Rectification power under section 154 cannot be used for debatable TDS-linked disallowance of interest expenditure.

Rectification under section 154 was not available where the proposed disallowance of interest expenditure depended on whether tax was required to be deducted or deposited at source, because that issue was not a patent error apparent from the record. The allowability of the expenditure and the effect of the alleged TDS default required examination and interpretation, making the matter at least debatable and outside the limited rectification power. As the original assessment had accepted the claim, the statutory conditions for section 154 were not met, and the deletion of the addition was sustained.

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Issues: Whether the Assessing Officer was justified in invoking rectification jurisdiction under section 154 of the Income-tax Act, 1961 to disallow interest expenditure on the ground of non-deduction or non-deposit of tax deducted at source.

Analysis: The impugned adjustment did not concern a patent or obvious error apparent from the record. The dispute involved the allowability of interest expenditure and the consequence of alleged TDS default, which required examination and interpretation and could not be treated as a self-evident mistake amenable to rectification. Since the original assessment had accepted the assessee's claim and the matter was at least debatable, the preconditions for exercising section 154 were not satisfied.

Conclusion: The invocation of section 154 was unjustified and the deletion of the addition was correctly sustained.

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