TMI Blog2002 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER The assessment years in question are 1985-86 and 1986-87. The Assessing Officer had, by assessment orders dated December 22, 1988, and March 28, 1989, in respect of the respective assessment years, inter alia, allowed power subsidy to be treated as capital receipt instead of revenue. This was also the law as laid down by the jurisdictional High Court in the decision of CIT v. Dusad Industries [1986] 162 ITR 784 (MP). The Commissioner in exercise of the powers under section 263 of the Income-tax Act, 1961, sought to revise the assessment orders by two identical but separate orders dated March 25, 1991. In each of the orders the Commissioner has merely stated that the Assessing Officer had erred while assessing the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital receipt but a revenue receipt. It is also pointed out to us that the decision of the Madhya Pradesh High Court in Dusad Industries' case [1986] 162 ITR 784 had been held to be erroneous by this court. It is contended that, therefore, the Commissioner was correct in revising the decision of the Assessing Officer and coming to the conclusion that the Assessing Officer had erroneously treated the power subsidy as a capital receipt. The appellant has also submitted that the declaration of law by this court, in Sahney Steel's case [1997] 228 ITR 253 could be deemed to have been the law which was at all times operative. In any event, according to the appellant, the Revenue, at least as far as the State of Andhra Pradesh was concerned, had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the power subsidy was a capital receipt. Given the fact that the decision of the jurisdictional High Court was operative at the material time, the Assessing Officer could not be said to have erred in law. The fact that this court had subsequently reversed the decision of the High Court would not justify the Commissioner in treating the Assessing Officer's decision as erroneous. The power of the Commissioner under section 263 of the Income-tax Act must be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the Revenue. The satisfaction of the Commissioner, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings were initiated. Apart from the language of section 263 of the Income-tax Act, if we were to accept the submission of the appellant that the Revenue authorities within the State could refuse to follow the jurisdictional High Court's decision on the ground that the decision of some other High Court was pending disposal by this court, it would lead to an anarchic situation within the State. If at the time when the power under section 263 was exercised the decision of the jurisdictional High Court had not been set aside by this court or at least had not been appealed from, it would not be open to the Commissioner to have proceeded on the basis that the High Court was erroneous and that the Assessing Officer who had acted in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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