Rectification of mistaken development rebate set-off upheld where the statute clearly barred carry forward for pre-1958 assets.

A mistaken allowance of set-off for unabsorbed development rebate relating to assets installed before 1 January 1958 was treated as a mistake apparent from the record and rectifiable under section 154. The statutory scheme distinguished between assets installed before and after 1 January 1958: carry forward of unabsorbed development rebate was available only within the limits set by the relevant provisions, including sections 33(2) and 33(3), and did not extend to the excluded pre-1958 class. Because the allowance contradicted that clear statutory restriction, no debatable interpretive issue arose, and rectification was upheld in favour of the revenue.

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Issues: Whether the grant of set-off of unabsorbed development rebate relating to assets installed prior to 1 January 1958 could be treated as a mistake apparent from the record and rectified under section 154 of the Income-tax Act, 1961.

Analysis: The relevant legislative history showed a clear distinction between development rebate attributable to machinery installed before 1 January 1958 and machinery installed thereafter. Under the 1922 Act, carry forward of unabsorbed development rebate arose only by the later amendment and only in respect of assets installed after 31 December 1957. The 1961 Act continued the same restriction in section 33(2), and section 33(3) governing amalgamation carried forward only the balance allowable under section 33(2). On that framework, the successor-company could not lawfully claim carry forward of development rebate for assets installed prior to 1 January 1958. The erroneous allowance of such set-off was therefore evident from the record and required no debatable interpretive exercise.

Conclusion: The rectification under section 154 was valid, and the issue was decided against the assessee and in favour of the revenue.

Final Conclusion: The reference was answered in the negative, confirming that the original allowance of set-off for pre-1 January 1958 assets was rectifiable as an apparent mistake.

Ratio Decidendi: Where the statutory scheme plainly excludes carry forward of a tax allowance for a specified class of assets by reference to clear dates and conditions, an incorrect allowance contrary to that scheme constitutes a mistake apparent from the record and is rectifiable under the rectification provision.

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