INCOME TAX ACT, 1961

Section 254(2)

Appeal (Tribunal) - Rectification under section 254(2) - No mistake apparent from record -

Assessee-company claimed that income derived by it from sale of agricultural land was exempt from being taxed under the head 'Capital gains'. However, AO held that it was to be treated as income from business or profession. Further, Tribunal concluded that the nature of land sold being agricultural land the income derived from the sale of such land could not be treated as income from business or profession as the land sold was not a business asset. Aggrieved, Revenue sought rectification of such order of the Tribunal on the ground that the Tribunal overlooked the fact that no agricultural activity was ever carried out on the said land. Held: Tribunal while deciding the issue in appeal had taken note of the factual matrix as well as the submissions made and accordingly, concluded that the nature of land sold being agricultural land, the income derived from the sale of such land could not be treated as income from business or profession. Thus, it would be said that the Revenue in the guise of rectification, wanted Tribunal to review the appeal order, which is not within the ambit of section 254(2) because section 254(2) is meant only for rectifying mistakes which are apparent on the face of record. Since the appeal order, prima facie, did not reveal any mistake apparent on the face of record; the rectification application filed by the Revenue would not be sustainable and hence, the same was dismissed.

REFERRED :

FAVOUR : In assessee's favour/Against the appellant.

A.Y. :

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