TaxTMI 
TaxTMI 
1988 (6) TMI 25
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....tted and/or found by the Appellate Tribunal and incorporated in the statement of case are stated hereafter : The assessee is a private limited company. By the assessment order dated July 28, 1977, for the assessment year 1974-75, the Income-tax Officer determined the assessee's total income at Rs. 18,322. Subsequently, by the rectification order dated January 16, 1978, under section 154 of the Act, the Income-tax Officer allowed the assessee the benefit of deduction of business losses of Rs. 18,322 pertaining to the assessment years 1968-69, 1971-72 and 1972-73 . Thus, the total income was reduced to "nil" and further business loss of Rs. 14,226 for the assessment year 1972-73 was carried forward. The Commissioner of Income-tax, on go....
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....stified in making the rectification. He has relied on several decisions in support of his contention that when the assessee carries on business, whether a part of that income has been shown under one source or the other would not make any difference and the loss, if any, has to be allowed as a business loss to be set off against the income of the following years. According to him, the Income-tax Officer rightly invoked the jurisdiction under section 154 of the Act. He has relied on the decision of the Supreme Court in CIT v. Cocanada Radhaswami Bank Ltd. [1965] 57 ITR 306. In that case, the assessee-company, which carried on banking business, held securities as part of the trading assets of its business. For the assessment year 1949-50, ....
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....usiness has to be decided not on the basis of the provisions of section 6 but on commercial principles. He has relied on the decision of the Division Bench of the Orissa High Court in the case of CIT v. Orissa State Co-operative Housing Corporation Ltd. [1976] 104 ITR 157. There, the Orissa High Court, following the decision in the case of CIT v. Cocanada Radhaswami Bank Ltd. [1965] 57 ITR 306 (SC), held that though for the purpose of computation of income, interest on securities is separately classified, income by way of interest on securities would not cease to be part of income from business if the securities are part of the trading assets of the assessee. Whether particular income is part of income from business falls to be decided n....
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....n to the facts of this case. Section 72 has laid down certain conditions for carry forward of business loss. The business loss shall be set off against the profits and gains, if any, of any business carried on by the assessee. In the regular assessment, carried forward loss was not set off as the assessee did not claim for such set off. The assessee derived rental income from land, building and machinery which were let out to several persons and the entire income was assessed under the head "Other sources". It is no doubt true that in case any business assets are hired out as part of the business activity carried on by the assessee or as commercial assets belonging to the assessee, income derived therefrom is assessable as business in....
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.... business or as income from "other sources" will depend on investigation of facts. The Income-tax Officer allowed set off of the carried forward loss treating the entire income originally assessed as income from "other sources" as income from business without ascertaining the facts and that too in a proceeding Under section 154 of the Act. Under section 154 of the Income-tax Act, 1961, only an obvious mistake can be rectified. There must be a mistake apparent on the face of the records. It does not cover any mistake which may be discovered by a process of investigation, argument or proof. The Income-tax Officer allowed the business loss to be set off against the income from "other sources" of the assessment year in question in a proceedi....