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2012 (12) TMI 652 - AT - Income TaxDoctrine of merger Revision order passed by CIT u/s 263 AO passed the order which is erroneous and prejudicial to the interest of the revenue Assessee contended that re-assessment order got merged with the order of Tribunal because the Tribunal has allowed the full deduction which were denied during assessment proceedings and therefore, such order is not available for revision - Held that - As the doctrine of merger would not be applicable because reassessment was confined only to the issue of deduction u/s 80HHC with and the assessment was not reopened for the purpose of examining the application of Sec. 80IB(13) r.w.s. 80IA(9) Validity of order u/s 263 - CIT argued that assessee had claimed deduction u/s 80IB as well as u/s 80HHC Deduction u/s 80IB and 80HHC was allowed by the original assessment order dated 20.12.2005 Held that - Since the original assessment order has been passed on 20.12.2005 and therefore, the limitation would run from 1.4.2006 and expire on 31.3.2008 whereas the revision order has been passed on 23.3.2010 which is clearly barred by limitation. Appeal in favour of assessee
Issues Involved:
1. Whether the revisionary order passed under Section 263 is time-barred. Detailed Analysis: Issue 1: Whether the revisionary order passed under Section 263 is time-barred. The primary issue in these appeals is the contention that the revisionary order passed under Section 263 is time-barred. The assessee originally filed a return declaring an income of Rs. 1,04,02,357/- and claimed deductions under Sections 80HHC and 80IB. During the assessment proceedings under Section 143(3), the Assessing Officer (AO) reduced 90% of gross interest from business profits for the deduction under Section 80HHC and excluded export incentives from business profits for Section 80IB, following relevant High Court decisions. The deductions were subsequently revised, leading to reassessment proceedings where the AO further reduced the deduction under Section 80HHC. The Commissioner, upon examining the assessment records, found the order passed under Sections 143(3)/147 erroneous and prejudicial to the revenue's interest because the AO failed to verify the applicability of Section 80IB(13) read with Section 80IA(9). The Commissioner initiated proceedings under Section 263, contending that the reassessment proceedings should have included verification of these sections. The assessee argued that the reassessment was confined to the issue of deduction under Section 80HHC and not for examining Section 80IB(13) read with Section 80IA(9). Therefore, the limitation for the revisionary order should run from the original assessment order dated 20.12.2005, making the revisionary order time-barred. The Tribunal found that the reassessment was limited to the deduction under Section 80HHC and not for the applicability of Section 80IB(13) read with Section 80IA(9). The doctrine of merger was not applicable as the reassessment did not cover the issue of Section 80IB(13) read with Section 80IA(9). The Tribunal relied on the Supreme Court decision in CIT V. Alagendran Finance Ltd, which stated that the limitation for passing a revisionary order runs from the date of the original assessment order if the reassessment does not cover the issue in question. The Tribunal concluded that the revisionary order passed on 23.3.2010 was clearly barred by limitation as the original assessment order was passed on 20.12.2005, and the limitation expired on 31.3.2008. Therefore, the revisionary order under Section 263 was quashed. Conclusion: The appeals filed by the assessee were allowed as the revisionary order under Section 263 was found to be time-barred. The limitation for passing the revisionary order runs from the date of the original assessment order, and since the reassessment did not cover the issue of Section 80IB(13) read with Section 80IA(9), the revisionary order was quashed.
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