2013 (10) TMI 923

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....A.Y.) 2005-06 vide order dated 26.06.2008 2. It would be relevant to recount the background facts of the case. The assessee, a company in the business of trading in auto spares, filed its return of income for the year on 22.11.2006 at nil income, adjusting the income for the year against brought forward claims (of business loss/depreciation). The same stood assessed under section 143(3) r/w.s. 147 of the Act on 31.12.2007 at Rs.10,93,295/-, making the following adjustments: Particulars Amount (Rs.) - Disallowance under sec.14A 70,689 - - Provision against bad debt 1,25,393 - - Disallowance of interest relatable to interest free loans to directors 15,96,499 - Disallowance of rent under sec. 40A(2)(a) 1,20,000....

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.... the disallowance qua interest, made similarly for A.Y. 2001-02, to which reference has been made by the A.O. in the assessment order, has since been deleted in appeal by the Tribunal (in ITA No.5020/Mum/2008 dated 19.05.2009/copy on record), yet the A.O. had for the current year taken a independent decision. The disallowance qua rent, which again stood also made for A.Y. 2001-02, at the same amount of Rs.1.20 lacs, to which the A.O. adverts in the assessment order, stood not even appealed against before the tribunal. On both the counts, therefore, the assessee's case for rectification u/s.154, the premise of which is to rectify a mistake apparent from the record, admitting of no debate, is not maintainable. The rejection of its rectificati....

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....st sight of that the assessee has indeed also been allowed interest-free loans from its directors, i.e., as per the record, and which fact has been ignored or failed to be taken into account while framing the assessment disallowing interest qua diversion of funds for non-business purposes. This most definitely constitutes a mistake. In fact, the assessee had been allowed relief for A.Y. 2001-02 only on this basis. Though, therefore, without doubt some verification would be required in the matter, if only to determine the extent to which relief is warranted to the assessee, and which (verification) would normally exclude rectification inasmuch as the same is only with reference to a mistake/s apparent from the record, the A.O. has clearly an....