T MANICKAVASAGAM CHETTIAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee in this case is a partner in a firm called M/s "Tamil Nadu", a newspaper published from Madurai. In the asst. year 1969 -70, the said firm had made certain capital gains on sales of certain assets. It had, however, incurred loss under the head " Business" which loss was more than the capital gains. Therefore, the capital gains was set off against the business loss. Even after the setting -off, there was a loss of Rs. 1,33,580 which was distributed between the five partners of the firm and the amount of loss which was apportioned to the assessee was Rs. 35,622.

(2.) IN the individual assessment of the assessee, the partner claimed the benefit of S. 80T of the IT Act, 1961, hereinafter referred to as "the Act". The assessing authority granted the relief under s. 80T of the Act in the original assessment of the assessee. Later, the ITO felt that he had committed a mistake in granting the relief under S. 80T of the Act and, therefore, he issued a notice under S. 154 of the Act for rectification of a mistake and for withdrawal of the relief granted under S. 80T of the Act. The assessee resisted the rectification proceedings initiated by the ITO. However, the ITO rectified his original order and cancelled the relief granted under S. 80T of the Act. Aggrieved by the order of rectification, the assessee took the matter in appeal to the AAC, who, however, held that under S. 67(2) of the Act, the assessee was entitled to the benefit of s. 80T of the Act in his assessment and, therefore, the ITO was not right in passing She order of rectification. The matter was taken by the Revenue to the Tribunal, Madras. The contention of the Revenue before the Tribunal was that the AAC was in error in applying S. 67(2) of the Act to the facts of this case and that the ITO had power to rectify the mistake which he had committed while passing the original assessment order. The Tribunal held that S. 67(2) of the Act will not stand attracted to this case, that under S. 80T of the Act, the assessee is not entitled to the relief and that the ITO was justified in invoking the power of rectification. In that view, the Tribunal reversed the order of the AAC and restored the order of rectification passed by the ITO.

(3.) THE question set out above can be split up as two :