2013 (1) TMI 595 - HC - Income Tax

Revision of order by CIT u/s 263 Computation of Period of limitation from the date of the order of original assessment or from the order of assessment passed after remanded back by Tribunal, and CIT exercising his revisional jurisdiction u/s 263 reopened the order of assessment only in relation to the issue which was not subject matter of the appeal or issues remand back Held that - Yes, the order is barred by limitation. Following the decision in case of Alagendran Finance Ltd. (2007 (7) TMI 304 - SUPREME COURT) that the CIT exercising his revisional jurisdiction reopened the order of assessment only in relation to issue which was not subject matter of the reassessment proceedings, it was held that the period of limitation provided for under sub-section (2) of section 263 would begin to run from the date of the order of assessment and not from the order of reassessment. The scope of remand pursuant to the order of the Tribunal remitting the matter to the A.O., was limited to the addition of Rs. 59,56,000/-, evidently, therefore, such deduction u/s 80I was not in issue in the remand proceedings. Under the circumstances, the limitation qua the issue of grant of deduction u/s 80I would have to be computed from the date of the original assessment order wherein the Assessing Officer had granted 30% deduction on the total income inclusive of the income u/s 68, that is, from 28th March, 1995. When so computed, the order dated 30th March, 2007 passed u/s 263, is hopelessly time barred, the prescribed period of limitation for making such order being two years from the end of the financial year in which the order sought to be revised was passed - In favour of assessee

Summary

Issues:
1. Interpretation of limitation period under section 263 of the Income Tax Act for revising orders.
2. Validity of the order passed by the Tribunal in relation to the deduction under section 80I of the Act.

Issue 1: Interpretation of limitation period under section 263 of the Income Tax Act for revising orders:
The case involved a dispute regarding the interpretation of the limitation period under section 263 of the Income Tax Act for revising orders. The Commissioner of Income Tax passed an order disallowing a deduction under section 80I of the Act, which was challenged by the assessee before the Tribunal. The Tribunal held that the Commissioner's order was barred by limitation as it was passed beyond two years from the original assessment order. The Tribunal relied on the Supreme Court's decision in CIT v. Alagendran Finance Ltd. to support its conclusion that the order was time-barred. The Supreme Court's decision highlighted that the limitation period for revision under section 263 starts from the date of the original assessment order, not from any subsequent reassessment order. The Tribunal's decision was based on the fact that the Commissioner's order was passed much beyond the prescribed period of limitation, rendering it invalid.

Issue 2: Validity of the order passed by the Tribunal in relation to the deduction under section 80I of the Act:
The dispute also revolved around the validity of the order passed by the Tribunal concerning the deduction under section 80I of the Act. The Tribunal had remanded the matter to the Assessing Officer for reconsideration of an addition made in the initial assessment order. The Tribunal's remand was specific to the addition issue and did not encompass the deduction under section 80I. The Commissioner invoked section 263 based on the inclusion of unexplained income in the total income for granting the deduction. However, the Tribunal found that the issue of deduction under section 80I was not part of the remand proceedings. Therefore, the limitation for revising the order related to the deduction had to be calculated from the date of the original assessment order, making the Commissioner's order time-barred. Consequently, the Tribunal's decision to dismiss the Commissioner's order was upheld, and the appeal was ultimately dismissed.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the Commissioner's order under section 263 was time-barred and lacked jurisdiction. The Court found no grounds to interfere with the Tribunal's order, leading to the dismissal of the appeal.