Rectification of an assessment can withdraw an 80P deduction granted contrary to binding Supreme Court law.

Interest earned from deposits with nationalised banks was not eligible for deduction under section 80P(2)(a)(i) where binding Supreme Court law required its exclusion. An assessment granting the deduction contrary to that law constituted a mistake apparent from the record and could be rectified under section 154. A contrary coordinate-bench view that had not considered the Supreme Court ruling was treated as per incuriam and non-binding. The rectification therefore validly withdrew the deduction.

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Issues: Whether rectification under section 154 could be invoked to withdraw deduction under section 80P(2)(a)(i) on interest earned from deposits with nationalised banks.

Analysis: The Supreme Court ruling governing eligibility under section 80P was treated as binding law. An assessment granting deduction contrary to that ruling constituted a mistake apparent from the record capable of rectification. The contrary coordinate-bench decision, having proceeded without considering the binding Supreme Court ruling, was per incuriam and did not govern the Division Bench.

Conclusion: Rectification withdrawing the section 80P deduction was valid; the issue was decided against the assessee.

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