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TMI Blog1997 (9) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1987, the Commissioner of Income-tax invoked his suo motu revisional jurisdiction under section 263 of the Act against the said assessment orders on the ground that those were prejudicial to the interests of the Revenue inasmuch as the assessee was entitled to depreciation on the building only at the rate of 2.5 per cent. The above order of the Commissioner of Income-tax was subjected to appeal before the Tribunal which set aside the same by holding that (i) the order was without jurisdiction inasmuch as the original assessment order had already merged with the appellate order much before the suo motu revisional jurisdiction was invoked, and (ii) the Income-tax Officer was right in holding that the assessee was entitled to depreciation on hotel building at the rates applicable to plant since the hotel building was the tool of the trade of the assessee. In the backdrop of the said facts, at the instance of the Commissioner, a statement of case was called from the Tribunal under section 256(2) of the Act by this court, on the following questions of law : "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in coming to the concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment so as to deprive the Commissioner of revisional powers, While holding so, the Supreme Court had laid down two important facets of the principles of merger which are : "(i) There can be no doubt that, if an appeal is provided against an order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of the confirmation or affirmance of the decision of the Tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement; (ii) There can be no doubt that even on the theory of merger the pendency of an appeal may put the order under appeal in jeopardy but until the appeal is finally disposed of, the said order subsists and is effective in law. It cannot be urged that the mere pendency of an appeal has the effect of suspend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 929) Ltd. v. Addl. CIT [1977] 108 ITR 407, and the Madhya Pradesh High Court in CIT v. Narpat Singh Malkhan Singh [1981] 128 ITR 77 and CIT v. Mandsaur Electric Supply Co. Ltd. [1983] 140 ITR 677 (MP) [FB]. A contrary view was taken by other High Courts by following the decision of the Supreme Court in Madurai Mills' case [1967] 19 STC 144; AIR 1967 SC 681, holding that that part of the order of assessment which has not been disputed and interfered with by the appellate authority and remained untouched, will not merge in the appellate order. This view has been shared by the Gujarat High Court in Karsandas Bhagwandas Patel v. Shah (G. V.), ITO [1975] 98 ITR 255, the Bombay High Court in CIT v. Sakseria Cotton Mills Ltd. [1980] 124 ITR 570, the Calcutta High Court in Singho Mica Mining Co. Ltd. v. CIT [1978] 111 ITR 231, the Madras High Court in Puthuthotam Estates (1943) Ltd. v. State of Tamil Nadu [1980] 125 ITR 41 and the Punjab and Haryana High Court in New Diwan Oil Mills v. CIT [1981] 129 ITR 224. A Full Bench of this court in the case of CIT v. Hindustan Aeronautics Ltd. [1986] 157 ITR 315, on being called upon to choose between the above noticed divergent views, opted to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer had already been disposed of prior to June 1, 1988, then irrespective of the fact whether any particular aspect of the order appealed against was decided or not, the entire original order merges with the appellate order thereby denuding the Commissioner from interfering with the original order in his revisional powers under section 263 of the Act, even if he felt that the same was prejudicial to the interests of the Revenue. But, keeping in view the legislative intent, it has further to be held that if any appeal was pending on June 1, 1988, irrespective of its date of filing then despite passing of any appellate order, clause (c) to the Explanation will authorise the Commissioner to invoke his revisional jurisdiction in respect of such matters which have not been considered and decided in such appeal. Another important aspect to be noticed and which goes even without saying is that, since the impugned clause (c) of the Explanation has been brought into force by the Legislature with effect from June 1, 1988, therefore, in respect of the matters covered thereby, the Commissioner could have exercised his revisional power only on and after June 1, 1988, and any proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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