2000 (9) TMI 33 - HC - Income Tax

Summary

Issues involved:
The judgment involves a reference under section 256(1) of the Income-tax Act, 1961, regarding the withdrawal of allowance granted by the Income-tax Officer and the merging of orders between the Income-tax Officer and the appellate authority.

Withdrawal of Allowance by Commissioner of Income-tax:
The assessee claimed investment allowance for various items in the assessment year 1980-81, which was partially allowed by the Assessing Officer. Upon appeal, the Commissioner of Income-tax (Appeals) granted investment allowance for additional items. However, another Commissioner of Income-tax initiated revision under section 263, contending that the initial allowance was erroneous. The Tribunal later deemed the revisional order invalid.

Merging of Orders and Revision Jurisdiction:
The key contention revolved around whether the revision under section 263 was valid, considering the doctrine of merger between the assessing authority and the appellate authority. The court analyzed the provisions of clause (c) of the Explanation to section 263(1) and the retrospective effect of the Finance Act, 1989, to determine the scope of revisional powers.

Court's Analysis and Decision:
The court examined the Commissioner of Income-tax (Appeals) order and concluded that all items, including those rejected by the Assessing Officer, were considered during the appeal process. It was held that since the appellate authority had already decided on the grant of investment allowance for all items, the revisional power did not extend to matters already considered and decided. The court differentiated the present case from previous judgments and emphasized the applicability of clause (c) of the Explanation to section 263(1).

Judgment and Conclusion:
The court answered the two questions posed in the reference by stating that the Commissioner of Income-tax was not correct in law in withdrawing the allowance granted by the Income-tax Officer. Additionally, it was determined that the order of the assessing authority could not be revised under section 263 due to the appellate authority's prior consideration and decision on all items for investment allowance. The reference was thus disposed of without any costs being awarded.