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2007 (6) TMI 232 - AT - Income TaxRevision u/s 263 - Computation of total income u/s 115JB - Claimed deduction u/s 80-IB - Merger With Appellate Order - the learned CIT has power to assume jurisdiction u/s 263 in view of the doctrine of merger and whether the order of the AO in this case has merged with the order of the learned CIT(A) on the issue of deduction u/s 80-IB or not ? - No dispute to the fact that while working out the claim of deduction u/s 80-IB of the Act, the assessee itself had added back the amount of depreciation to the P&L a/c - HELD THAT:- It is the settled proposition of law that the CIT(A) has plenary powers in disposing of an appeal. The scope of his power is conterminous with that of the AO. He can do what the AO can do and can also direct him to do what he has failed to do. [decision in the case of CIT v. Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME COURT]. Therefore, in our opinion, when the issue of deduction u/s 80-IB was before the learned CIT(A) he is presumed to have applied his mind regarding the deduction u/s 80-IB as a whole. We find that the Hon'ble apex Court in the case of State of Madras v. Madurai Mills Co. Ltd.[1966 (10) TMI 119 - SUPREME COURT] held that 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 an inferior Tribunal and the other by a superior Tribunal, passed in an appeal or revision, there is a fusion or merger of the 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 provision conferring the appellate or revisional jurisdiction. We are of the considered opinion that since the matter regarding deduction u/s 80-IB was a subject-matter of appeal before the learned CIT(A), therefore, the order of the AO on the issue of deduction u/s 80 IB as a whole had merged with that of the order of the learned CIT(A) and therefore, by virtue of Expln. (c) to s. 263 of the IT Act the learned CIT had no power to assume jurisdiction u/s 263 of the IT Act on the issue of deduction u/s 80-IB of the Act. Since the assessee succeeds on this legal issue regarding assuming of jurisdiction by CIT u/s 263 on the issue of deduction u/s 80-IB the alternative submission of the assessee regarding allowability of depreciation from business profits in case depreciation has to be considered for 80-IB deduction becomes academic in nature and therefore the same is not dealt with separately. Claim of interest - delayed payment - We find that there is no discussion at all either in the body of the assessment order or in the appellate order. Nothing was brought to our notice at the time of hearing of the appeal to state whether the AO has applied his mind on this issue or not. Therefore, the order of the learned CIT on this issue in our opinion is justified and accordingly upheld. Calculation of profit u/s 115JB - We find there is no dispute to the fact that the assessee is following this system of accounting year after year for the purpose of calculation of taxable income. This otherwise shows that a portion of the expenditure on account of advertisement and sales promotion debited in the P&L a/c remains as unascertained liability. We do not find from the order of the AO or CIT(A) that this aspect has ever been discussed by either of them. Nothing was brought to our notice that the AO has applied his mind on this issue or not. Therefore, the order of the learned CIT on this issue is also upheld. In the result, the appeal filed by the appellant is partly allowed.
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