Provision for loss on investment is not a revenue obligation for...

Provision for loss on investment is not a revenue obligation for the year and not eligible for deduction u/s 37(1) of the Act. It represents a portion of investment capital, not falling under the block of assets defined in Section 2(11), thus ineligible for depreciation deduction. Allowing such provision fails the test prescribed u/s 37(1). There is no discretion for tax authorities to allow deduction for an inadmissible item. The item was glaringly appearing on financial statements but overlooked by the Assessing Officer while framing assessment u/s 143(3). The audit objection notified this obvious mistake, which was rectified u/s 154 after due process. Rectification of a mistake apparent on record, not requiring examination or verification, falls within the ambit of Section 154, as per the Supreme Court's ratio in TS Balram (ITO) Vs M/s Volkart Bros. The Tribunal upheld the rectification order, setting aside the impugned order.