ORDER This is an application under section 256(2) of the Indian Income-tax Act, 1961 (hereinafter referred to as the Act), read with section 18 of the Companies (Profits) Surtax Act, 1964 (hereinafter referred to as the Surtax Act) at the instance of the Commissioner of Sur-Tax Madhya Pradesh, Bhopal (hereinafter referred to as the Department) requesting this Court that as the following points of law arise out of the order passed by the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal) on 31-3-1980 in R. A. Nos. 100, 101, 102, 103, 104 and 105, respectively :- 1. Whether, on the facts and in the circumstances of the case, the amounts of deductions under sections 80I and 80L of the Income-tax Act, 1961 could not be considered as sums not includible in the total income for income tax assessment and, therefore, would not fall for deduction under Rule 4 for computing the capital under the Second Schedule to the Companies (Profits) Sur-tax Act, 1964? Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Income Tax Officer's failure at the time of the assessment in not considering the deductions under sections 801 and 80L of the Income Tax Act, 1961 for the purpose of Rule 4 of the Second Schedule to the Companies (Profits) Sur-tax Act, 1964 is not a mistake of law apparent from the record and, therefore could not be rectified under sections 13 or 14 of the said Act. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the rectification orders passed on 18-7-1977 by the Surtax Officer/Income Tax Officer under section 14 of the Companies (Profits) Sur-tax Act, 1964 read with sections 154/155 of the Income-tax Act, 1961 were barred by limitation? If the questions Nos. 1, 2 and 3 above are answered in favour of the department and against the assessee, whether the Tribunal was right in law in upholding the AAC's orders and consequently in cancelling the rectification orders passed by the Sur-tax Officer/Income-tax Officer on 18-7-1977 under section 14 of the Companies (Profits) Sur-tax Act, 1964 read with section 154/155 of the Income-tax Act, 1961. The facts giving rise to this application are that M /s. India Thermit Corporation Limited (hereinafter referred to as the Company) has its address as 'Shree Bhawan', Sarafa Road, Lashkar, Gwalior and the Company is a limited Company engaged in the business of manufacture and sale of Thermit used for welding railway lines. The said Company is liable to payment of Sur-tax under the Surtax Act. Assessment years are 1967-68, 1968-69, 1969-70, 1970-71, 1971-72 and 1972-73. Sur-tax assessments were completed on different dates. The dates are mentioned in Annexure I to the petition. While completing the said Sur-tax assessments, the Sur-tax Officer (hereinafter referred to as the Sur-tax Officer) had computed the capital without making any deduction in respect of the capital under Rule 4 of the Second Schedule to the Surtax Act, proportionate to the deduction allowed under sections 80L and 801 in the income tax assessment. The date of assessment of Surtax is between 3-7-1970 and 27-12-1972. Later on, the Sur-tax Officer discovered that there was a mistake, which in his opinion, was apparent on the face of the record in the aforesaid assessment inasmuch as there was an omission to make proportionate deduction in the capital computed for different years in view of the deduction allowed under section 801 and SOL in the income-tax assessments. Details regarding the deduction allowed under section 801 and the deductions that ought to have been made proportionately in the computation of the capital in terms of Rule 4 in the Second Schedule of the Surtax Act are as under: - A.Y. Income SOI relief Capital & Proportionate assessed granted. Reserves deduction of capital. 1967-68 13, 28, 110 59,264 31,02,989 1,38,000 1968-69 9,64,005 76,960 33,52,989 2,67,579 1969-70 18,40,717 1,47,097 34,33,315 2,74,665 1970-71 14,94,705 1,19,496 35,12,127 2,80,123 1971-72 16,76,412 1,33,832 38,12,476 3,04,998 1972-73 33,98,348 1,89,867 41,17,798 2,05,890 The Sur-tax Officer issued two notices dated 10-10-1975 and 7-4-1977 requiring the Company to show cause as to why the proportionate capita) should not be deducted from the capital already computed for the assessment years 1967-68 to 1972-73, both inclusive and why additional Surtax should not be levied. The Company replied the notices given to it and contended that the proposed rectification was barred by limitation and even if it is held that the rectification is permissible, it ought to have been made within four years from the dates of the original Surtax assessment and the limitation for making such a deduction for assessment year 1967-68 to 1972-73, both inclusive, expired on 31-7-1974, 4-1-1975, 12-2-1975, 13-10-1975 and 21-12-1976 respectively. The other contention raised was that Rule 4 of the Second Schedule of the Surtax Act was not applicable to the deductions under section 801 and 80L because the said Rule uses the words: "Where a part of the income, profits and gains of a company is not includible in its total income as computed under the Income-tax Act". The words 'not includible in the total income' were meant to exclude only those items of income which are mentioned in Chapter III of the Income-tax Act, 1961 and not to any other deduction that is permissible to be granted under the said Act. The Surtax Officer did not accept either of the contentions and made a revised assessment by a common order dated 17-8-1977. With respect to the plea of limitation, the Sur-tax Officer held that since the original orders of assessment were subject to further proceedings under one or more of the provisions, such as sections 151,155,250 and 263 of the Act, the limitation should be computed from the date of revision of the assessment and if the date of the order of revision is taken into consideration, the assessments are within limitation. The Company, aggrieved by the order made by the Surtax Officer filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, by his common order dated 23-12-1977 disposed of the six appeals filed by the Company. The learned Appellate Assistant Commissioner did not accept the contention of the Company that the rectification proceedings before the Surtax Officer were barred by limitation. However, the learned Appellate Assistant Commissioner accepted the contention of the assessee that the deduction allowed under section 801 or 80L does not fall within the scope of Rule 4 of the Second Schedule to the Surtax Act and cannot be treated as 'income not includible in the total income'. The Revenue, aggrieved by the order of the Appellate Assistant Commissioner, preferred an appeal before the Tribunal. The Revenue, aggrieved by the order of the Appellate Assistant Commissioner, preferred an appeal before the Tribunal. The Tribunal accepted the Company's contention that the rectification proceedings before the Sur-tax Officer were barred by time and also held that expression 'is not includible' used in Rule 4 of Second Schedule to the Surtax Act relates only to the income referred to under Chapter III of the Act and not to deduction permissible under Chapter VI-A of the Act and as this point is a debatable point of law, it cannot be said to be an error apparent on the face of the record. Holding this, the learned Tribunal dismissed the appeal and confirmed the orders against which the appeal was preferred. Aggrieved by this order of the Tribunal the Department made an application for reference to this Court, saying that the aforesaid points of law do arise from the orders under challenge and as such, the matter may be referred to this Court for decision. The application made for reference to the Tribunal was dismissed by the learned Tribunal by saying that the alleged mistake of law is not apparent on the face of the record and as such, there is no need to refer the matter to this Court. Similarly, it held that the limitation will start from the original order passed by the Surtax Officer and, therefore, the rectification proceedings which were started after four years from the original order, were clearly barred by limitation. The second aspect which was considered by the learned Tribunal was whether the point which is a debatable point and which requires long-drawn arguments and for which different High Courts have expressed different views, is a point which can be covered by the wordings 'mistake apparent on the face of the record'. The learned Tribunal held that it will not amount to a mistake apparent on the face of the record and as such, the order cannot be reviewed and on this ground also, the application for reference was dismissed. One more aspect of the case which was considered by the learned Tribunal was as to whether deduction under section 80L and 801 of the Act will be covered under Rule 4 of Second Schedule to the Surtax Act. One more aspect of the case which was considered by the learned Tribunal was as to whether deduction under section 80L and 801 of the Act will be covered under Rule 4 of Second Schedule to the Surtax Act. This point also was held by the Tribunal to be a debatable point, which cannot be covered under the heading 'mistake apparent on the face of the record' and as such, review will not lie to correct the same. Holding this, the Tribunal rejected the application for reference to this Court, saying that no question of law, as submitted by the Department, arises and as such there is no need to refer the matter to this Court for an opinion. When the application was rejected by the Tribunal, the Department has filed this application before this Court. Shri H. L. Sharma, learned counsel appears on behalf of the Department, while Shri R. C. Lahoti, learned counsel, appears on behalf of the Company. The learned counsel for the Company supports the order passed by the Tribunal. The first point to be considered is whether the rectification proceedings were barred by limitation. To submit that they were not barred by limitation, the learned counsel for the Department, submitted that when an action is taken in the matter under revisional jurisdiction under the Act, then, the limitation should be counted from the date of the final order passed under the proceedings under the revisional jurisdiction and if that date is taken to be the date on which limitation begins to run, then all the proceedings taken against the Company are within limitation. The learned counsel for the Company submitted that in case of an order under the revisional powers, the doctrine of merger cannot be applied and if the doctrine of merger cannot be applied then the limitation will start from the original order and not from the date of the order under revisional powers under the Act. The learned counsel for the Company submitted that in case of an order under the revisional powers, the doctrine of merger cannot be applied and if the doctrine of merger cannot be applied then the limitation will start from the original order and not from the date of the order under revisional powers under the Act. He referred to us to a judgment of the Supreme Court in State of Madras v. Madurai Mills AIR 1967 SC 681 , in which it was observed as under : - The doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority, passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate and or revisional jurisdiction. AIR 1958 SC 868 , Relied on. Similarly, it is further held in the above judgment as under:- Sales-tax-Madras General Sales-tax Act (19 of 1939), Section 12 (4) (b) - Assessee filing revision against his assessment by Deputy Commercial Tax Officer-Deputy Commissioner of Commercial Taxes dismissing revision on 21-8-1954 - On 4-8-1958, Board of Revenue issuing notice to assessee stating that it proposed to revise, assessment of Deputy Commercial Tax Officer as it excluded certain taxable amount-Assessee's objection that proceeding was time-barred under section 12 (4) (b) - Revenue's defence that order revised by Board was revisional order of Deputy Commissioner D/- 21-8-1958 and not assessment order of Deputy Commissioner D/- 28-1-1952 - Held subject-matter of revisional proceeding before Board was assessment order D/- 28-1-1952 and revision being beyond 4 years was invalid-Held further that there was no merger of assessment order with revisional order of Deputy Commissioner of Commercial Taxes ILR 1962 Mad 489, Affirmed. Similar point was decided in Mettur Chemical and Industrial Corporation, Ltd. v. Commissioner of Income-tax, Madras-I (1977) 110 ITR 822 and in Poonjabhai Barmalidas v. Wealth Tax Officer, Circle IV-A (Spl.) Ahmedabad (1978) 114 ITR 38. Similar point was decided in Mettur Chemical and Industrial Corporation, Ltd. v. Commissioner of Income-tax, Madras-I (1977) 110 ITR 822 and in Poonjabhai Barmalidas v. Wealth Tax Officer, Circle IV-A (Spl.) Ahmedabad (1978) 114 ITR 38. It was observed in the case of Mettur Chemical Corporation (supra) as under:- In completing the income-tax assessment for the assessment years 1959-60 and 1960-61, the Income-tax Officer allowed the wealth-tax paid as a deduction in computing the total income of the assessee. In the subsequent orders of reassessment also, this point was not touched by the officer. Subsequently, the officer inititated proceedings in respect of both the years under section 154 of the Income-tax Act, 1961, evidently on the basis of the decision of the Madras High Court in Kambakonam Electric Supply Corporation Ltd. v. Commissioner of Income Tax (1963) 50 ITR 809, which held that wealth tax paid was not deductible from the income from business for arriving at the taxable income, and, overruling the objections of the assessee, rectified the assessment orders by adding back the wealth-tax which was originally deducted. The assessee's appeals failed before the Appellate Assistant Commissioner and the Tribunal. On a reference to the High Court at the instance of the assessee : HELD, (1) that the decision of the Madras High Court made it clear that the Income-tax Officer committed an error in deducting the wealth-tax from the income of the assessee and that error was apparent from the record. Therefore, the officer acted without his jurisdiction in proceeding under section 154 in order to rectify the mistake. (2) Though proceedings for reassessment have been completed under section 147, it cannot be held that the entire order of assessment originally passed by the officer ceased to exist and that the only order that remains in force is the reassessment order. Therefore, the limitation for initiation of proceedings under section 154 will have to be reckoned from the original assessment order. As the order of rectification in the instant case for 1959-60 was passed on February 25, 1965, after the period of four years from the date of the original assessment made on May 27, I960, the same was barred by limitation. As the order of rectification in the instant case for 1959-60 was passed on February 25, 1965, after the period of four years from the date of the original assessment made on May 27, I960, the same was barred by limitation. In Poonjabhai's case (supra), it was held as under:- Against the assessment orders made on February 22, 1971, the petitioner assessee went in appeal before the Appellate Assistant Commissioner, who by his order dated June 23, 1971, reduced the net wealth of the petitioner by Rs. 15,000. By virtue of the said appellate orders, the petitioner became entitled to refund of Rs. 150 and the necessary consequential orders were passed by the Wealth-tax Officer on March 30, 1974, allowing a refund of Rs. 150. Thereafter, three notices were issued by the Wealth tax Officer, all dated January 15, 1976, under section 35 of the Wealth-tax Act, calling upon the petitioner to show cause why the rectification proposed in those notices should not be made. The ground mentioned was that in the calculation of tax, additional wealth-tax on immovable property situated in an urban area as provided in the Schedule to the Act, Part I paragraph A (2) was left out through oversight. Ultimately, overruling the petitioner's objections, the officer passed rectification orders under section 35 of the Act. The petitioner filed a writ petition challenging the orders of rectification on the ground that under section 35(7) of the Act, the rectification proceedings were time-barred after the expiry of four years from the date of the orders sought to be rectified, that is, from February 22, 1971,: Held, that under section 23(5A) of the Act, in disposing of an appeal, the Appellate Assistant Commissioner may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner by the appellant. The entire assessment is before him and he has the power, if he chooses, to examine any particular decision of the Income-tax Officer and to correct it if he finds it wrong but there is no obligation on him to do so. The entire assessment is before him and he has the power, if he chooses, to examine any particular decision of the Income-tax Officer and to correct it if he finds it wrong but there is no obligation on him to do so. It is only that part of the order of assessment which consists of decisions reviewed by the Appellate Assistant Commissioner, that is, considered and examined by him, irrespective of whether ultimately affirmed, modified or reversed, that is superseded by the order of the Appellate Assistant Commissioner. It is only in respect of points which were touched by the Appellate Assistant Commissioner that it can be said that the Appellate Assistant Commissioner's order and the consequential order necessitated by the Appellate Assistant Commissioner's order will be the orders that can be subsequently considered for rectification proceeding from the date of those orders. In so far as the Appellate Assistant Commissioner has not dealt with or touched the points which were originally decided by the Wealth-tax Officer it is the date of the original order of assessment by the Wealth tax Officer that will be the starting point for limitation for rectification thereof. In the appellate order of the Appellate Assistant Commissioner the question as to whether the amount mentioned in clause 2 (c) of paragraph A of Part I of the Schedule to the Wealth-tax Act, should or should not be included was never dealt with nor touched upon by the Appellate Assistant Commissioner. Therefore, the omission in the original order passed on February 22, 1971, was sought to be rectified by the Wealth-tax Officer when he initiated proceedings under section 35(1) of the Act and he wanted to rectify it by removing that error from the order of assessment. What he was seeking to do was not in consequence of the order passed by the Appellate Assistant Commissioner but was a matter which should have been dealt with initially by the Wealth-tax Officer himself and was not dealt with by him at that stage when he passed the original orders on February 22, 1971. Therefore, for the purposes of limitation under section 35 (7) (b) of the Act, the period of four years has to be calculated from the date of the orders passed by the Wealth-tax Officer himself, namely, February 22, 1971. Therefore, for the purposes of limitation under section 35 (7) (b) of the Act, the period of four years has to be calculated from the date of the orders passed by the Wealth-tax Officer himself, namely, February 22, 1971. The notice calling upon the petitioner to show cause was issued on January 15, 1976, and the ultimate order was passed on February 10, 1976. Even at the stage that the show-cause notice regarding rectification was issued, the period of four years had expired and, therefore, the action of the Wealth-tax Officer was clearly time barred and, hence, wholly without jurisdiction. The orders of rectification for each of the three years and the consequential notices of demand were quashed and set aside. Therefore, relying on these rulings, we are of the opinion that the doctrine of merger is not applicable to the present case and the rectification proceedings were barred by limitation. In the present case, the learned counsel for the Department was not able to show us that after passing of the order of the Surtax Officer, there was any stay order against it from the superior forum and when there was no stay order from the superior forum, the limitation will run as a matter of course without any interruption and the right of the Surtax Officer to revise the order will certainly be subject to the limitation provided. The other point submitted before us by the learned counsel for the Company was that the alleged error which the Surtax Officer has corrected is not an error which is apparent on the face of the record The meaning of 'an error apparent on the face of the record' is that it should be an evident error which does not require any extraneous matter to show its incorrectness. It is an error so manifest and clear that no court would permit such an error to remain on the record. It is not an error which could be demonstrated by a process of ratiocination. The 'error' may be one of fact but is not limited to matters of fact, and includes also errors of law. But the law must be definite and capable of ascertainment. It is not an error which could be demonstrated by a process of ratiocination. The 'error' may be one of fact but is not limited to matters of fact, and includes also errors of law. But the law must be definite and capable of ascertainment. An erroneous view of the law on a debatable point or a wrong exposition of the law or a wrong application of law or a failure to apply the appropriate law cannot be considered a mistake or error apparent on the face of the record. We are not willing to go so far as to say that a Court has jurisdiction to decide wrongly. But, a wrong judgment or a wrong inference is not an error apparent on the face of the record. Now, applying this principle to the present case, we will have to see as to what is the dispute between the parties. Section 801 and section 80L of the Act allow certain deductions, while assessing the taxable total income of the assessee and according to Rule 4 contained in the Second Schedule to the Surtax Act, which is as under : 4. Where a part of the income, profits and gains of a company is not includible in its total income as computed under the Income-tax Act, its capital shall be the sum ascertained in accordance with rules 1, 2 and 3, diminished by an amount which bears to that sum the same proportion as the amount of the aforesaid income, profits and gains bears to that total amount of its income, profits and gains. Certain profits and gains of the company is not includible in its total income. Certain profits and gains of the company is not includible in its total income. What is the meaning of income not includible under the said rule was considered in Second Income- Tax Officer, Company Circle Bangalore and another v. Stumpp-Schuele and Somappa Private Ltd. (1977) 106 ITR 399 and also in Commissioner of Surtax, Vidarbha and Marathwada v. Ballarpur Industries, Ltd. (1979) 116 ITR 528 in which, it was held as under : - The expression "not includible" in rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, means "not capable of being included." It cannot refer to an amount which already forms part of the gross total income and which would be later on deducted for purposes of determining the tax liability under Chapter VI-A. It is significant that the expression "shall not be included" which is found in sections 10 and 11 which are found in Chapter III is not used in any of the provisions contained in Chapter VI-A. Similarly, the said expression is not used in Chapter IV of the Income Tax Act which provides for the method of computing income under which the assessee is allowed deduction by way of expenses, rebates, allowances, etc. Both in Chapter IV and Chapter VI-A Parliament has consistently used the words "deduction shall be allowed" and not the expression "shall not be included." It is, therefore, clear that the expression "income, profits and gains of a company not includible in its total income as computed under the Income Tax Act," in rule 4 refers to those income by the provisions of Chap. III of the Income Tax Act and does not refer to any of the deductions claimable under Chapter VI-A of the Income Tax Act. III of the Income Tax Act and does not refer to any of the deductions claimable under Chapter VI-A of the Income Tax Act. Hence, the amount of relief permissible by reason of the provision contained in section 801 should not be deducted in determining the amount of the capital of a company for purposes of assessment to surtax This point was also considered in detail in Commissioner of Income-tax, Kerala-II v. Premier Cotton Spinning Mills Ltd. (1981) 128 ITR 694 in which it is held as under: Under the scheme of section 15B of the Indian Income Tax Act, 1922, as well as under section 88 (now section 80G) of the Income Tax Act, 1961, the amounts in respect of which rebate of tax was admissible were to be treated as forming part of the total income of the assessee chargeable to tax. The introduction of Chap. VI-A in the Income Tax Act, 1961, containing, inter alia, section 80G brought about a change only in the procedure of granting the relief by substituting the simpler mode of straight deduction of the expenditure in the place of the original system or grant of rebate of tax. Even under the scheme of Chap. VIA the amount in respect of which relief is claimed under section 80G continues to form part of the total income of the assessee and it is "includible in its total income," but if the assessee proves to the satisfaction of the Income Tax Officer that the conditions mentioned in section 80G are duly satisfied then a deduction will be made from the total income in respect of such amount. What section 80G provides for is the grant of the relief of deductions in respect of certain types of expenditure incurred by an assessee subject to the conditions specified therein being duly satisfied. They are not provisions for excluding any part of an assessee's income from his total income. What section 80G provides for is the grant of the relief of deductions in respect of certain types of expenditure incurred by an assessee subject to the conditions specified therein being duly satisfied. They are not provisions for excluding any part of an assessee's income from his total income. Where an assessee has been granted relief under section 80G in respect of an amount paid by way of donations such amount would not constitute, for the purpose of Rule 4 of Schedule II to the Companies (Profits) Surtax Act, 1964 a part of the income, profits and gains of the company "not includible in its total income as computed under the Income Tax Act." There are certain categories of income which, by reason of their special nature, are treated by the Income Tax Act as not liable to be included in the assessee's total income and those categories are enumerated in Chapter III of the Income Tax Act and it is only those categories that are to be regarded as income "not includible" in the total income of a company for the purpose of Rule 4 of Schedule II to the Surtax Act. Therefore, the amount of deduction allowed to the assessee under section 80G is not to be treated as part of the income of the assessee "not includible in its total income as computed under the Income Tax Act" within the meaning of the expression contained in Rule 4 of Schedule II and hence the same is not deductible while making a computation of its capital under the provisions of the Schedule. In this ruling, it was considered further whether the Second Schedule to Surtax Act, 1964 will be applicable to deductions under Chapter IV of the Indian Income-tax Act, 1961. We are mentioning this to show that the point whether certain income is not includible or whether it is includible is a debatable point and if it is a debatable point, then it cannot be said that it is such an error which is apparent on the face of the record. Therefore, the submission of the learned counsel for the Department that doctrine of merger will apply in the present case and the limitation will start from the date of the order passed in the proceedings under section 154 of the Act cannot be accepted and it is rejected. Therefore, the submission of the learned counsel for the Department that doctrine of merger will apply in the present case and the limitation will start from the date of the order passed in the proceedings under section 154 of the Act cannot be accepted and it is rejected. If this submission is rejected, then the view of the learned Tribunal that the rectification proceedings were barred by limitation, in our opinion is correct. Further, the observation of the learned Tribunal that the mistake is not such as can be termed to be the mistake apparent on the face of the record is, in our opinion, according to law and we accept its finding in this behalf. The result, therefore, is that we see no force in the application and it is dismissed with costs. Counsel's fee Rs. 250 if certified. Application dismissed