TaxTMI 
TaxTMI 
2011 (7) TMI 97
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....r the Assessment Year 1995-96 for which the relevant previous year was the Financial Year ended March 31, 1995. The appellant derives income from purchase and sale of and investment in shares, interest income, dividend income and rental income. For the Assessment Year 1995-96, the appellant filed a return on October 31, 1995 disclosing a total income of Rs.35,09,420/-. The said return was processed under Section 143(1)(a) of the Act. Subsequently, notices under Sections 143(2) and 142(1) were issued. In support of the said return, the appellant submitted numerous details in course of the assessment proceedings which were duly verified and examined by the Assessing Officer. On May 21, 1997, the Assessing Officer passed an order under Section 143(3) determining the total income at Rs.35,79,410/-. In the said assessment, the Assessing Officer allowed deduction under Section 80M of the Act in respect of the dividend of Rs.60,88,864/- received by the appellant. The Assessing Officer took note of the fact that the appellant had paid dividend of Rs.61,10,000/- but the deduction under Section 80M was limited to the amount of dividend received. b) On November 25, 1999, the Assessi....
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.... order dated June 30, 2000 passed by the Assessing Officer under Section 154. "ii) Whether in the facts and circumstances of this case the findings of the learned Tribunal rejecting the appellant's contention that no expenditure was incurred for earning dividend income could be sustained on the mere presumption that there were certain expenditure and therefore a proportionate amount is to be allotted for the purpose of earning the dividend income which on facts appears to have been earned out of investment made long before and thus the finding is arbitrary, unreasonable and perverse." 4. Mr. Khaitan, the learned Senior Advocate appearing on behalf of the appellant, has strenuously contended before us that the learned Tribunal below committed substantial error of law in reversing the order passed by the CIT(A) by not considering the scope of Section 154 of the Act. According to Mr. Khaitan, there was no scope of rectifying of the order by deducting the expenses under Section 80M of the Act on the basis of materials on record inasmuch as the Assessing Officer assessed the expenses on the basis of proportionate expenditure which is impermissible. According to Mr. K....
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....t there was no mention of any expenditure in getting the dividend. It was stated that the interim dividend to the extent of Rs.47,00,000/- was paid on November 21, 1994 and the final dividend to the extent of Rs.14,10,000/- was paid on January 9, 1995 but the appellant claimed Rs.60,88,864/- as deduction under Section 80M of the Act. In the original assessment order, the following observations have been made regarding the benefit of Section 80M of the Act: 9. "The Assessee has paid dividend of Rs.61,10,000/- but entitled for deduction limited to dividend earned i.e. Rs.60,88,864/-." In the notice under Section 154 of the Act, the following details of mistake have been indicated: "It is seen from the records while computing total income of the assessee, the error had been made making allowance u/s 80M and refund. Since, this apparent mistake and rectification u/s 154 is required." 10. Ultimately, the Assessing Officer by relying upon the decision of the Supreme Court in the case of CIT Vs. United General Trust (P) Ltd (200 ITR 488) held that proportionate management expenses should be deducted from the dividend for calculation of the amount of....
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....; Rs.85,20,325 Profit from Share Rs.11,29,770/- Profit from Share : Rs. 11,29,770 Dividend to the receipts : &nb....
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....ee and in favour of the Revenue in the case of Distributors (Baroda) P Ltd. Vs. Union of India reported in (1985)155 ITR 120 and the same principles should apply to the said case. 13. In the case of Distributors (Baroda) P. Ltd. (supra), the five-judge-bench of the Supreme Court laid down the following proposition for computing the deduction under Section 80M of the Act: "Now when in computing the total income of the assessee, a deduction has to be made from "such income by way of dividends", it is elementary that "such income by way of dividends" from which deduction has to be made must be part of gross total income. It is difficult to see how the language of this part of sub-sec. (1) of S. 80M can possibly fit in if "such income by way of dividends" were interpreted to mean the full amount of dividend received by the assessee. The full amount of dividend received by the assessee would not be included in the gross total income: what would be included would only be-the amount of dividend as computed in accordance with the provisions of the Act. If that be so it is difficult to appreciate how for the purpose of computing the total income from the gross total income any ded....
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....on is whether Section 154 of the Act authorizes the Assessing Officer to issue notice in the facts of the present case. 18. In a recent case of Deva Metal Powder (P) Ltd Vs. Commissioner Trade Tax, Uttar Pradesh, the Supreme Court had occasion to deal with the scope of Section 22 of the U. P. Trade Tax Act, 1948 conferring similar power of rectification as indicated in Section 154 of the Act. The said provision of Section 22 is quoted below: "22. Rectification of mistakes.-(1) Any officer or authority, or the Tribunal or the High Court may, on its own motion or on the application of the dealer or any other interested person rectify any mistake in any order passed by him or it under this Act apparent on the record within three years from the date of the order sought to be rectified: Provided that where an application under this sub-section has been made within such period of three years, it may be disposed of even beyond such period: Provided further that no such rectification as has the effect of enhancing the assessment, penalty, fees or other dues shall be made unless reasonable opportunity of being heard has been given to the dealer or oth....
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....o rectify the mistake, however, does not cover cases where a revision or review of the order is intended. "Mistake" means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error, a fault, a misunderstanding, a misconception. "Apparent" means visible; capable of being seen; obvious; plain. It means "open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming". A mistake which can be rectified under Section 22 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. "13. In our view rectification of an order does not mean obliteration of the order originally passed and its substitution by a new order. What the Revenue intends to do in the present case is precisely the substitution of the order which according to us is not permissible under the provisions of Section 22 and, therefore, the High Court was not justified in holding that there was mistake apparent on the face of the record. In order to bring an application under Section 22, the mistake must be "apparent" from the record. Section 22 does not enable an order to be reversed by ....