TMI Blog1993 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... gains arising on the sale had been considered in the original assessment) in the reassessment pursuant to the order of the Commissioner under section 263 of the Income-tax Act, 1961 ?" The deceased first respondent whose legal representatives are respondents Nos. 2 and 3 herein is an assessee to income-tax. The relevant assessment year is 1976-77. In the original assessment completed on February 25, 1977, the Income-tax Officer did not include the capital gains arising out of transfer of 2,000 shares in Messrs. Nirlon Synthetic Fibres and Chemicals Ltd. to a firm called Messrs. Laxmi Ram in which the assessee was a partner. The Commissioner of Income-tax, acting under section 263 of the Income-tax Act, 1961, held that the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was carried in second appeal to the Appellate Tribunal. The Tribunal held that the assessment having been set aside by the Commissioner on the earlier occasion, the assessee was well within his rights to agitate a claim that was not made in the original assessment. It was observed that the original assessment has become non est on the passing of the order by the Commissioner under section 263. The appeal by the Revenue was dismissed by the Tribunal upholding the order of the Commissioner. It is in these circumstances that the question aforementioned has been referred to this court. Heard counsel. The main argument advanced by learned counsel for the Revenue is that the Commissioner acting under section 263 of the Income-tax Act by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtallam. The Commissioner observed that the amount claimed is a portion of the total expenditure and is calculated in proportion to the area sold as compared to the total area of the land held by the appellant. The Income-tax Appellate Tribunal has considered the matter in detail and found that the assessee was well within his rights to claim deduction of that amount. On hearing counsel for the Revenue, we see no error in the order of the Tribunal. Section 263 of the Income-tax Act enables the Commissioner to call for and examine the record of any proceeding under the Act. If he considers that an order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated February 22, 1979, passed under section 263 of the Act, had set aside the earlier assessment and the Income-tax Officer was directed to make fresh assessment after giving an opportunity to the assessee to place before the Income-tax Officer whatever materials he wishes to place in regard to the question relating to the taxation of capital gains indicated in that order. Learned counsel for the Revenue would contend that the assessing authority has only to consider the aspects indicated in the order which did not relate to the expenses incurred in connection with the property at Courtallam. It is, therefore, contended that the deduction of that amount was not made in accordance with the direction of the Commissioner. It is his conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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