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2013 (11) TMI 775 - ITAT MUMBAIJurisdiction of CIT to revise an order u/s 263 - Deduction u/s 80IB - doctrine of merger - AO denied deduction - The sole ground on which the deduction is denied by the AO was that the project was approved prior to 1/10/1998 and according to one of the conditions laid down in section 80 IB(10), deduction can be allowed only in a case where project has started after 1st day of Oct.1998 - Held that:- CIT(A) has decided the issue relating to deduction under section 80 IB (10). A careful perusal of the order passed by Ld. CIT(A) will reveal that neither he has applied his mind on the fulfillment of condition laid down in Explanation (ii) section 80 IB(10) and nor it was the case of the assessee that it has fulfilled the other condition/ conditions regarding completion of project as this was never the issue which was either raised by the assessee before Ld. CIT(A) nor it can be said that Ld. CIT(A) has considered and decided this issue. The language of section 263, clause (c) is very clear and unambiguous. The restriction is for the matters which have been “considered” and “decided” in the appeal. On perusal of order of Ld. CIT(A) can it be said by any stretch of imagination that he has considered and decided the issue regarding admissibility of the deduction under section 80 IB(10) on the ground of completion of the project which was to be considered as complete only on furnishing completion certificate to be issued by the local authority under Explanation (ii). Therefore, it can be said that the issue regarding completion of project was never considered and decided by the Ld. CIT(A). It can also not be said that if an assessee has not fulfilled the condition as laid down in Explanation (ii) than also he can be held to be entitled for deduction u/s. 80 IB(10). Therefore, looking into the plain provisions of language of clause (c) of section 263, it is held that Ld. CIT(A) has never considered and decided the issue regarding compliance of condition by the assessee regarding furnishing of completion certificate to be issued by the the local authority as per provisions of Explanation (ii). Therefore, doctrine of merger as pleaded by the assessee is not applicable to the facts of this case. It is difficult to accept the proposition that when deduction claimed under a particular section is subject matter of appeal and issue has been decided by the Appellate Authority, the jurisdiction of Ld. CIT under section 263 is totally precluded on that section. Such a contention will be contrary not only to the express language of clause (c) to section 263 but is also contrary to cardinal principle governing the doctrine of merger. According to these principles, while considering the cases of merger it is obligatory upon Courts to carefully go through the appellate or revisional order and also the concerned provisions of the statute. After such exercise the issue of merger should be carefully determined. There may be several judicial pronouncements in which Courts have held that when a particular deduction was considered by the Appellate Authority then the jurisdiction of Commissioner Under section 263 is ousted . At the same time there are several cases in which Courts have held that despite the fact that whether deduction under a particular section was considered and decided by the first appellate authority then also doctrine of merger would not be applicable. This has so been held after perusing the revision order as well as appellate order - CIT has rightly invoked his jurisdiction under section 263 and the assessment order did not merge with the appellate order - Decided against assessee.
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