Rectification cannot correct a debatable computation issue where capital employed was based on a plausible interpretation.

A rectification under section 154 could not be used to alter the computation of capital employed where the treatment of average profits or losses under rule 3(6) was reasonably open to more than one view. A debatable or plausible interpretation is not a "mistake apparent from the record", so the original computation could not be revised through rectification. The discussion follows the earlier ruling on the same issue, which had treated such rectification as impermissible.

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Issues: Whether the order passed under section 154 of the Income-tax Act, 1961, could validly rectify the computation of capital employed for the purposes of section 15C of the Indian Income-tax Act, 1922, read with rule 3(6) of the Indian Income-tax (Computation of Capital of Industrial Undertakings) Rules, 1949, when the inclusion or exclusion of average profits was a matter capable of two views.

Analysis: The question whether average profits or losses were to be added to or deducted from the capital employed under the relevant rule was held to be debatable and capable of more than one reasonable interpretation. Where the original computation was based on one such plausible view, the matter could not be treated as a mistake apparent from the record so as to attract rectification under section 154. The earlier decision on the same point, which had upheld the Tribunal's view that such rectification was impermissible, governed the controversy.

Conclusion: The rectification order was not valid in law and the issue was answered in favour of the assessee and against the Commissioner.

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