Revision under section 263 can apply to a give-effect order when the appellate authority has not finally ined the claim.

An Income-tax Officer's order passed while giving effect to an appellate direction was treated as an independent order where the appellate authority had not finally decided the assessee's rebate claim. Because the officer had to apply the law afresh in implementing the direction, the order did not merge with the appellate order. It remained separately appealable and, if erroneous and prejudicial to revenue, was open to revision under section 263 of the Income-tax Act, 1961. The commentary therefore concludes that such a give-effect order can attract revisional jurisdiction within the statutory limits.

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Issues: Whether an order passed by the Income-tax Officer while giving effect to the Appellate Assistant Commissioner's direction was an independent order amenable to revision under section 263 of the Income-tax Act, 1961, or part of the appellate order and therefore immune from revision.

Analysis: The Appellate Assistant Commissioner had not finally decided the assessee's entitlement to the rebate claims, but had only directed the Income-tax Officer to examine the claims and grant such relief as was admissible in law. The order made by the Income-tax Officer pursuant to that direction was not an order merged in the appellate order, because there is no merger of a subordinate authority's order with that of the appellate authority. Since the Income-tax Officer had to apply the law independently while giving effect to the direction, any erroneous application of law in that order gave it an independent existence in the eye of law. An order so passed could itself be appealed against and was, therefore, capable of revision by the Commissioner subject to the statutory limits.

Conclusion: The order passed by the Income-tax Officer was an independent order and was revisable under section 263 of the Income-tax Act, 1961. The challenge failed.

Ratio Decidendi: An order passed by the Income-tax Officer to give effect to an appellate direction, where the appellate authority has not finally determined the substantive claim, remains an independent order and is open to revisional jurisdiction if it is erroneous and prejudicial to revenue.

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