Rectification of apparent mistakes under section 254(2) corrected the disposal of grounds, while an undecided issue went back for fresh hearing.

Rectification under section 254(2) is available to correct mistakes apparent from the record in the Tribunal's earlier disposal of Grounds 1 and 2; the order was corrected because typographical and consequential errors had wrongly recorded their outcome, and those grounds were treated as allowed in favour of the Revenue. A separate issue concerning disallowance of software expenditure under section 40(a)(i) was not finally adjudicated on merits, as the earlier discussion had proceeded on an alternative depreciation plea. That ground was therefore not capable of final determination in rectification proceedings and was directed for fresh consideration by the regular Bench.

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Issues: (i) whether the Tribunal's earlier order contained mistakes apparent from the record warranting rectification under section 254(2) of the Income-tax Act, 1961 in relation to Grounds 1 and 2; (ii) whether Ground 3 concerning disallowance under section 40(a)(i) had remained unadjudicated and therefore required fresh consideration by the regular Bench.

Issue (i): Whether the Tribunal's earlier order contained mistakes apparent from the record warranting rectification under section 254(2) of the Income-tax Act, 1961 in relation to Grounds 1 and 2.

Analysis: The earlier order was found to contain typographical and consequential errors in the disposal of the first two grounds. The corrected reading of the relevant paragraphs showed that both grounds were intended to be allowed in favour of the Assessing Officer.

Conclusion: The order was rectified and Grounds 1 and 2 were treated as allowed in favour of the Revenue.

Issue (ii): Whether Ground 3 concerning disallowance under section 40(a)(i) had remained unadjudicated and therefore required fresh consideration by the regular Bench.

Analysis: Ground 3 related to disallowance of software expenditure under section 40(a)(i), while the earlier discussion had accepted the assessee's alternative plea on depreciation for imported software. On that basis, the application disclosed that the specific ground remained unattended on merits and could not be treated as finally decided in the rectification proceeding.

Conclusion: Ground 3 was directed to be placed before the regular Bench for afresh.

Final Conclusion: The miscellaneous application succeeded to the extent of rectifying the earlier order on Grounds 1 and 2, while the controversy relating to Ground 3 was left for fresh adjudication before the regular Bench.

Ratio Decidendi: Rectification under section 254(2) is permissible to correct apparent errors in the recorded disposal of grounds, but an issue that has not been adjudicated on merits cannot be conclusively decided in rectification proceedings and must be taken up for fresh hearing.

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