PUNJAB STATE CO-OPERATIVE SUPPLY AND MARKETING FEDERATION LIMITED Vs. DEPUTY COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee has filed the present appeal under Section 260A of the IT Act, 1961 (hereinafter referred to as the "Act"), against the order dt. 27th Feb., 2007 passed by the Tribunal, Chandigarh, Bench-B, in ITA No. 844/Chd/2004 for the asst. yr. 1998-99.

(2.) The return of income was processed under Section 143(1)(a) of the Act on 15th March, 1999 at an income of Rs. 35,38,62.548 after making various adjustments. It is relevant to mention here that during the financial year 1996-97 corresponding to asst. yr. 1997-98, the appellant had made a provision of Rs. 7 crores for payment of arrears of the salary to the employees. Since it was only a provision and the exact liability had not been quantified, it was added back as income in the return filed and the amount of Rs. 7 crores was taxed. In the next financial year i.e., 1997-98, the liability was quantified and an amount of Rs. 4,99,37,406 was paid during the next year i.e.. 1998-99. Since the amount was paid out of the provision made in financial year 1996-97, it was not charged to P&L a/c for the financial year 1997-98. While computing the income for filing its return for the asst. yr. 1998-99, the appellant did not claim the said amount i.e. Rs. 7 crores as expenses. As a result, the income of Rs. 7 crores was assessed in excess for asst. yr. 1998-99.

(3.) It is further pleaded in the appeal that thereafter the appellant filed an application under Section 154 of the Act before the AO claiming that since the omission to claim the expenditure of Rs. 7 crores was a mistake apparent from the record, this may be rectified and the income assessed be reduced by the said amount of Rs. 7 crores. However, the AO did not agree with the contention of the appellant and rejected the same vide order dt. 8th Dec, 2003 on the ground that the said deduction had not been claimed either in the return of income or during the course of assessment proceedings and therefore the said claim of deduction, which is not apparent from the record, can (sic-not) be allowed in the rectification application.