1993 (9) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation of Section 264(4)(c) of the Income-tax Act, 1961.
2. Scope and ambit of the Commissioner's revisional jurisdiction.
3. Application of the doctrine of merger in tax assessments.

Summary:

Issue 1: Interpretation of Section 264(4)(c) of the Income-tax Act, 1961
The petitioner, a public limited company, sought weighted deduction u/s 35B for export markets development on expenses of Rs. 41,46,009, which was not initially claimed during the assessment proceedings. The Commissioner dismissed the revision application on the grounds that the assessment order was subject to an appeal to the Appellate Assistant Commissioner and the Tribunal, invoking the bar u/s 264(4)(c). The court held that the revision application was not barred by section 264(4)(c) because the specific claim was neither raised nor decided by the Income-tax Officer or the Appellate Assistant Commissioner, and thus, was not the subject of an appeal before the Tribunal.

Issue 2: Scope and Ambit of the Commissioner's Revisional Jurisdiction
The court emphasized that the Commissioner's power under section 264 is broad and intended to provide relief in cases of overassessment, even if the error was due to the assessee's oversight. The court cited precedents indicating that the Commissioner's revisional power is not confined to correcting errors made by lower authorities but extends to granting relief for claims not initially made. The court referenced decisions from other High Courts, particularly agreeing with the Kerala High Court in Parekh Brothers v. CIT, which supported the view that the Commissioner can entertain claims not raised before the Income-tax Officer.

Issue 3: Application of the Doctrine of Merger in Tax Assessments
The court discussed the doctrine of merger, stating that only the decisions of the Income-tax Officer that are expressly or impliedly decided by the Appellate Assistant Commissioner merge into the appellate order. The court disagreed with the broader interpretation of the Karnataka High Court, which held that the entire order merges when appealed. Instead, it maintained that parts of the order not appealed or considered remain intact and can be revised by the Commissioner. The court concluded that the petitioner's claim, not being part of the appeal, did not merge and thus was eligible for revision.

Conclusion:
The court quashed the Commissioner's order dismissing the revision application and directed the Commissioner to hear and decide the application on its merits. The judgment clarified that the bar u/s 264(4)(c) applies only to those parts of an order that were the subject of an appeal, and the Commissioner's revisional jurisdiction includes granting relief for claims not initially raised.