2015 (5) TMI 937 - HC - Income Tax

Revision u/s 263 - CIT was of the view that Assessing Officer erred in addition of alleged suppressed business profit aggregating to 11 crores - Assessing Officer erred in disallowing the alleged cost of production claimed - ITAT quashed revision order - Held that - We do not find that the Tribunal erred in holding that clause (c) of the Explanation to subsection (1) of section 263 cannot be applied. In the present case that has no application because the matters which have been considered and decided in the Appeal by the first appellate authority are being made subject matter of the revisional authority s order. In other words the power to revise as conferred by section 263 is sought to be exercised so as to deal with the same matters which have been considered and decided in the Appeal. We do not find any merit in Mr. Mohanty s submission because detailed references have been made in the foregoing paragraphs to the case of the Assessee before the Assessing Officer his initial order the order of the first appellate authority the direction issued by the first appellate authority and which was given effect to by the Assessing Officer. All these would denote that something which was very much part and parcel of the appellate authority s order and dealt with extensively therein is now sought to be revised and revisited. We fully agree with the Tribunal when it concluded in para 14 that it is evident from the order of the Commissioner (Appeals) that the claim of cost of production of film was a subject matter of Appeal before him and after consideration of remand report of the Assessing Officer he gave his findings. Therefore this order of the Assessing Officer dated 31st December 2009 undisputedly had merged with the order of the first appellate authority dated 12th October 2011 as far as the claim of cost of production of the film is concerned. Similarly the other argument that applicability of Rule 9A has not been considered by the Commissioner the Tribunal in para 15 found that this was also very much before the authorities and hence even in relation thereto it cannot be said that the Assessing Officer at the time of making the assessment order did not consider the applicability of Rule 9A vis a vis the claim of the Assessee on the aspect of cost of production of the film. - Decided against revenue.

Summary

Issues:
1. Challenge to the order passed by the Income Tax Appellate Tribunal by the Revenue.
2. Interpretation of section 263 of the Income Tax Act, 1961.
3. Application of Rule 9A of the Income Tax Rules.
4. Merger of orders by the Assessing Officer and the Commissioner of Income Tax (Appeals).
5. Revision of the Assessing Officer's order under section 263 of the Income Tax Act, 1961.

Analysis:

1. The Revenue challenged the order of the Income Tax Appellate Tribunal, which was based on an appeal by the Assessee against the Commissioner of Income Tax's order under section 263 of the Income Tax Act, 1961. The main contention was whether the matters subject to revision by the Commissioner were considered in the Appeal against the Assessing Officer's order.

2. The interpretation of section 263 of the Income Tax Act, 1961 was crucial. The Revenue argued that the Commissioner's revisional power should not apply if the matters under consideration were already decided in the Appeal process. The Assessee contended that once the Assessing Officer's order merged with the Commissioner's order, section 263 could not be invoked.

3. The application of Rule 9A of the Income Tax Rules was discussed concerning the deduction of the cost of production of a film. The Assessing Officer's decision to disallow a portion of the claimed expenses was challenged by the Assessee, citing Rule 9A. The Tribunal examined whether Rule 9A was appropriately considered in the assessment process.

4. The issue of merger of orders between the Assessing Officer and the Commissioner of Income Tax (Appeals) was raised. The Tribunal found that the Commissioner's attempt to revisit matters already decided in the Appeal was impermissible, as the orders had effectively merged. The Tribunal upheld the objection raised by the Assessee regarding the doctrine of merger.

5. The revision of the Assessing Officer's order under section 263 was a focal point of the dispute. The Tribunal concluded that the matters considered and decided in the Appeal before the Commissioner were being revisited by the revisional authority. The Tribunal found no merit in the Revenue's arguments and dismissed the Appeal, stating that no substantial question of law was raised.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of considering whether matters subject to revision were already addressed in the Appeal process. The judgment highlighted the doctrine of merger and the limitations on the Commissioner's power to revise orders already dealt with by the Appellate authority.