IMPORTANT POINTS
1. A rectifiable mistake must exist an d the same must be apparent from the record. Decision on debatable point of law cannot be treated as mistake apparent from the record
2. There is no straight jacket principle of distinguishing a capital receipt from a revenue receipt .It depends upon the circumstances of each case.

JUDGMENT

Kapadia, J. —

Heard learned counsel on both sides.

Leave granted.

2. The short question which arises in the facts and circumstances of these appeals is: whether it was open to the Commissioner of Income Tax to rectify its own order of under Section 154 of the Income Tax Act, 1961, on the basis of the judgement of this Court [later judgement] in the case of Sahney Steel and Press Works Limited & Ors. vs. Commissioner of Income Tax, reported in, 1 [1997] 228 I.T.R.253? In short, in these appeals, we are concerned with the scope of Section 154 of the Act.

3. The appellant is engaged in the business of manufacture of Potassium Chlorates. Its factory is located in the Union Territory of Pondicherry. The appellant received power subsidy for two years, which it initially offered as revenue receipt in its Return of Income. In the petitions filed under Section 264 of the Income Tax Act, 1961 [for short, “the Act”], the assessee pleaded that the subsidy amount was a capital receipt, hence not liable to be taxed, and, accordingly, it sought revision of the assessment orders for Assessment Years 1993-1994 and 1994-1995. In the revision petitions, appellant had pleaded that the subsidy amount was a capital receipt and, for that purpose, it relied upon the judgement of this Court in the case of Commissioner of Income Tax vs. P. J. Chemicals Limited, reported in, 2 [1994] 210 I.T.R. 830. The revision petitions filed by the appellant under Section 264 of the Act stood allowed by the Commissioner of Income Tax by order dated April 30, 1997, Subsequent to the said order, on 19th September, 1997, this Court in the case of Sahney Steel and Press Works Limited ( supra) held that incentive subsidy admissible to Sahney Steel and Press Works Limited was a revenue receipt and hence, it was liable to be taxed under Section 28 of the Act. This decision was based on a detailed examination of the Subsidy Scheme formulated by the Government of Andhra Pradesh. It stated that incentives would not be available unless and until production had commenced. In that matter, this Court found that incentives were given by refund of sales tax and by subsidy on power consumed for production. In short, on the facts and circumstances of that case, this Court carne to the conclusion that incentives were production incentives in the sense that the assessee was entitled to incentives only after entering into production. It was also clarified that the Scheme was not to make any payment directly or indirectly for setting up the industries.

4. Following the judgement of this Court in the case of Sahnev Steel and Press Works Limited (supra), delivered on 19th September, 1997, the Commissioner of Income Tax passed an order of rectification dated 30th March, 1998. The only ground on which rectification was sought to be made by the Commissioner of Income Tax was that Power Tariff Subsidy given to the appellant herein was admissible only after commencement of production. Consequently, according to the Commissioner of Income Tax, Power Tariff Subsidy constituted operational subsidies, they were not capital subsidies and, in the circumstances, applying the ratio of the judgement of this Court in the case of Sahney Steel and Press Works Limited (supra), the Commissioner of Income Tax sought to rectify its earlier order dated 30th April, 1997, by invoking Section 154 of the Act. Aggrieved by the said order, the appellant herein filed writ petitions before the Madras High Court, which took the view that, in view of the subsequent decision of this Court in the case• of Sahney Steel and Press Works Limited (supra), the Department was entitled to invoke Section 154 of the Act and that the Commissioner was right in treating the receipt of subsidies as a revenue receipt. This decision of the learned Single Judge has been affirmed by the Division Bench of the Madas High Court. Hence, these appeals by special leave.

5. At the outset, we may state that, in these appeals, we are concer