Deduction under section 36(1)(viia)(c) and 36(1)(viii) recomputation not permissible via rectification; Revenue appeal dismissed and addition deleted

Whether recomputation of deductions under sections 36(1)(viia)(c) and 36(1)(viii) could be corrected by rectification was contested; the tribunal found the issue involves conflicting precedents and is a debatable question of law rather than a mistake apparent from records, so it cannot be resolved under section 154. Because the calculation of the two deductions required substantive adjudication and not mere clerical correction, the addition made on recomputation was deleted and the revenue appeal was dismissed.

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Issues: Whether the Assessing Officer was entitled to recompute and reduce the deductions claimed under section 36(1)(viia)(c) and section 36(1)(viii) of the Income-tax Act, 1961 by exercise of rectification under section 154 on the ground of a purported mistake apparent from the record.

Analysis: The dispute involves the proper sequence and computation of deductions under sections 36(1)(viia)(c) and 36(1)(viii) and whether the AO's re-computation constitutes a rectification of a mistake apparent from record under section 154. The Tribunal examined competing decisions of coordinate benches and found the question to be debatable - differing precedents exist on the computation and sequencing of these deductions. Where the legal position is arguable and depends on contested interpretation of provisions and precedent, the defect cannot be treated as a mistake apparent on the face of the record permitting summary rectification under section 154.

Conclusion: The recomputation and consequent addition made by the Assessing Officer under section 154 is not sustainable because the issue is highly debatable and does not constitute a mistake apparent from the record; the AO is directed to delete the addition. Decision is in favour of the assessee.

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