Rectification under section 254(2) cannot reopen settled tax treatment of interest on enhanced compensation.

Rectification under section 254(2) is confined to correcting obvious and patent mistakes; it cannot be used to review an order or re-argue a debatable issue. The Tribunal noted that its earlier decision had followed the Supreme Court ruling in Ghanshyam HUF on the taxability of interest under section 28 of the Land Acquisition Act, 1894, and held that later contrary High Court rulings did not disclose any apparent error on the record. It also relied on Govindbhai Mamaiya, which reiterated that such interest forms part of enhanced compensation and is taxable on receipt basis. The rectification applications were therefore held not maintainable.

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Issues: Whether the Tribunal could rectify its earlier order under section 254(2) of the Income-tax Act, 1961 on the basis of subsequent High Court decisions concerning the taxability of interest received on enhanced compensation under section 28 of the Land Acquisition Act, 1894, and whether the earlier order suffered from any apparent error.

Analysis: The Tribunal held that its earlier decision had followed the Supreme Court ruling in Ghanshyam HUF and that the later contrary High Court judgments did not disclose any mistake apparent from the record. It also noted that the Supreme Court in Govindbhai Mamaiya had reiterated the same legal position that interest under section 28 of the Land Acquisition Act, 1894 forms part of enhanced compensation and is taxable on receipt basis. The Tribunal further observed that proceedings under section 254(2) permit only rectification of obvious and patent mistakes and do not authorise review or re-argument on a debatable question.

Conclusion: The misc. applications were not maintainable as no apparent error in the earlier order was shown, and the rectification request failed.

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