Exempt interest claim needs factual verification before rectification can be refused under income-tax law.

The assessee's claim that income shown as dividend was actually exempt interest required factual verification, because the taxability question depended on whether the receipts were interest from investments in government companies and covered by Section 10 of the Income-tax Act, 1961. The earlier treatment under Section 143(1) and refusal to rectify under Section 154 was based on the view that the alleged correction was not an obvious or patent mistake. As the issue turned on examination of holding statements and supporting details, the matter was remitted for reconsideration and verification, with relief to follow if the exempt-income claim was established.

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Issues: Whether the assessee's claim that the amount returned as dividend income was in fact exempt interest income required factual verification and, if so, whether the matter should be restored for reconsideration under the rectification jurisdiction.

Analysis: The claim turned on whether the receipts were truly interest from investments in government companies and whether such receipts were exempt under Section 10 of the Income-tax Act, 1961. The earlier processing under Section 143(1) and the refusal to rectify under Section 154 were based on the view that the correction of the nature of income from dividend to interest could not be treated as an obvious or patent mistake. The record, however, indicated that the controversy depended on examination of the holding statements and supporting details, and therefore required verification before the taxability claim could be conclusively rejected.

Conclusion: The matter was remitted to the appellate authority for necessary verification, and relief was to follow if the assessee's exempt-income claim was found correct.

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