Rectification of inconsistent depreciation findings on non-compete fees was allowed where the record conflicted with applicable precedent.

Rectification under section 254(2) was sought for inconsistent findings on depreciation for non-compete fees. For the fee paid to Medispan Ltd., the earlier operative result conflicted with the precedent followed in the assessee's own case, so the mistake apparent from the record was corrected and depreciation was allowed. For the fee paid to Sudhir Vaid in relation to Concord Biotech Limited, the earlier result was corrected to reflect that the item fell outside depreciation under section 32(1)(ii), so the claim was disallowed. The Miscellaneous Application succeeded and the earlier order was amended accordingly.

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Issues: (i) Whether the earlier order required rectification under section 254(2) of the Income-tax Act, 1961, in so far as it dealt with depreciation on non-compete fee paid to Medispan Ltd.; (ii) Whether the earlier order required rectification under section 254(2) of the Income-tax Act, 1961, in so far as it dealt with depreciation on non-compete fee paid to Sudhir Vaid in relation to Concord Biotech Limited.

Issue (i): Whether the earlier order required rectification under section 254(2) of the Income-tax Act, 1961, in so far as it dealt with depreciation on non-compete fee paid to Medispan Ltd.

Analysis: The earlier consolidated order had followed the prior decision in the assessee's own case but the operative result recorded for this item was inconsistent with the precedent relied upon. The Miscellaneous Application pointed out that the corresponding earlier decision had allowed depreciation on this item, and the inconsistency disclosed a mistake apparent from the record.

Conclusion: Rectification was warranted and the assessee's claim for depreciation on this item was to be allowed.

Issue (ii): Whether the earlier order required rectification under section 254(2) of the Income-tax Act, 1961, in so far as it dealt with depreciation on non-compete fee paid to Sudhir Vaid in relation to Concord Biotech Limited.

Analysis: The earlier consolidated order had also recorded a result for this item that was contrary to the binding treatment in the assessee's own earlier case. On reconsideration, the item was held to fall outside depreciation under section 32(1)(ii) of the Income-tax Act, 1961, and the earlier order was therefore corrected to reflect the proper conclusion.

Conclusion: Rectification was warranted and the assessee's claim for depreciation on this item was to be disallowed.

Final Conclusion: The Miscellaneous Application succeeded, and the earlier order was rectified by substituting the corrected findings on both depreciation issues.

Ratio Decidendi: A manifest inconsistency between the operative findings of an order and the binding precedent actually applicable to the issue constitutes a mistake apparent from the record, correctable in rectification proceedings under section 254(2) of the Income-tax Act, 1961.

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