proceedings.

Section 155(3) of the Income-tax Act permits consequential amendment of an income-tax assessment where excess profits tax or business profits tax payable is modified in appeal, revision or any other proceeding, or is assessed after the income-tax assessment. The term "payable" is used in the sense of tax determined as due, not mere liability, so the provision can apply even where the tax ceases to be payable altogether. The phrase "any other proceeding" is broad enough to include writ proceedings, and rectification under section 154 may be used to give effect to that change in tax position.

---

---

Issues: Whether section 155(3) of the Income-tax Act, 1961 applied where excess profits tax deduction had been allowed in income-tax assessments but the notices initiating excess profits tax proceedings were quashed in writ proceedings, and whether the Income-tax Officer could rectify the assessments under section 154 read with section 155(3).

Analysis: Section 155(3) contemplates consequential amendment of income-tax assessment in two situations: where the excess profits tax or business profits tax payable is modified in appeal, revision or any other proceeding, and where such tax is assessed after completion of the corresponding income-tax assessment. The controlling expression is "payable", which is distinct from mere liability. The provision is not confined to cases of partial variation of tax; read in context, it also covers total cessation of payability when the tax is held not payable in proceedings. The phrase "any other proceeding" is wide enough to include writ proceedings. The rectification mechanism under section 154 was therefore available for giving effect to the change in the tax position.

Conclusion: Section 155(3) was applicable, and the rectification orders were sustainable; the question was answered in favour of the Revenue.

Ratio Decidendi: For purposes of section 155(3), "payable" refers to tax determined as due and the expression "modified in appeal, revision or any other proceeding" is to be construed contextually so as to include proceedings that render the tax not payable, including writ proceedings.

---