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2010 (4) TMI 1071 - AT - Income TaxThird Member Appointment - difference in opinion between the ld JM and the ld AM - Validity of order passed u/s 263 - receipt of gold ornaments and cash by the assessee through the "Will" - whether the order of the AO got merged with the order of the CIT(A) on the matter relating to the addition - claimed relief u/s 80-I - assessee has claimed that she has received a sum of ₹ 4,50,000 while the AO accepted only a sum of ₹ 4,00,000 and made the addition of ₹ 50,000 - AO accepted the validity of the Will. Subsequently, the assessee went in appeal before the CIT(A) and the CIT(A) deleted the addition of ₹ 50,000 and has also accepted the validity of the appeal. Main reasons for revising the order by the CIT were that the Assessing Officer failed to examine (a) whether the "Will" has been probated or not?, (b) whether the person who bequeathed the said amount and jewellery did so in terms of Hindu Succession Act? and (c) whether the said cash and jewellery were part of her "Stridhan" or self-acquired property which she could legally bequeath or was it part of HUF and did the said cash and jewellery factually exist? The learned JM was of the view that the order of the AO had merged with the order of the CIT(A) and, therefore, the CIT was not having any jurisdiction to pass the impugned order u/s 263. Learned AM, on the other hand, took the view that the order of the CIT(A) has not merged with the order of the AO and it is the case where there had not been proper enquiry by the AO and, therefore, the order passed u/s 263 was valid one. HELD THAT:- The word ‘matter’ is wider than the word ‘point’. Once a particular matter has been considered and decided in appeal and if any point relating to that remains unconsidered, it cannot be said that the subject-matter of appeal had not been considered and decided in such appeal. The subject-matter in appeal before the CIT(A) relates to the addition of ₹ 50,000 on the basis of the will of the mother of the assessee. A subject-matter may consist of number of arguments and number of points. If any point, in my opinion, has not been referred to by the CIT(A) in his order, it cannot be said that the matter relating to the addition on the basis of the Will has not been considered. While computing the deductible amount from the taxable income the assessing authority is required to ensure that the profits and gains are derived from an industrial undertaking; such profits and gains are included in the gross total income of the assessee; and the allowance has to be made in accordance with and subject to the provisions of section 80-I. Therefore, to contend that sub-section (1) of section 80-I has to be independently considered, i.e., independent of other sub-sections of section 80-I is not a correct proposition, especially when the provision itself says that it has to be in accordance with and subject to the provisions of this section. The provision does not use the phraseology in accordance with and subject to the provisions of the sub-section but refers to the entire section, which includes sub-section (2). When the deduction u/s 80-I was granted by the AO after disallowing a part of the claim which was carried in appeal before CIT(A), the appellate authority was duty-bound to examine whether the claim made by the assessee was in accordance with and subject to the provisions of section 80-I. The requirement of fulfilment of conditions stipulated by sub-section (2) of section 80-I is therefore very much subject-matter of the appeal in relation to the income from warehousing which had been disallowed by the AO. The subject-matter of the appeal since relates to the addition in the case of the assessee on the basis of the Will and since the assessee has, gone in appeal before the CIT(A) against the addition made by the AO on the basis of the Will, therefore, the order of the CIT(A) got merged with the order of the AO, on the addition made by the AO on the basis of the Will and in view of Explanation (c) to section 263(1), in my opinion, the CIT will not have any jurisdiction to invoke the provisions of section 263, hence the order passed by the AO got merged with the order of CIT(A) on subject-matter of addition on the basis of the Will. Accordingly, in my opinion, the order of CIT should be cancelled. Thus, ground as decided in favour of the assessee. The learned Third Member has agreed with the view of the learned JM. Therefore, in view of the majority decision, the assessee succeeds in its appeal.
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