Rectification for a debatable tax issue fails when the alleged error is not a mistake apparent from the record.

Rectification power under section 13 of the Companies (Profits) Surtax Act, 1964 could not be used to revise chargeable profits where the point was debatable and had produced divergent Tribunal views. The Tribunal treated the allowance of the sum in computing chargeable profits as a question not free from doubt, noting conflicting Benches and the need for Special Bench reference on the treatment of deposits under the Companies Deposit (Surcharge on Income-tax) Scheme, 1976. Applying the principle that a rectification provision cannot correct a matter requiring detailed argument, it held that there was no mistake apparent from the record and the enhancement order was liable to be cancelled.

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Issues: Whether proceedings for rectification under section 13 of the Companies (Profits) Surtax Act, 1964 could be initiated where the point involved was debatable and had been the subject of divergent Tribunal views.

Analysis: The matter turned on whether the allowance of the sum of Rs. 1,15,000 in computing chargeable profits was a mistake apparent from the record. The Tribunal noted that conflicting views had already been expressed by different Benches on the treatment of the amount deposited under the Companies Deposit (Surcharge on Income-tax) Scheme, 1976, and that the issue had required reference to Special Benches. Applying the principle that a rectification power akin to section 154 of the Income-tax Act, 1961 cannot be used where the point requires detailed argument or is not free from doubt, the view was taken that the alleged error was not a patent mistake.

Conclusion: Rectification under section 13 was not justified, and the order enhancing chargeable profits was liable to be cancelled.

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