1983 (2) TMI 39 - HC - Income Tax

Court denies assessee's claim for section 80T benefit, rules in favor of rectification under section 154

The court held that the assessee was not entitled to claim the benefit of section 80T based on section 67(2) of the Income-tax Act, 1961. It determined ... Firm, Partners, Rectification Issues Involved:1. Entitlement of the assessee to claim the benefit of section 80T of the Income-tax Act, 1961, based on section 67(2) of the Act.2. Whether the grant of relief under section 80T of the Act constitutes a mistake apparent on the face of the record, warranting rectification under section 154 of the Act.Summary:Issue 1: Entitlement to Section 80T BenefitThe Tribunal held that section 67(2) of the Act does not assist the assessee in claiming the benefit of section 80T. The firm's assessment resulted in a business loss after setting off capital gains against the business loss. Therefore, the loss determined in the firm's assessment should be treated as a business loss in the partner's individual assessment. The court agreed with the Tribunal, stating that section 67(2) does not allow for a fresh assessment under each head of income in the partner's individual capacity. The apportionment of the firm's income or loss should be under the same heads as determined in the firm's assessment. Thus, section 67(2) does not support the assessee's claim for the benefit of section 80T.Issue 2: Mistake Apparent on the RecordThe court examined whether the grant of relief under section 80T by the ITO was a mistake apparent on the record, rectifiable under section 154 of the Act. The court noted that if a provision inapplicable to the facts is applied, it constitutes a mistake on the face of the record. The court referenced the Supreme Court's decision in T.S. Balaram, ITO v. Volkart Brothers, which stated that a mistake apparent on the record must be obvious and not require extensive reasoning. The court concluded that the ITO's erroneous application of section 80T was a mistake apparent on the record, justifying rectification under section 154. The court also cited other relevant decisions supporting the rectification of such mistakes.Conclusion:The court answered the question in the affirmative and against the assessee, confirming that the Tribunal was correct in holding that there was a mistake apparent on the face of the record in the original assessment, warranting rectification under section 154 of the Income-tax Act, 1961.