Revisional jurisdiction survives appellate merger after the 1989 amendment, while factual eligibility for deduction was sustained.

After the 1989 amendment to section 263, the Commissioner's revisional jurisdiction was not barred merely because the assessment order had been appealed against and had merged in the appellate order, so the revision power remained available. The Tribunal's finding that the assessee satisfied the conditions for deduction under section 80HH was a factual finding and, absent any legal infirmity, was sustained on reference.

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Issues: (i) Whether the Commissioner of Income-tax had jurisdiction under section 263 after the assessment order had been appealed against and merged in the appellate order. (ii) Whether the assessee was entitled to deduction under section 80HH on the facts found by the Tribunal.

Issue (i): Whether the Commissioner of Income-tax had jurisdiction under section 263 after the assessment order had been appealed against and merged in the appellate order.

Analysis: The revisional power under section 263(1), Explanation (c), of the Income-tax Act, 1961, as amended by the Finance Act, 1989, was held applicable. In view of that amendment and the Supreme Court's interpretation, the mere filing of an appeal did not oust the Commissioner's revisional jurisdiction in the manner contended.

Conclusion: The issue was answered in favour of the Department and against the assessee.

Issue (ii): Whether the assessee was entitled to deduction under section 80HH on the facts found by the Tribunal.

Analysis: The Tribunal's finding was that the assessee had satisfied all the conditions required for deduction under section 80HH. That finding was one of fact and was not shown to suffer from any legal infirmity.

Conclusion: The issue was answered in favour of the assessee and against the Department.

Final Conclusion: The reference was disposed of by upholding the revisional jurisdiction under section 263 while sustaining the assessee's entitlement to deduction under section 80HH on the facts found.

Ratio Decidendi: After the 1989 amendment to section 263, the Commissioner's revisional jurisdiction is not excluded merely because the assessment order has been appealed against, and a Tribunal's factual finding that statutory conditions for deduction are satisfied will ordinarily be accepted in reference proceedings.

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