Rectification limits on debatable development rebate claims: a disputed Schedule interpretation was not a mistake apparent from the record.

Section 154 rectification cannot be used to revise a development rebate allowance where the eligibility turns on a reasonably debatable interpretation of the Fifth Schedule. The assessment record showed application of mind by the Income-tax Officer, including an initial addition and later partial allowance, so any error was not patent or self-evident from the record. On that basis, the rectification was held unsustainable and the development rebate could not be altered through section 154 proceedings.

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Issues: Whether the Income-tax Officer could invoke rectification powers under section 154 to alter the development rebate originally allowed, or whether the matter involved a debatable question beyond rectification.

Analysis: The assessee manufactured woollen yarn and the controversy turned on the interpretation of the relevant item in the Fifth Schedule governing development rebate. The original assessment showed application of mind by the Income-tax Officer, who first made an addition and thereafter allowed part of the claim, indicating that the issue was not a patent or self-evident error. Since the eligibility of the machinery for the higher rate of development rebate depended on a reading of the Schedule that was reasonably open to debate, the error, if any, was not a mistake apparent from the record.

Conclusion: The rectification under section 154 was not sustainable and the assessee succeeded on this issue.

Final Conclusion: The impugned rectification was set aside and the development rebate claim could not be altered through section 154 proceedings.

Ratio Decidendi: A point that is reasonably debatable on interpretation of the relevant statutory schedule cannot be treated as a mistake apparent from the record for the purposes of rectification.

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