High Court Of Allahabad
CIT vs. Span International
Section 263(1) Expln. (c)
Asst. Year 1976-77
M. Katju & Prakash Krishna, JJ.
IT Ref. No. 44 of 1983
31st January, 2003
Counsel Appeared :
B.B. Ahuja, for the Respondent
M. Katju, J. :
This is a reference under s. 256(1) of the IT Act, 1961 in which the following questions have been referred to us for our opinion :â
“1. Whether, on the facts and in the circumstances of the case, the learned Tribunal was legally correct in holding that the order of the ITO had got merged in the order of the CIT(A) and, therefore, the CIT had no jurisdiction to revise that order ?
2. Whether, on the facts and in the circumstances of the case, the learned Tribunal was right in law in holding that even on merits, the assessee was entitled to deduction under s. 80HH of the Act ?”
The assessee is a firm and the relevant assessment year is 1976-77. For this year the ITO allowed deduction under s. 80HH of the Act and held that all the requirements of the said section had been satisfied. The CIT was of the opinion that the order of the ITO was erroneous and prejudicial to the interest of Revenue and as such he issued notice under s. 263 of the Act. He set aside the order of the ITO and remanded the matter for a fresh assessment insofar as deduction under s. 80HH was concerned. The assessee went up in appeal to the Tribunal and the Tribunal allowed the appeal following the decision of the Allahabad High Court in the case of J.K. Synthetics vs. CIT (1976) 104 ITR 255 (sic). The Tribunal held that since an appeal had been filed against the assessment order, therefore, the CIT had no power to revise the order under s. 263. At the instance of the Department, the above two questions have been referred to us for our opinion.
In our opinion the first question has to be answered in favour of the Department in view of amendment of s. 263(1) Expln. (c) of the IT Act as amended by Finance Act of 1989 and as interpreted by the Supreme Court in the case of CIT vs. Shri Arbuda Mills Ltd. (1998) (1998) 147 CTR (SC) 474 : (1998) 231 ITR 50 (SC)
As regards the second question referred to us, it has to be decided in favour of the assessee since the finding of the Tribunal is that the assessee has complied with all the conditions in s. 80HH and this is a finding of fact.
In view of the above, we answer the first question referred to us in favour of the Department and against the assessee and the second question in favour of the assessee and against the Department.
[Citation : 270 ITR 538]