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2021 (6) TMI 169 - ITAT SURATRevision u/s 263 - Doctrine of merger - while computing disallowance u/s 14A by applying formula under Rule 8D item (iii) being percent of average investment, investment in partnership firm M/s. Gokulanand Petro Fibers was not considered - HELD THAT:- PCIT under 263 revision proceedings directed the assessing officer to recompute the disallowance under section 14A r.w.r.8D, although in the meantime the order of assessment passed by the assessing officer under section 143(3) r.w.s. 92CA(3) of the Act, had been the subject-matter of appeal before the Commissioner of Income Tax (Appeals). Therefore, order passed by the assessing officer has merged with the Commissioner of Income Tax (Appeals), hence ld Principal Commissioner of Income Tax ( Ld. PCIT) does not have power under section 263 to exercise his jurisdiction on the issue of “disallowance under section 14A r.w.r.8D”, since the said issue has been already adjudicated by the Commissioner of Income Tax (Appeals) Provision contained in clause (c) of Explanation 1 to section 263(1) has been inserted by amendment by the Finance Act, 1989 with effect from 1-6-1988. We note that the subject-matter in question “Disallowance under section 14A r.w.r.8D” ‘ has been considered and decided by the Commissioner of Income Tax (Appeals), therefore, now ld PCIT could not invoke the revisional jurisdiction under section 263(1) of Act. The power of revision conferred on the Commissioner by section 263 to call for and examine then record of any proceeding under the Act and to interfere if he considers that any order passed therein by the assessing officer is erroneous insofar as it is prejudicial to the interest of the revenue, does not empower the Commissioner to interfere with any order passed by the Commissioner of Income Tax (Appeals). Therefore, if any order of the assessing officer had merged in the order passed in appeal by the Commissioner of Income Tax (Appeals), the same cannot be set aside under section 263, in revision, by the Principal Commissioner of Income Tax. For the reasons given above, we are of the view that order of the Principal Commissioner of Income Tax passed under section 263 is without jurisdiction and hence, invalid in law - Appeal of the assessee is allowed.
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