Income Tax Appellate Tribunal - Kolkata
Income-Tax Officer vs General Investment Co. Ltd. on 6 March, 1989
Equivalent citations: [1989]29ITD1(KOL)
ORDER
S.N. Rotho, Accountant Member
1. These two appeals filed by the department are heard together and disposed of by this common order for the sake of convenience.
2. The only common ground in both these appeals relating to the assessment years 1977-78 and 1978-79 states as below:
That on the facts and in the circumstances of the case, CIT (Appeals), C-III erred in law and in facts in deleting the order passed by the ITO under Section 154 to give effect to the amendment of the provisions of Sections 80AA read with Section 80M of the IT Act, which was amended with retrospective effect from 1-4-1968.
3. In the original assessments, the Income-tax Officer allowed relief under Section 80M of the Act on the gross dividends received by the assessee. In those assessments, there was no mention anywhere as to whether the assessee had incurred any expense for earning those dividends and if so, what was the said amount. Subsequently, the Income-tax Officer rectified those original assessments under Section 154 of the Act. In the rectification orders passed by the Income-tax Officer, the Income-tax Officer took the positive incomes earned by the assessee under the different heads (ignoring the loss from the business). Then, he totalled up the expenses incurred by the assessee. Out of the said expenses, he took a portion which bore the same proportion to the total expenses as the dividend income bore to the aforesaid total positive incomes. Thus, the Income-tax Officer estimated the expenses which, in his opinion, related to the earning of the dividend income. He deducted these estimated expenses from the gross dividends and allowed relief under Section 80M of the Act only on the balance. In other words, the Income-tax Officer reduced the relief under Section 80M of the Act by following the above process in the rectification orders passed by him. It may be stated in this connection that the gross dividend has been included in the total income of the assessee and subjected to tax in both the years under consideration and no expenses relatable to the earning of the dividend has been determined and deducted from the gross dividend for the purpose of taxing the dividend income in both the years under consideration.
4. The assessee appealed against the rectification orders passed by the Income-tax Officer and urged that the rectifications were not justified. The CIT(A) agreed with the contentions raised by the assessee before him. He stated that in a rectification order, the Income-tax Officer cannot apply a formula and estimate the amount of expense attributable to the earning of the income. There could be a honest difference of opinion as to the question whether there was any expense at all for earning the dividend in view of what has been done by the Income-tax Officer himself in the original assessment orders. Again, there could be differences of opinion as to what was the amount that could be said to have been spent for earning the dividend income. In other words, the formula adopted by the Income-tax Officer is open to challenge, and debate. Relying on the decision in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC), the CIT(A) quashed the rectification orders for both the years and allowed the assessee's appeals.
5. Shri B.B. Kundu, learned representative for the department, urged before us that the CIT(A) erred in his decision. He urged that relief under Section 80M of the Act is admissible not on the gross dividend but only on the net dividend arrived at after deducting expenses for earning the said dividends from the gross amount. The law as enacted in Section 80AA of the Act with retrospective effect is very clear on the point and after the said Section 80AA came into force, the relief given on the gross amount of dividends in the original assessment orders became a mistake rectifiable under Section 154 of the Act.
6. Shri N.A. Bhaduri, the learned representative for the assessee, on the other hand, supported the order of the CIT(A). He stated that the original assessment order did not determine any expense relating to the earning of the dividend. In fact, the original assessments have been made on the footing that no such expenses were incurred and that is why the entire gross dividends were included in the total income and subjected to tax. Consequently, it cannot be stated that the relief was wrongly allowed on a higher amount of dividend than what the assessee was entitled to. Thus, he stated that there was no mistake in the original assessment orders which could be rectified as apparent from the records under Section 154 of the Act. Apart from the above, the method applied by the Income-tax Officer to estimate the amount of expenses attributable to the earning of the dividends is open to challenge, debate and long-drawn-out reasoning. In this connection, he produced certain orders of the Tribunal wherein this very point has been decided in favour of the assessee under similar facts and circumstances. These orders are the order dated 1-1-1986 in 1TA Nos. 1709 & 1710 (Cal.)/84, order dated 15-1-1986 in ITA Nos. 1700 & 1701 (Cal.)/84, order dated 6-1-1986 in ITA Nos. 2263 & 2264 (Cal.)/84 and order dated 15-1-1986 in ITA Nos. 1968 & 1699 (Cal.)/84.
7. We have considered the contentions of both the parties as well as the facts on record. We have gone through the aforesaid orders of the Tribunal with which we are in respectful agreement. We find from the original assessment orders that the entire gross dividends have been subjected to tax. Hence, it cannot be said that any amount was spent for earning those dividends. Had that been so, the Income-tax Officer would have deducted the said expenses from the gross dividends and included only the net amount of dividends in the total income. As this has not been done, it cannot be said that there was any mistake in the original assessment orders which is apparent from the record. Apart from the above, there is also force in the other contention raised by the assessee, vis., that the method adopted by the Income-tax Officer to estimate the amount of expense which, in his opinion, is attributable to the earning of dividends is neither free from doubt nor from challenge and debate. It is not as if such expenses were determined but lost sight of in the original assessments. Hence, after reconsidering the aforesaid Tribunal decisions, we come to the same conclusion as the CIT(A) on the authority of the decision of the Supreme Court in the case of Volkart Bros, (supra).
8. In the result, we uphold the order of the CIT(A) and dismiss the two appeals.
S.K. Jain, J.M.
1. I express my inability to agree with the order of my learned brother and, therefore, this separate order.
2. After completion of the original assessments for the assessment years 1977-78 and 1978-79, Section 80AA came to be inserted by the Finance (No. 2) Act, 1980, with retrospective effect from 1-4-1968 in the Income-tax Act, 1961 (for brevity the Act) which in substance provides that deduction allowable to a company under Section 80M should be computed not on the basis of gross dividend income but on the basis of net dividend income, that is to say, after deducting expenditure expended for the purpose of earning the dividend income. In the original assessments the Income-tax Officer had allowed deduction under Section 80M as it stood prior to the said amendment. He, therefore, took the said allowance as mistake apparent from the record and proceeded to rectify the said mistake under Section 154 of the Act. He thereby computed the expenses incurred for earning dividend income at Rs. 1,67,569 in the A.Y. 1977-78 due at Rs. 1,37,404 in the A.Y. 1978-79 and thus recomputed the deduction allowable under Section 80M.
3. The assessee took up the matter in appeal before the CIT(A). The argument developed by the assessee before the CIT(A) is based upon the meaning of "mistake apparent from the record" as explained by the Hon'ble Supreme Court in several judgments. A mistake apparent from record is not a mistake simplicitor ; it should be obvious and self-evident not requiring an elaborate argument to be established. On this basis, contention of the assessee before the CIT(A) was that what had been recomputed by the ITO as the deduction allowable under Section 80M was debatable and was open to divergent opinions inasmuch as that it needed further investigation into the facts and, therefore, the ITO had no jurisdiction to rectify the alleged mistake. The OIT(A) accepted the contention of the assessee. He mentioned--"as pointed out by the authorised representative (that) there is a dispute between the department and the appellant-company as to what should be the net dividend income on which the latter should be entitled to Section 80M relief". He on this reasoning allowed the appeal.
4. Learned counsel of the assessee reiterated the same argument before us while opposing this departmental appeal.
5. The argument advanced for and on behalf of the assessee is apparently fallacious. Foundation of the jurisdiction of the ITO to take proceedings for rectification of an order of assessment is 'a mistake apparent from the record' in the assessment order. Such mistake, no doubt, should be obvious and for its deduction or discovery no elaborate argument is required. The test laid down by the Hon'ble Supreme Court in several judgments is for detection or discovery of the mistake and not for amendment in consequence of rectification of the mistake. There is distinction in detection of the mistake and amendment in consequence of rectification of the mistake. For the purpose of detection it is necessary to see that the mistake is glaring, obvious and self-evident and it does not require an elaborate argument to be established. If these conditions are fulfilled, the Income-tax Officer gets jurisdiction under Section 154 to rectify the mistake. The amendment in consequence of rectification does not require the condition that it should be infallible. Following observations of the Hon'ble Bombay High Court in the case of Blue Star Engg. Co. (Bombay) (P.) Ltd. v. CIT [1969] 73 ITR 283 (299) are pertinent :
The power intended, to be given under Section 154 is to rectify an error apparent on the face of the record. Amendment of the order is the consequence of the rectification and its purpose is to give effect to the rectification. If the rectification involves an amendment which will affect the whole of the order, it cannot be said that simply because of the use of the word 'amend', which normally may not mean the cancellation of the whole order, the Income-tax Officer should be powerless to rectify the mistake or error which is apparent on the face of the order. The word 'amend' with reference to legal documents means correct an error and the expression 'amend the order' would mean correct the error in the order. under Section 154 power to rectify the error is to be exercised by correcting the error in the order and the correction must, therefore, extend to the elimination of the error. What the effect of the elimination of the error will be on the original order will depend upon each case. It may be that the elimination of the error may affect only a part of the order. It may also be that error may be such as may go to the root of the order and its elimination may result in the whole order falling to the ground.
6. It is, therefore, wrong to attach the requirements of 'mistake apparent from the record to the 'amendment of the order in consequence of the rectification'.
7. There cannot possibly be any amendment in the original assessment order in consequence of rectification which is not free from debate. In case the scope of Section 154 is limited to such an extent as is contended by the assessee, the provision itself would be unworkable. Take an example of an order of the Tribunal passed inadvertently in ignorance of proper service of notice upon a party. There is obviously apparent mistake on the record. Such order cannot be recalled by the Tribunal if the argument that the order to be substituted in the consequence of the rectification would be debatable and would be open to arguments. Again, take an example of the facts as were in the case of Kastur Chand Jain v. GTO [1961] 42 ITR 288 before the Calcutta High Court. In that case the value of the shares for the purpose of the Gift-tax Act was calculated on the basis of rules framed under the Wealth-tax Act. This was found by the Hon'ble High Court a mistake apparent from the face of the record and the assessment order was quashed by the Hon'ble High Court, with a right to the department to make assessment again. The reassessment, though on the lines suggested by the Hon'ble High Court, would be equally a debatable order. I, therefore, do not find any merit in the argument that the amendment in consequence of rectification should be free from debate.
8. It is not questioned bafore us that a mistake apparent from the record may follow on the basis of a retrospective amendment of the statute. However, in this connection the recent judgment of the Hon'ble Supreme Court in the case of J.K. Bhatia, AAC v. /. M. Shah [1985] 156 ITR 474 may be advantageously referred to.
9. Detection of the mistake being apparent from the record is not dependent upon the fact that there was no mention in the original assessments if the assessee had incurred any expense for earning dividends. In view of Section 80M as it stood prior to amendment, it was not necessary for the ITO to mention the expenses incurred for earning dividend and, therefore, that should not come in the way of the ITO to exercise jurisdiction under Section 154.
10. Learned counsel for the assessee placed before us four orders of the Tribunal in support of his contention that there is no mistake apparent from the record where there is a dispute as to what should be substituted while amending the assessment order. Those orders of the Tribunal are : (1) order dated 1-1-1986 in ITA Nos. 1709 and 1710 (Cal.)/1984, (2) order dated 6-1-1986 in ITA Nos. 2263 and 2264 (Cal.)/1984, (3) order dated 15-1-1986 in ITA Nos. 1700 and 1701 (Cal.)/1984, and (4) order dated 15-1-1984 in ITA Nos. 1968 and 1699 (Cal.)/1984.
11. It is to be noticed that the first of these four orders is the main order and the other orders have followed that order.
12. I am in respectful disagreement with these orders. I am aware of the importance of the judicial precedents of the co-ordinating jurisdiction and their binding effect as has been held by the rules of the common law but there are exceptions to it. For the reasons stated above, to my mind, those decisions do not spell out the correct law and need reconsideration. It may be mentioned that as early as on the 8th March, 1984 the Hyderabad Bench of the Tribunal on identical facts held that the ITO had jurisdiction to rectify such mistake--vide ITO v. A.P. State Financial Corpn. [1984] 8 ITD 473 (Hyd.). The said Bench also recorded a finding as to the amount of deduction under Section 80M to be substituted in the original assessment in place of the deduction already allowed. To the same effect is the recent order dated 5-2-1986 of 'E' Bench of the Tribunal at Calcutta in ITA No. 2073 (Cal.)/84. The same orders of the Tribunal relied upon by the counsel for the assessee, were relied upon by the same counsel before the 'E' Bench and the Bench did not take those orders of the Tribunal into account.
13. Since the CIT(A) has disposed of the appeal on the preliminary ground holding lack of jurisdiction of the ITO, the case requires to be remitted to him for decision on merit.
14. I would, therefore, allow the appeal with a direction to the C1T(A) to render decision on the merit of the case.
ORDER UNDER SECTION 255(4) We, having differed on the following point in the above appeals filed by the department, refer the following point of difference to the President under Section 255(4) of the Income-tax Act, 1961:
Whether, on the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) erred in quashing the orders under Section 154 of the Income-tax Act, 1961 passed by the Income-tax Officer for the assessment years 1977-78 and 1978-79 ?
THIRD MEMBER ORDER G. Krishnamurthy, President
1. These appeals were originally heard by B-Bench, Calcutta. The learned Members of the Tribunal, who constituted the Bench, could not agree on a particular point and that point of difference of opinion, mentioned below, was referred to me as a Third Member ;
Whether, on the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) erred in quashing the orders under Section 154 of the Income-tax Act, 1961, passed by the Income-tax Officer for the assessment years 1977-78 and 1978-79 ?
2. The assessee, inter alia, was in receipt of gross income from dividends amounting to Rs. 2,98,159 for the assessment year 1977-78 and Rs. 3,02,005 for the assessment year 1978-79. The Income-tax Officer while making the original assessments allowed relief under Section 80M of the Income-tax Act, 1961 on the entire amount of gross dividends. At the time when the assessment was made by the Income-tax Officer, the law as interpreted was that the gross dividend was to be allowed as a deduction under Section 80M. Subsequently, the Parliament by enacting Section 80AA by Finance (No. 2) Act of 1980 with retrospective effect from 1-4-1968, provided that:
Where any deduction is required to be allowed under Section 80M in respect of any income by way of dividends from a domestic company, which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, the deductions under that section shall be computed with reference to the income by way of such dividends as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) and not with reference to the gross amount of such dividends.
Acting on the basis of Section 80AA, the Income-tax Officer sought to rectify the assessments made for these two assessment years by deducting from the gross amount of dividends proportionate expenditure. The assessee objected to the rectification of these assessments by relying on the decision of the Gujarat High Court in the case of CIT v. Cotton Fabrics Ltd. [1981] 131 ITR 99. Declining to accept the assessee's contention, the Income-tax Officer rectified the assessments under Section 154 by reducing an amount of Rs. 1,67,569 in the assessment year 1977-78 and Rs. 1,34,404 in the assessment year 1978-79 from the gross dividend income as representing expenditure incurred to earn the dividends and granted exemption only on the balance under Section 80M of the Income-tax Act. Aggrieved by the rectification orders, the assessee appealed before the Commissioner (A), before whom it was contended that it was not open to the Income-tax Officer to invoke Section 154 because that would virtually amount to computing the net income by estimating the allowable expenditure by adopting a certain formula and such a method or formula could be a matter of dispute and since debatable and disputable items are not open to rectification under Section 154, the rectification orders passed by the Income-tax Officer were wrong and illegal. The attention of the Commissioner (A) was also drawn to a number of appeals involving identical point, which were decided in favour of the assessee. The Commissioner (A) holding that he himself held in a number of cases that the Income-tax Officer exceeded his jurisdiction when he computed the net dividend income on the basis of a disputable formula and referring to the Supreme Court decision in the case of Volkart Bros, (supra), held that the Income-tax Officer had exceeded his jurisdiction in computing net dividend income for the purposes of allowing relief under Section 80M, under Section 154. He therefore allowed the appeals of the assessee.
3. Against these orders, the department came up in appeal before the Tribunal. Arguments addressed before the Bench were that the Income-tax Office]? in the original assessment orders did not determine any expense relating to the earning of the dividends and the assessments were completed on the footing that no such expenses were incurred for earning the dividend income. Such being the case, it could not be inferred for the purpose of rectification under Section 154 that some expenditure must have been incurred by the assessee in earning the dividend income and estimate that expenditure on the basis of a formula which was open to challenge and debate. Identical appeals involving identical points were decided by the Tribunal in a few cases and references were given to those cases before the Bench, which were referred to in the orders of the learned Members. The learned Accountant Member held that the view taken by the earlier Benches of the Tribunal with regard to this point appeared to him to be correct and he agreed with those views. He concluded that when there was no reference to incurring of any expenditure for earning the dividends, it was not open to the Income-tax Officer to suppose that some expenditure was incurred in earning dividends and in estimating it arbitrarily. He therefore held that there was no mistake apparent from the original assessment orders. He also held that the basis adopted by the Income-tax Officer to estimate the amount of expense was not free from doubt and open to serious challenge. He therefore agreed with the view expressed by the Commissioner (A) in dismissing the department's contentions. But the learned Judicial Member took a different view. His approach to the problem was that there is a difference between locating a mistake apparent from or in the record and its amendment thereafter. According to him, the law laid down by the Supreme Court was that the mistake, which could be apparent from the record, must be such as is obvious from the record and no debate or long-drawn process of reasoning should be involved for its detection or discovery. Once the mistake was detected as apparent from the record without any elaborate argument or reasoning, the mere fact that in rectifying that mistake some steps would become necessary, would not convert that mistake apparent from the record into a, mistake apparent from the record only as a consequence of elaborate argument. Once the Income-tax Officer gets jurisdiction under Section 154 to rectify the mistake when it was found to be glaring, obvious and self-evident, the amendment for rectification does not attach to itself the further condition that it should be infallible. He placed reliance on a decision of the Bombay High Court in the case of Blue Star Engg. Co. (Bombay) (P.) Ltd. (supra). Having thus held that location of the mistake apparent from the record being different from the amendment of such a mistake, he held that in this case no argument was needed to find out the mistake, which was glaring from the order of the Income-tax Officer" because Section 80AA as amended with retrospective effect from 1-4-1968 did show that the allowance of the relief under Section 80M on the gross dividends was wrong. He did not agree with the view expressed by the learned Accountant Member that for the detection of the mistake apparent from the record, there should be a mention in the original assessment order as to the incurring of any expenditure to earn the dividends. According to him, this was not at all necessary. He expressed his dissent with the views expressed by the other Benches of the Tribunal and instead referred to an order passed by the Hyderabad Bench of the Tribunal on identical facts reported in A.P. State Financial Corpn.'s case (supra.) and preferred to follow that view, which was not in consonance with the view expressed by the Other Benches of the Tribunal, which were cited before the Bench. He also referred to an order passed by 'E' Bench of the Calcutta Benches of the Tribunal in the case of ITO v. Kishore Trading Co. Ltd. [IT Appeal No. 2073 (Cal.) of 1984] and following that order, held that the Commissioner (A) was wrong in allowing the appeals. Since the Commissioner (A) had disposed of the appeals on the preliminary ground holding lack of jurisdiction of the Income-tax Officer, he felt that the case should be remitted to his file for decision on merits. Thus, the above difference of opinion arose.
4. I have heard the parties at length. Both the parties before me relied on Supreme Court decision in the case of Volkart Bros. (supra), where the Supreme Court pointed out that a mistake apparent from the record must be such as to be glaring obvious and self-evident and should not be the result of a long-drawn process of reasoning and as in this case a long-drawn process of reasoning to arrive at the expenditure to set off against the gross dividend income was involved, that process of rectification was not a rectification of a mistake apparent from the record, While the Department contended that in view of the amendment to Section 80AA with retrospective effect, there was a glaring mistake in the order of the Income-tax Officer in granting relief to the assessee on the gross amount of dividends and that mistake needed to be rectified because no one had a vested right in an erroneous order. Such being the position, merely because there was some difficulty in estimating the expenditure, it could not be said that the order of the Income-tax Officer did not suffer from a mistake rectifiable under Section 154. Both the sides had placed strongest reliance upon the orders they were seeking to support. The arguments further proceeded that though the original order when passed was good in law, it became erroneous in the light of the retrospective amendment and it is now open to rectify not only a mistake of fact but also a mistake of law but again reverting to the positions, they are taking that to rectify the mistake some estimate of expenditure has to be adopted and since that estimate involved a debate or a reasoning, the rectification could not be said to be rectification of a mistake apparent from the record while the other side reverting to its arguments said that once the Income-tax Officer's order was found to be suffering from a mistake, that had to be rectified and the assessee would not come to any grief if he was able to show in an appeal that could be filed against such a rectification order, that expenditure estimated was very excessive. When it was open to the assessee to show that the expenditure allowed was excessive by filing an appeal to the Appellate Asstt. Commissioner and then to the Tribunal, the assessee was not without remedy. In such an event the original order passed, which glaringly show out a mistake should not be allowed to remain unrectified. My attention was also drawn to the orders passed by the Calcutta Benches of the Tribunal, the more recent one is in 'E' Bench of the Tribunal, which the learned Judicial Member had relied upon.
5. In the recent decision of the Calcutta Bench 'E' of the Tribunal, reference was made to a recent decision of the Supreme Court in the case of J.M. Shah (supra), which was also cited before me in the course of arguments. In this case the Supreme Court pointed out that there was a difference between resorting to the power of rectification with reference to a particular provision in an amending Act but if rectification could be made de hors that Act, it was permissible. The Supreme Court pointed out in that case that the amending power was sought to be exercised under the original section, namely, 35(7) of the Wealth-tax Act, 1957. To appreciate these observations, it may be necessary to refer briefly to the facts of that case. For the assessment year 1969-70, the assessee was assessed to wealth-tax which included, inter alia, the value of jewellery and ornaments. On appeal, the Appellate Asstt. Commissioner by his order dated 28-6-1970 excluded from the net wealth the value of jewellery and ornaments on the ground that they were intended for personal use of the assessee and were exempted under the then Section 5(1)(viii) of the Wealth-tax Act, 1957. No further appeal was filed by either side against the order of the Appellate Asstt. Commissioner. By Section 32 of the Finance (No. 2) Act of 1971, Section 5(1)(viii) of the Wealth-tax Act, 1957 was amended withdrawing the exemption on the jewellery with retrospective effect from 1-4-1963. In view of this amendment the Appellate Asstt. Commissioner issued a notice dated 25-1-1972 and rectified the order under Section 35 withdrawing the exemption granted in the earlier order. The assessee challenged the validity of the rectification order in a writ petition in the High Court. The High Court set aside the order by holding that whether the retrospectivity given by the Finance Act would cover completed assessments or would apply to pending assessments was a debatable point and since it was a debatable point, there could not be said to be an error on the face of the record. On appeal to the Supreme Court by the Revenue, the Supreme Court reversed the decision of the High Court and held that that was not a case where resort to the power of rectification was required to be made by reference to any provision in the amending Act but it was de hors that Act. The amending power was exercised under the original section of the Wealth-tax Act, 1957. The order of the Appellate Asstt. Commissioner had not become final notwithstanding the fact that no appeal had been filed against that order or the prescribed period for appeal had expired. That order was continued to be liable to be rectified under Section 35(7) of the Wealth-tax Act, 1957 within the four years' period of limitation. Therefore, the order of rectification was valid. In other words, if the order sought to be rectified in this case had not become final, that order could be rectified within the period provided under the Statute. The order for the assessment year 1977-78 was passed on 10-12-1979 and for the assessment year 1978-79 on 19-1-1980. The period of four years expires for the assessment year 1977-78 on 9-12-1983 and for the assessment year 1978-79 on 7-11-1983. The rectifications were therefore within the period of limitation. The power of rectification to the Income-tax Officer is therefore traceable to the inherent power given to him under Section 154. So, applying the law laid down by the Supreme Court in the case of J.M. Shah (supra), referred to above, it cannot be said that the orders passed by the Income-tax Officer were wrong.
6. Now before me it was not disputed that there was no expenditure incurred in earning dividend income. All that was urged that the method adopted by the Income-tax Officer to arrive at that expenditure attributable to the earning of dividend income was a matter of dispute and open to challenge. It may be so but that does not mean as pointed out by the learned Judicial Member that some expenditure was incurred and that has to be estimated and the mere possibility of debate in the estimate of expenditure would not have the effect of converting the mistake, which is glaring in the assessment orders in the light of Section 80AA, a mistake not capable of being rectified under Section 154. This is also the view taken by the 'E' Bench of the Tribunal, Calcutta cited above. In this case the orders of the Tribunal on which the learned Accountant Member in this appeal had relied upon were also cited but the Bench pointed out that those orders were distinguishable because those orders did not consider the effect of the Supreme Court in the case cited above, namely, J.M. Shah (supra). So. since it is agreed that there is a mistake apparent from the record in the orders passed by the Income-tax Officer originally by allowing full exemption to the gross dividend income and since it is also an undisputed fact that some expenditure was incurred for the purpose of earning that dividend income and since it is also an undisputed fact that under Section 80AA the expenditure relatable to the earning of dividend income must be allowed under Section 80M and since the rectifications were made within the period available to the Income-tax Officer under Section 154 and since the power of rectification was traceable to Section 154 and not to the amending Act as pointed out by the Supreme Court in the case of J.M. Shah (supra), I am inclined to agree with the view expressed by the learned Judicial Member that the Income-tax Officer was justified in rectifying the assessments. If the assessee is aggrieved by the rectifications made by the Income-tax Officer on the ground that the expenditure deducted was more, it is always open to him to file an appeal before a competent authority and on furnishing proper proof get it scaled down. I therefore agree that the Commissioner (A) should go into the merits of the case and decide the quantum of allowable expenditure.
7. The matter will now go before the regular Bench for deciding the case according to the majority opinion.