The main legal point established in the judgment is that the relief under Section 80m should be given before or after the deduction of the depreciation of the past years as claimed by the assessee, and since there is a possibility of two views in respect of this matter, it cannot be said that there is a mistake apparent on the face of the record which can be rectified under Section 154 of the Act.

( 1 ) IN this reference under Section 256 (2) of the I. T. Act, 1961, the following question has been referred to this court for its opinion :"whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was no mistake apparent from the record and as such the ITO was not justified in passing the order under Section 154 of the I. T. Act, 1961, and in that view cancelling the order under Section 154 of the said Act ?"

( 2 ) THE assessee is a company and the assessment year involved is 1973-74 for which the relevant accounting period ended on December 31, 1972.

( 3 ) THE assessee deals in tea and has business in share dealing. Besides these, the assessee has income from dividends. In the original assessment made on December 24, 1974, the ITO allowed the deduction as claimed by the assessee under Section 80m of the Act in respect of certain dividend income received by the assessee. Subsequently, the ITO was of the view that since the total income of the assessee was determined at a loss figure of Rs. 1,32,080 the assessee was not entitled to deduction under Section 80m of the I. T. Act, 1961, in respect of the dividend income received by it. It appears that the ITO arrived at the loss of Rs. 1,32,090 after taking into consideration the depreciation of the earlier years. With a view to rectify the mistake the ITO passed an order under Section 154 of the Act and withdrew the deduction granted to the assessee under Section 80m of the Act, in the original assessment.

( 4 ) AGAINST the order of the ITO, the assessee preferred an appeal to the AAC. In the appeal it was submitted on behalf of the assessee that since there was no mistake apparent on the face of the records, the ITO was not justified in passing an order under Section 154 of the Act. The AAC, however, upheld the action of the ITO.

( 5 ) ASSESSEE preferred a second appeal to the Tribunal against the order of the AAC. In further appeal the Tribunal was of the view that since the point in dispute could not be decided without long drawn process of reasonings and arguments as it was a debatable point, the ITO was not justified in initiating proceedings under Section 154 of the Act. Relying on the decision of the Supreme Court in the case of T. S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50, the Tribunal cancelled the order made by the ITO under Section 154 of the Act.

( 6 ) THE question in the instant case is whether the relief under Section 80m should be given before or after the deduction of the depreciation of the past years as claimed by the assessee ? There is a possibility of two views in respect of this matter and hence it cannot be said that there is a mistake apparent on the face of the record which can be rectified under Section 154 of the Act. In the case of National Engineering Industries Ltd. v. CIT, cited at the Bar, it appears that the question of carrying over of losses and/or depreciation and/or development rebate from previous years was left open. This is also not a case under Section 154.

( 7 ) IN the above view of the matter, we answer the question in the affirmative and in favour of the assessee. There will, however, be no order as to costs.