2018 (6) TMI 1092 - HC - Income Tax

Revision u/s 263 - scope of the order passed by the CIT(A) under Section 263 - Held that - We note that the Revenue has not challenged the finding of the CIT(A) that the AO has gone beyond the scope of directions given by the CIT(A) in its order under Section 263 of the Act. The issue now being urged by the Revenue, that the Assessment Order dated 24th December, 2009 was in accordance with the order dated 27th September, 2011 of the CIT and not beyond the scope of its directions. As this was not an issue urged by them before the Tribunal, this question does not arise from the order of the Tribunal. Issue raised before the Tribunal and cannot be urged before this Court as held by this Court in CIT v/s. Tata Chemicals 2002 (4) TMI 42 - BOMBAY HIGH COURT . Set off of R & D Expenses - We find that once it is not disputed by the Revenue before the Tribunal that, the order of the Assessing Officer on set off of R & D Expenses was beyond the scope of the directions given by the Commissioner of Income Tax in exercise of its power under Section 263 of the Act, the occasion to examine the correctness of the same, would not arise. In view of the above, the Question No.(b), in the above facts of the case, is academic and, therefore, does not give rise to any substantial question of law.

Summary

Issues:
- Whether the Tribunal failed to appreciate the directions given in an order passed under Section 263 for a fresh assessment on a specific issue?
- Whether the Tribunal erred in deleting an addition to expenses made in the original assessment order, considering it an enlargement of the scope of the 263 order?
- Whether the Tribunal was justified in holding that the assessment order passed after the revision under Section 263 was beyond the scope of the revisional authority's order?
- Whether the issue of R&D expenses was not part of the revisional authority's order under Section 263?

Analysis:

1. Directions in Order under Section 263:
The High Court noted that the Revenue did not challenge the finding that the Assessing Officer had exceeded the directions given by the Commissioner of Income Tax in the order under Section 263. The Revenue's new argument that the assessment order was in line with the CIT's order of September 27, 2011, was not raised before the Tribunal, thus not a valid issue for the Court to consider. The Court held that this question did not give rise to any substantial question of law and was not entertained.

2. Scope of Revisional Authority's Order:
Regarding the issue of whether the assessment order was beyond the scope of the revisional authority's order, the Court found that since the Revenue did not dispute before the Tribunal that the Assessing Officer's decision on R&D expenses exceeded the directions of the Commissioner of Income Tax under Section 263, there was no need to examine the correctness of that decision. The Court concluded that this question was academic in the given circumstances and did not give rise to any substantial question of law.

3. Conclusion:
The Court dismissed the appeal, emphasizing that the Revenue had not challenged the finding that the assessment order went beyond the directions of the CIT under Section 263. As a result, the Court did not find any substantial questions of law arising from the issues raised by the Revenue. The appeal was dismissed with no order as to costs.