CIT Vs. THAMBI MODERN SPINNING MILLS LTD

JUDGEMENT

(1.) The Revenue has come up on appeal as against the order of the Income-tax Appellate Tribunal, Madras "B" Bench, dated 26-2-2003, in I.T.A. Nos. 1556, 1557 of 1994 relating to the assessment years 1991-92 and 1992-93 raising the following substantial question of law :

(2.) The assessee herein filed its returns for the abovesaid assessment years claiming unabsorbed investment allowance to be set off for the assessment years 1991-92 and 1992-93 under section 115J of the Income-tax Act, 1961 (hereinafter called as "the Act"). The return were processed under section 143(1)(a) of the Act. Subsequently, the assessing officer invoked his jurisdiction under section 154 of the Act. Aggrieved by the same, the assessee filed an appeal before the Commissioner of Income tax (Appeals). However, the Commissioner of Income tax (Appeals) dismissed the appeal on the ground that the issue of carry forward allowance in computing the assessment was based on the provisions of section 115J of the Act and could be rectified under section 154 of the Act having regard to the facts that the mistake of fact was an apparent one. Aggrieved by the same, the assessee filed an appeal before the Tribunal.

(3.) It is seen from the order of the Tribunal that it agreed with the assessees contention that brought forward allowance could not be set off as against the income computed under section 115J of the Act. In so holding, it allowed the appeal following the decision in the case of CIT v. Fab Exports P. Ltd.,2001 258 ITR 56 . Thus, the Tribunal held that even on the merits, rectification could not be sustained. The Tribunal further held that as on the date of assessment, there was divergence of opinion and the issue was highly debatable. It was further pointed out that debatable issue would not come under the purview of a mistake of fact on the face of record and, therefore, the order passed by the assessing officer under section 154 of the Act could not be sustained. Aggrieved by the same, the Revenue has come on appeal before this court.