1982 (2) TMI 40 - HC - Income Tax

Summary

Issues Involved:
1. The applicability of the Indian Electricity (Madhya Pradesh) Amendment Ordinance, 1974, and the Gwalior Electricity Act, and the Indian Electricity Act, 1910, to the assessee's case.
2. The validity of the Tribunal's decision regarding non-interference u/s 263 with the assessment order of the ITO.
3. The doctrine of merger concerning the assessment order and the jurisdiction of the Commissioner u/s 263 of the I.T. Act, 1961.

Summary:

Issue 1: Applicability of the Indian Electricity (Madhya Pradesh) Amendment Ordinance, 1974
The Tribunal held that the amount of compensation became payable to the assessee on the promulgation of the Indian Electricity (Madhya Pradesh) Amendment Ordinance, 1974, and not under the provisions of the Gwalior Electricity Act, and the Indian Electricity Act, 1910.

Issue 2: Non-interference u/s 263 with the Assessment Order of the ITO
The Tribunal found no case for interference u/s 263 with the assessment order of the ITO. The Commissioner had issued a notice u/s 263 to revise the assessment order, but the Tribunal held that the Commissioner had no jurisdiction as the order of the ITO had merged in the order passed by the AAC.

Issue 3: Doctrine of Merger and Jurisdiction of the Commissioner u/s 263
The Tribunal held that the assessment order, which was the subject-matter of an appeal to the AAC, had not merged in the order of the appellate authorities on points not canvassed and agitated in the appeal. The Full Bench, however, reframed the question to address whether the Commissioner had jurisdiction u/s 263 to set aside the order of assessment passed by the ITO when that order was the subject-matter in appeal before the AAC. The Full Bench concluded that the Commissioner had no jurisdiction to set aside the order of assessment as it had merged with the order of the AAC. This decision was based on the principle that the appellate decision is the operative decision in law, and the original decision merges in the appellate decision.

Conclusion:
The Tribunal was not justified in holding that the Commissioner had jurisdiction u/s 263 to set aside the order of assessment passed by the ITO. Consequently, it was unnecessary to answer the first two questions. The reference was answered in favor of the assessee, and each party was to bear its own costs.