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TMI Blog1998 (11) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Inspecting Assistant Commissioner under section 144B on the point of depreciation, which has been the subject-matter of appeal before the Commissioner (Appeals) wherein an order has been passed by him, there was merger of assessment order with the appellate order and the Commissioner of Income-tax had no jurisdiction to revise the assessment under section 263 of the Income Tax Act, 1961 ?" Though the question referred to us is a single question, it consists of two parts both touching upon the jurisdiction of the Commissioner of Income-tax to invoke his powers under section 263 of the Act. The facts leading to the reference are that the assessee is a company and the Income Tax Officer, for the assessment year 1979-80, completed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to note the order of the Commissioner (Appeals) for the purpose of the present reference or the result of the appellate order. The Commissioner of Income-tax exercising the powers of revision conferred upon him under section 263 of the Act, on a perusal of the records of the assessment of the assessee, found that the allowance of depreciation at the rate of 15 per cent. in respect of the plant and machinery installed in the Cold Roll Mill, a unit of the assessee was erroneous and prejudicial to the interests of the revenue as the assessee would be entitled to depreciation at the rate of 10 per cent. on the machinery and plant. After issuing show-cause notice to the assessee and after hearing the objections of the assessee, the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner had no jurisdiction to revise the order of the Income Tax Officer which was the subject-matter of appeal before the Commissioner (Appeals), as the assessee's claim for depreciation allowance was the subject matter of consideration by the Commissioner (Appeals). The Tribunal held that the Commissioner lacked the jurisdiction to exercise his power of revision and cancelled the order of revision passed by the Commissioner and allowed the appeal preferred by the assessee. The order of the Appellate Tribunal is the subject-matter of reference before its. The question of law referred to it is a comprehensive one as it challenges both the views expressed by the Appellate Tribunal on the jurisdiction of the Commissioner of Income-tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct as the order of Income Tax Officer does not cease to be an order of assessment made by him, and the contrary view expressed by the Appellate Tribunal is not legally sustainable in law. The second part of the question refers to the question of merger. The Supreme Court in the case of CIT v. Shri Arbuda Mills Ltd. (1998) 231 ITR 50, held that the Commissioner of Income-tax is empowered to exercise his power to revise that part of the order of the Income Tax Officer which was not the subject-matter of consideration in appeal before the higher authority by way of appeal. The Income Tax Officer in the instant case, at the time of original assessment, granted depreciation on the items in question at a particular rate and as claimed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation allowance, the Commissioner (Appeals) has to decide the question as to the rate of depreciation to be allowed on each of the machinery employed in the factory. Therefore, we are of the opinion that it can be regarded that part of the order, of the Income Tax Officer granting the depreciation remained undisturbed even after the order passed by the Commissioner of Income-tax in appeal and, hence, it could not be said that the order of the Income Tax Officer granting depreciation at the particular rate had merged with the order of the Commissioner (Appeals). Hence, we hold that the appellate order of the Commissioner (Appeals) does not in any way preclude the Commissioner from exercising his power of revision under section 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o question of merger of the order of the Income Tax Officer with the order of the higher authority. The Explanation introduced in section 263 of the Act also makes the position abundantly clear, that there was no merger of the order of the Income Tax Officer with the order of the Commissioner (Appeals). Accordingly, we hold that the Tribunal was not correct in holding that there was a merger of the order of the Income Tax Officer, with the order of the Commissioner (Appeals) preventing the Commissioner from exercising his power under section 263 of the Act. Learned counsel for the assessee submitted that the Commissioner was not justified in ignoring the report of the chartered engineer and registered valuer of the assessee. Learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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