JUDGMENT
S.C. Sen, J.
1. The following question of law has been referred by the Tribunal to this court under Section 256(2) of the Income-tax Act, 1961 (“the Act”) :
“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the mistake sought to be rectified by the Income-tax Officer was not a mistake which was apparent from the record within the meaning of Section 154 of the Income-tax Act, 1961 ?”
2. This reference relates to the assessment year 1963-64 but no paper book has been filed as of date, although it has been pending in this court since 1977.
3. The facts of the case, as stated in the statement of the case, are briefly as follows ;
“The assessee is a limited company. In the course of assessment, extra shift depreciation allowance was allowed at Rs. 5,38,769 on the basis of the claim made by the assessee. The assessee had been allowed normal depreciation allowance of Rs. 5,38,769 at 50 per cent, of the allowance for the whole year as the assessee’s working days were less than 180 days. The Income-tax Officer proposed to rectify the order by reducing the extra shift depreciation allowance as he was of the view that the extra shift allowance could be allowed only at 50 per cent, of the normal depreciation actually allowed to the assessee and not at 50 per cent, of the maximum permissible depreciation for the whole year as had been done in the assessment. The assessee’s plea was that extra shift depreciation allowance had been correctly allowed in the assessment. This plea was not accepted by the Income-tax Officer and he rectified the order as proposed by him on the ground that the mistake was an obvious one. He, accordingly, reduced the extra shift depreciation allowance to Rs. 2,65,793 on the basis of the depreciation allowance actually allowed to the assessee.”
4. On appeal, the Appellate Assistant Commissioner held that the point involved was a debatable one, when it was a case of rectification under Section 154 of the Act and he, therefore, set aside the order of the Income-tax Officer.
5. The Department appealed to the Tribunal which held, after hearing both the parties, that:
“We have considered the rival submissions of the representatives of the parties. Normal depreciation allowance is defined in the Explanation appended to the provision in column No. III relating to item No. III of Part I of Appendix I. The view taken by the Income-tax Officer is not based on the interpretation of the Explanation as he has taken into consideration Rule 5. Both the views, i.e., the view of the Income-tax Officer and that of the representative of the assessee are conceivable. The whole controversy centres round the meaning of the expression ‘normal allowance’ and the determination of that expression requires a long-drawn process of reasoning. We find ourselves in agreement with the Appellate Assistant Commissioner that the mistake, if any, is not an obvious or a patent one and the point in controversy is a debatable one.”
6. It is a well-settled principle of law that if, on a question of construction on a point of law, two views are possible, then the view which is in favour of the assessee has to be taken and, therefore, no rectification can be done by invoking Section 154.
7. The Supreme Court, in the case of T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50, and also a number of other cases, has expressed the above view.
8. In that view of the matter and following the principles laid down by the Supreme Court in that judgment, the question is answered in the affirmative and in favour of the assessee.
9. The reference is finally disposed of without the paper book. There will be no order as to costs.
Bhagabati Prasad Banerjee, J.
I agree.