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2019 (1) TMI 1533 - HC - Income TaxRevision u/s 263 - claim under Section 80IB allowability - period of limitation under Section 263(2) - return filed under Section 153A - Held that - We find that the reasons stated for revising the order under Section 263 which go to the root of the claim made under Section 80IB of the Act, which would apply to the entire amounts claimed; that in the revised return originally filed and in the return filed under Section 153A of the Act. Without revising the earlier order at Annexure-I, it would not be possible to disallow the claim further made under the return filed pursuant to notice issued under Section 153A of the Act by revising Annexure-C order. The grounds as stated in Section 263 order was available to the Revenue even as against the original order passed at Annexure-I. No interference of the allowance granted by the Assessing Officer having been attempted under Section 263 of the Act; the issue stands settled for that assessment year. As for the enhanced claim made under Section 80IB not being sustainable in a return filed pursuant to a notice issued under Section 153A; it was never raised by the CIT in the order under Section 263. In such circumstances, we are of the opinion that the limitation in so far as interfering with the claim under Section 80IB of the Act has to commence from the first order at Annexure-I, which is dated 31.08.2005. The order under Section 263 of the Act had been passed long after the limitation expired and hence we are unable to sustain the same. We answer the question of law in favour of the assessee and against the Revenue, in so far as the limitation aspect is considered. - Decided in favour of the assessee
Issues:
1. Claim under Section 80IB of the Income Tax Act for assessment years 2001-2002, 2003-2004, 2005-2006, and 2006-2007. 2. Question of limitation in the assessment year 2001-2002. 3. Revision of assessment orders under Section 263 of the Act. 4. Whether the orders under Section 263 were sustainable based on limitation and merger with appellate orders. Analysis: Issue 1: Claim under Section 80IB The Tribunal affirmed the order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Act, revising the assessment made and disallowing the claim under Section 80IB due to unsatisfied essential conditions. The questions raised in all assessment years pertained to the correctness of this decision. Issue 2: Question of Limitation (2001-2002) The question of limitation arose in the assessment year 2001-2002 as the Tribunal affirmed the order under Section 263 for the reason of the period of limitation having expired at the time of the order. The period of limitation under Section 263(2) of the Act is two years from the end of the financial year in which the order sought to be revised was passed. Issue 3: Revision of Assessment Orders The Commissioner revised the claim under Section 80IB for the year 2001-2002 to include an amount not originally claimed in the returns. The grounds for revision included non-compliance with conditions for allowing the claim, such as not maintaining separate accounts and lack of audit reports. The appellant argued that the revision was beyond the limitation period and that the original order allowing the claim had attained finality. Issue 4: Merger with Appellate Orders In the assessment years 2005-2006 and 2006-2007, the appellate authority directed the Assessing Officer to grant the claim under Section 80IB, which was initially rejected. The High Court held that the assessment orders had merged with the appellate orders, making them not revisable under Section 263. The Revenue's choice to proceed under Section 263 was deemed erroneous. In conclusion, the High Court ruled in favor of the assessee on the grounds of limitation and merger with appellate orders, setting aside the orders under Section 263 for the respective assessment years. The judgment highlighted the importance of compliance with conditions for claiming deductions under the Income Tax Act and the significance of adhering to limitation periods for revising assessments.
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