TMI Blog2008 (7) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Assessment Order on 26.03.1981 and computed total income of ₹ 7,85,635/-. While finalising the assessment, the Income Tax Officer granted deduction under Section 35B of the Income Tax Act, 1961('the Act' for short). Simultaneously, the Assessing Officer also allowed the deduction under Section 80J of the Act at the rate of 7.5% of the Capital employed to the extent of ₹ 64,465/-. 4. The Commissioner of Income Tax passed order under Section 263 of the Act on 24.12.1983. In his opinion, the Income Tax Officer had committed an error in granting benefit under Section 35B of the Act to the Assessee. He therefore, remanded the proceedings before the Income Tax Officer for passing fresh order on this count. The Commissioner in his remand order dated 24.12.1982, made following specific observations: The assessment order made by the Income-Tax Officer is accordingly set aside on this particular point. The Income-tax officer is directed to withdraw the weighted deduction of ₹ 26,681/- as already allowed and consider the grant of such deduction as is admissible in respect of the claim now lodged. Pursuant to the said order passed by the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.O. Whatever detail evidence it may want to for the purpose of claiming weighted deduction. Pursuant to the said order passed by the Commissioner, the Assessing Officer passed fresh assessment order on 24.08.1984. In his order also, he maintained grant of benefit under Section 80J of the Act as claimed by the Assessee. 8. By an order dated 08.01.1987, the Commissioner in purported exercise of power under Section 263 of the Act sought to revise the order passed by the Assessing Officer on 24.08.1984 holding that granting of benefit under Section 80J and 35B of the Act would be prejudicial to the interest of Revenue. This order was also carried by the Assessee before the Tribunal and the Income Tax Tribunal by common Judgement dated 29.06.1995, set aside the order passed by the Commissioner of Appeals on similar grounds and held that the Commissioner could not have exercised the power since such exercise would be beyond the period of limitation prescribed under Section 263 of the Act. The Tribunal was of the view that the error, if any, did not arise in the fresh order passed by the Income Tax Officer on 24.08.1984, but was part of the earlier order of assessment. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for rectifying the respective orders should be four years from the date of original assessment order. Merely because an assessment order is rectified, it cannot enlarge the period of limitation. It was, therefore, held that the effort of the ITO was to rectify the error which had crept in the original assessment order for A.Y. 1961-62 wich had been made on 26.12.1962. The Hon'ble High Court held that the impugned rectification notice issued no 3.2.68 on the strength of the second order u/s. 154 dated 21.5.65 was clearly time barred and without jurisdiction. Similar view was expressed by the Hon'ble Gujarat High Court in the case of Poonjabhai Vanmalidas Vs. ITO reported in 114 ITR 38. In a recent judgement in the case of Digvijay Cement Co. Ltd. reported in 21 ITR 797, the Hon'ble Gujarat High Court observed that the assessee had not claimed weighted deduction before the I.T.O. On certain items of expenditure and no such claim was made before the A.A.C. also. The A.A.C. on his own also did not examine this point and he did not give any decision thereon. It was therefore, held that the revision application submitted by the assessee u/s.264 claiming the deduction was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation. However, we are not directly concerned with this aspect of the matter. 11.On the basis of the above factual matrix, the Tribunal at the instance of the Revenue, has referred the above quoted questions for our consideration. 12.The learned counsel Shri Manish Bhatt, appearing for the Revenue submitted that the Tribunal committed an error in holding that the power exercised by the Commissioner was beyond the period of limitation. He submitted that once the assessments were reopened, only fresh assessment orders survived and since the Commissioner exercised his powers under Section 263 of the Act, admittedly, within the period of limitation prescribed from the date of the fresh assessment orders passed by the Assessing Officer, the Tribunal ought not to have held the same as barred by limitation. 12.1 It was further contended that once the assessment orders were set aside, and the Assessing Officer was required to pass fresh orders, for all purposes, the assessments were reopened. He therefore contended that it was open for the Commissioner to revise fresh orders passed by the ITO pursuant to such remand. 12.2 Reliance was placed on the decision of the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contended that in both the cases, i.e. for the assessment year 1979-80 and assessment year 1980-81, the Commissioner(Appeals) touched only the question of grant of benefit to the Assessee under Section 35B of the Act and there was no discussion whatsoever with respect to the benefit granted to the Assessee by the Income Tax Officer under Section 80J of the Act. The Income Tax Officer thereafter passed a fresh order of assessment giving effect to the order passed by the Commissioner(Appeals). At which time also, there was no fresh consideration so far as the claim of the Assessee under Section 80J is concerned and all that the Income Tax Officer did was to re-grant the same benefits in the same form without any fresh consideration. She therefore, submitted that the principle of merger would not apply and the Commissioner therefore could not have reopened the assessments beyond the period of limitation prescribed considering the date of passing of the initial assessment orders passed by the Assessing Officer. 15.Heavy reliance was placed on the decision of the Apex Court in the case of C.I.T. Vs Alagendran Finance Ltd. reported in 293 ITR 1. It was a case wherein assessments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e both under Section 35B as well as under Section 80J of the Act. With respect to assessment year 1979-1980, the Commissioner (Appeals) took the proceedings under suo motu revision believing that the assessment insofar as the same pertains to benefit under Section 35B of the Act is concerned was prejudicial to the interest of Revenue. In this order, the Commissioner made no reference to the benefit granted to the Assessee by the Assessing Officer under Section 80J of the Act. As already noted, the Commissioner in his order under Section 263 of the Act, specifically provided that the order of the Income Tax Officer is set aside on this particular point . Consequently, the Income Tax Officer was directed to withdraw the weighted deduction as already allowed and consider grant of such deduction as is admissible in respect of claim now lodged. 2) With respect to assessment year 1980-1981, no proceedings were initiated by the Commissioner under Section 263 of the Act. However, the Assessee approached the Commissioner seeking revision of the Assessment Order under Section 264 of the Act. Once again, in the order that the Commissioner passed upon the application of Assessee, the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years under consideration granting benefit under Section 80J of the Act to the Assessee. Upon remand also, the Assessing Officer reconsidered only the question of deduction under Section 35B of the Act and took no further steps with respect to the question of benefit under Section 80J of the Act to the Assessee. 21.It was therefore, not open for the Commissioner to revise such orders of the Assessing Officer in exercise of powers under Section 263 of the Act holding that the Assessing Officer had erred in granting benefit under Section 80J of the Act to the Assessee which was prejudicial to the interest of Revenue. The mistake, if any, was committed by the Assessing Officer in his original order of assessment and not while passing fresh orders as directed by the Commissioner. To our mind, the Assessing Officer was required to carryout the the directions of the Commissioner in his revisional orders passed under Sections 263/264 of the Act, which he did. This did not include question of grant of benefit under Section 80J. 22.One may recall that under Section 263 of the Act, the Commissioner has the power to call for and examine the record of any proceedings and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of assessment, such orders could have been revised only within two years after the end of the assessment year during which such orders were passed. Admittedly, this not having been done, in our view, the Tribunal was justified in holding that the Commissioner sought to exercise powers beyond the limitation. 26.The decision in the case of C.I.T. Vs Alagendran Finance Ltd. (supra) would apply on all fours in facts of the present case. As already noted, it is a case in which, under similar factual background, the Apex Court was pleased to hold that it was not a case of merger and the period of limitation commenced from the original assessments and not from the reassessments since the later had nothing to do with the question of Lease Equilisation Fund which question was sought to be reopened through revision. It was observed that it is not a case where the subject matter of reassessment and the subject matter of assessment were the same. They were not. So are the facts in the present case. 27.In the said decision of C.I.T. Vs Alagendran Finance Ltd.(supra), the Apex Court was also pleased to consider the decision in the case of Hind Wire Industries Ltd.(supra). It was observ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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