Rectification under Section 154 fails where the deduction adjustment issue is debatable and not apparent from the record.

Rectification under Section 154 of the Income-tax Act, 1961 cannot be used where the proposed correction depends on a debatable legal issue and is not a mistake apparent from the record. The dispute concerned whether the deduction under Section 80-IA could be reduced while computing deduction under Section 80HHC, but the legal position on that inter se adjustment was not conclusively settled at the time of rectification. The HC held that such controversy fell outside the scope of Section 154, upheld the Tribunal's view, and found that no substantial question of law arose. The Revenue's appeal therefore failed.

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Issues: Whether rectification under Section 154 of the Income-tax Act, 1961 could be invoked to reduce the deduction under Section 80-IA for computing the deduction under Section 80HHC, when the issue was debatable.

Analysis: The Tribunal found that the legal position on the inter se adjustment between the deductions was controversial and had not been conclusively settled at the time of the rectification order. A debatable issue does not amount to a mistake apparent from the record, and therefore cannot be corrected in proceedings under Section 154. The High Court held that the Tribunal was justified in treating the issue as outside the scope of rectification and that no substantial question of law arose.

Conclusion: The invocation of Section 154 was invalid and the Revenue's appeal failed.

Ratio Decidendi: Rectification under Section 154 of the Income-tax Act, 1961 is impermissible where the purported error depends on a debatable legal issue and is not a mistake apparent on the face of the record.

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