Section 154 rectification unavailable where depreciation rate turns on a debatable question of law and fact.

Rectification under section 154 is unavailable where the proposed correction depends on a debatable question of law or mixed law and fact. The court held that whether the assessee qualified as a mineral oil concern, and thus whether depreciation at 10% was allowable instead of 7%, involved interpretation of the relevant schedule entry, statutory context, and factual application. Because the issue was not a clear, patent mistake apparent from the record, section 154 could not be used to reduce the depreciation rate. The referred question was answered in favour of the assessee.

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Issues: Whether the Tribunal was justified in holding that no mistake apparent from the record existed so as to permit rectification under section 154 of the Income-tax Act, 1961, for reducing depreciation from 10% to 7% for the relevant assessment years.

Analysis: The allowance of depreciation at 10% depended on whether the assessee could be treated as a "mineral oil concern" within the relevant schedule entry. The scope of that entry, the meaning of "mineral oil", the effect of the assessee dealing in ethyl alcohol rather than directly extracting petroleum, and the relevance of allied statutory definitions and commercial understanding all raised questions of interpretation and factual application. A rectification under section 154 is confined to clear, patent, and incontrovertible mistakes apparent from the record, and is not available where the issue is debatable or reasonably capable of more than one view. Since the applicability of the higher depreciation rate depended on contested construction and factual inquiry, the matter could not be treated as an obvious mistake.

Conclusion: The rectification was not permissible under section 154, and the answer to the referred question was in favour of the assessee.

Ratio Decidendi: Section 154 cannot be invoked to correct an assessment where the proposed correction depends on a debatable question of law or mixed law and fact that admits of more than one reasonably tenable interpretation.

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