Ajit Kumar Sengupta, J. - (1.) In this reference under Section 256(2) of the I.T. Act, 1961, the Tribunal has referred the following question to this court at the instance of the Commissioner : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that there was no mistake apparent from the record with the meaning of Section 154 of the Income-tax Act, 1961, and in that view cancelling the amendment order made by the Income-tax Officer under the said section ?"
(2.) The facts which are admitted and/or found by the Appellate Tribunal incorporated in the statement of case are stated as under : For the assessment year 1967-68, the ITO had granted rebate to the assessee under Section 2(4)(a) of the Finance (No. 2) Act, 1967, in respect of its export sales and profits up to June 5, 1966. In granting the rebate, the ITO had treated the cash subsidy received from the Iron and Steel Controller and also the excise duty drawback received from the Customs Department by the assessee in respect of the export sales as part of the "sales proceeds" and "turnover" within the meaning of the relevant provisions of the said Finance (No. 2) Act, 1967, and the rules made thereunder. The successor-ITO considered that the inclusion of the cash subsidy and the excise duty drawback in the "sale proceeds" and "turnover" for the purpose of rebate under Section 2(4)(a) of the Finance (No. 2) Act, 1967, and the rules made thereunder was a mistake apparent from the record. He accordingly initiated proceedings under Section 154 of the LT. Act, 1961, for rectification of the assessment. This action of the ITO was opposed by the assessee. The ITO, however, overruled the assessee's contention that the cash subsidy received from the Iron & Steel Controller and the excise duty drawback received from the Customs Department were rightly treated in the original assessment as part of the "sale proceeds" and "turnover" within the meaning of the relevant provisions of the Finance (No. 2) Act, 1967, and the rules made thereunder and that there was no mistake apparent from the record to warrant rectification under Section 154 of the Act. As a result of the rectification order made by the ITO under Section 154 of the Act, rebates granted to the assessee on its export sales up to June 5, 1966, under Section 2(4)(a) of the Finance (No. 2) Act, 1967, were reduced. While in the original assessment, the rebates were granted on the "sale proceeds" and "turnover" of Rs. 59,18,883, the rebates now allowed to the assessee by the rectification order was on "sale proceeds" and "turnover" of Rs. 30,66,052. This reduction, as already stated above, was. consequent to the exclusion of the cash subsidy and the excise duty drawback from the "sale proceeds" and "turnover". On appeal, the AAC upheld the order of rectification passed by the ITO. Being aggrieved, the assessee preferred an appeal before the Tribunal. The Tribunal held that there was no glaring or patent mistake so as to admit of rectification under Section 154 of the Act. According to the Tribunal, the question as to whether the expression "sale proceeds" or "turnover" occurring in Section 2(4)(a) of the Finance (No. 2) Act, 1967, or the rules made thereunder means merely the amount received by the seller from the buyer as consideration for the sale or it includes all amounts received by the seller in connection with the sale is a highly debatable issue on which there can conceivably be two views. The Tribunal held that the decision of the previous ITO treating the receipts by way of cash subsidy and excise duty drawback as part of the proceeds of export sale or turnover for the purpose of granting rebate under Section 2(4)(a) of the Finance (No. 2) Act, 1967, or the rules made thereunder cannot be regarded as a mistake apparent from the record. The order of rectification was, therefore, held to be without jurisdiction and was vacated.
(3.) It is contended by the learned advocate for the Commissioner that under the relevant Finance Act, rebate should be allowed only on sale proceeds of export. Cash subsidy and excise duty drawback though it may have accrued to the assessee out of the export, yet it cannot be said to be a part and parcel of export sale and as such rebate cannot be allowed on such cash subsidy or excise duty drawback. According to the learned counsel, the ITO in allowing rebate on those two items, committed a mistake. This mistake is apparent from the record and can be rectified under Section 154.;